Lab EMR Donations Violate Washington Anti-Rebate Statute

Washington state Attorney General Rob McKenna has ruled that the donation by a laboratory to a referring physician of 85 percent of the software cost of the physician’s electronic health record (EHR) violates the state anti-rebate statute. The Washington anti-rebate statute provides that is unlawful to “request, receive, or allow, directly or indirectly, a rebate, refund, commission, unearned discount or profit by means of a credit or other valuable consideration in connection with the referral of patients.” According to Jane Pine Wood, Esq., an attorney with McDonald Hopkins, the attorney general considered a donation by a laboratory to a referring physician for 85 percent of the electronic health record software expenses. While such a donation can be structured to fall within the applicable exception under the Stark law and the applicable safe harbor under the Medicare and Medicaid anti-kickback statute, the Washington attorney general ruled that such a donation would still be in violation of [the anti-rebate statute]. “The state attorneys general of Missouri and Pennsylvania also have issued opinions that question the legality of EMR donations, and regulations in New Jersey and New York also place limitations on EMR donations. Many states have fraud and abuse laws, and these recent attorney general opinions raise the possibility that other state attorney generals could issue similar opinions,” says Wood. While both the anti-kickback and the Stark law prohibit inducements for referrals, the electronic health records safe harbor permits referring providers to receive a donation of EHR software and related training from a clinical laboratory (or other health care provider) provided certain conditions are met. The EHR donation cannot be tied to the volume of referrals, and the recipient must pay a minimum of 15 percent of the costs. No portion of this contribution may be funded or financed by the donor or any affiliate of the donor. The safe harbor is set to expire at the end of 2013.