Publications: Favorable Advisory Opinion Issued on Hospital Funding of Electronic Health Records Interface

The Centers for Medicare & Medicaid Services (“CMS”) issued an advisory opinion May 28, 2008, which concluded that a hospital system’s proposed arrangement to pay for a customized software interface that would allow the hospital’s electronic health records (“EHR”) system to communicate with those of its medical staff physicians would not constitute a compensation arrangement under the Stark Law, and therefore would be acceptable under Stark.

Please note that the CMS advisory opinion applies only to the party requesting the opinion and its specific facts. However, advisory opinions do serve as general guidance to the industry with respect to the issuing agency’s opinion on various practices.

The proposed arrangement approved by CMS included:

• Hospital payment for the development of the customized EHR interface system that would communicate with each physician practice’s EHR system and the purchase of licenses to authorize physician practice use
• EHR interface use by medical staff physician practices would be limited to the ordering or communicating of laboratory tests or procedures performed by the hospital 
• EHR interfaces could not be applied or altered by physician practices to perform any alternative functions
• Recipient physicians would not be able to resell, transfer or assign their licenses for the interface to access the hospital system

Please note that other state and federal rules and regulations may be implicated by hospital-provided EHR interfaces, such as the Federal Anti-kickback Statute and, for tax-exempt hospitals, Internal Revenue Service (“IRS”) rules and regulations. To date, the Department of Health & Human Services Office of the Inspector General and the IRS have provided guidance on hospital-provided EHR, but such guidance does not drill down to the interface level addressed here by CMS.

Please see information regarding the Anti-kickback Statute safe harbor for EHR here and the IRS guidance on hospital-subsidized EHR here.

CMS Advisory Opinion No. CMS-AO-2008-01 is available here.