Labs Breathe Sigh of Relief Over Exemption From EHR Safe Harbor Extension

Clinical and anatomic pathology laboratories are breathing a sigh of relief now that they no longer will be forced into providing referring physicians with electronic health record (EHR) software and services. In an end-of-year announcement, the Centers for Medicare and Medicaid Services (CMS) and the Health and Human Services Office of Inspector General (OIG) said that while they were extending the EHR safe harbor scheduled to expire on Dec. 31, 2013, laboratories would be exempted. The rule was announced Dec. 23 and published in the Dec. 27 Federal Register. It became effective Jan. 1. The final rule revises the exception to the physician self-referral law that permits certain arrangements involving the donation of EHR items and services. Specifically, the rule extends the expiration date of the exception to Dec. 31, 2021, excludes laboratory companies from the types of entities that may donate EHR items and services, updates the provision under which EHR software is deemed interoperable, removes the electronic prescribing capability requirements, and clarifies the requirement prohibiting any action that limits or restricts the use, compatibility, or interoperability of donated items or services. The exception was initially put in place in 2006 to encourage development of EHR technology. However, lab and pathology groups have long opposed the exception, saying that physician groups often used the exception as a way to essentially blackmail labs into donating EHR software and services or risk losing referrals from the physicians. While CMS and the OIG had initially proposed extending the sunset date to Dec. 31, 2016, the final rule extended it even longer to the end of 2021. This date coincides with the end of the Medicaid incentives program. Although some commenters wanted a permanent exception, the agencies said they believe the sunset date is necessary to ensure adoption of interoperable EHR technology in the near term and to guard against “inappropriate donations” that “lock in data and referrals between a donor and physician recipient, among other risks.” Lab Groups Applaud Exception The College of American Pathologists (CAP) says it is “pleased that referral decisions can no longer be premised on the highest EHR donation offers and that patients will have access to laboratories referring physicians have chosen based on the quality and service rather than an EHR donation.” “While prohibited under the rules, these donations in practice were indeed quid pro quo arrangements for referrals,” said George Kwass, M.D., chair of CAP’s Council on Government and Professional Affairs. “Recognition by OIG and CMS of these longstanding abuses and removal of ‘laboratory companies’ as protected donors are true victories for the laboratory community, pathologists, and the patients they serve.” The American Society for Clinical Pathology (ASCP) also applauded the final rules, noting that it has long advocated for the removal of laboratories from the list of entities protected under the EHR safe harbor, citing the practice as a direct violation of the Stark and anti-kickback laws. “ASCP has continually communicated to CMS that, due to the unique referral-based nature of the pathology specialty, allowing laboratories to gift EHRs has generated a slippery slope effect resulting in the essentially forced exchange of EHRs for referrals. Thus, laboratories are inadvertently forced to fund EHRs in order to sustain their referral base and compete with other laboratories looking to broaden their referral base,” said ASCP in a statement. “ASCP has also pointed out that the inclusion of laboratories under the EHR safe harbor yields unfair irony, in that pathologists are unable to participate in the EHR incentive program but are allowed to fund EHRs for physicians that are able to participate.” Takeaway: Clinical and anatomic pathology laboratories will no longer feel pressured into providing referral sources with EHR software and services or risk losing referrals.