Medicare and State Health Care Programs: Fraud and Abuse; Safe Harbors for Certain Electronic Prescribing and Electronic Health Records Arrangements Under the Anti-Kickback Statute, 45110-45137 [06-6666]
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Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Rules and Regulations
the anti-kickback statute and safe
harbors; a summary of the relevant
MMA provisions; a summary of the
proposed safe harbors; and a summary
of the final safe harbors. Section II
contains a summary of the public
comments and our responses.
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Office of Inspector General
42 CFR Part 1001
RIN 0991–AB39
Medicare and State Health Care
Programs: Fraud and Abuse; Safe
Harbors for Certain Electronic
Prescribing and Electronic Health
Records Arrangements Under the AntiKickback Statute
Office of Inspector General
(OIG), HHS.
ACTION: Final rule.
AGENCY:
SUMMARY: As required by the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA),
Public Law 108–173, this final rule
establishes a new safe harbor under the
Federal anti-kickback statute for certain
arrangements involving the provision of
electronic prescribing technology.
Specifically, the safe harbor would
protect certain arrangements involving
hospitals, group practices, and
prescription drug plan (PDP) sponsors
and Medicare Advantage (MA)
organizations that provide to specified
recipients certain nonmonetary
remuneration in the form of hardware,
software, or information technology and
training services necessary and used
solely to receive and transmit electronic
prescription information. In addition, in
accordance with section 1128B(b)(3)(E)
of the Social Security Act (the Act), this
final rule creates a separate new safe
harbor for certain arrangements
involving the provision of nonmonetary
remuneration in the form of electronic
health records software or information
technology and training services
necessary and used predominantly to
create, maintain, transmit, or receive
electronic health records.
DATES: Effective Date: These regulations
are effective October 10, 2006.
FOR FURTHER INFORMATION CONTACT:
Catherine Martin, Office of Counsel to
the Inspector General, (202) 619–0335.
SUPPLEMENTARY INFORMATION:
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I. Background
Overview—Establishing New Safe
Harbors for Arrangements Involving
Electronic Prescribing and Electronic
Health Records Technology
This final rule establishes safe harbor
protection for certain arrangements
involving the donation of electronic
prescribing and electronic health
records technology. Section I contains a
brief background discussion addressing
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A. The Anti-Kickback Statute and Safe
Harbors
Section 1128B(b) of the Act (42 U.S.C.
1320a–7b(b), the ‘‘anti-kickback
statute’’) provides criminal penalties for
individuals or entities that knowingly
and willfully offer, pay, solicit, or
receive remuneration in order to induce
or reward the referral of business
reimbursable under any of the Federal
health care programs, as defined in
section 1128B(f) of the Act. The offense
is classified as a felony and is
punishable by fines of up to $25,000
and imprisonment for up to five years.
Violations of the anti-kickback statute
may also result in the imposition of civil
money penalties (CMPs) under section
1128A(a)(7) of the Act (42 U.S.C. 1320a7a(a)(7)), program exclusion under
section 1128(b)(7) of the Act (42 U.S.C.
1320a–7(b)(7)), and liability under the
False Claims Act, (31 U.S.C. 3729–33).
The types of remuneration prohibited
specifically include, without limitation,
kickbacks, bribes, and rebates, whether
made directly or indirectly, overtly or
covertly, in cash or in kind. Prohibited
conduct includes not only the payment
of remuneration intended to induce or
reward referrals of patients, but also the
payment of remuneration intended to
induce or reward the purchasing,
leasing, or ordering of, or arranging for
or recommending the purchasing,
leasing, or ordering of, any good,
facility, service, or item reimbursable by
any Federal health care program.
Because of the broad reach of the
statute, concern was expressed that
some relatively innocuous commercial
arrangements were covered by the
statute and, therefore, potentially
subject to criminal prosecution. In
response, Congress enacted section 14 of
the Medicare and Medicaid Patient and
Program Protection Act of 1987, Public
Law 100–93 (section 1128B(b)(3)(E) of
the Act), which specifically required the
development and promulgation of
regulations, the so-called ‘‘safe harbor’’
provisions, which would specify
various payment and business practices
that would not be treated as criminal
offenses under the anti-kickback statute,
even though they may potentially be
capable of inducing referrals of business
under the Federal health care programs.
Since July 29, 1991, we have published
in the Federal Register a series of final
regulations establishing ‘‘safe harbors’’
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in various areas.1 These OIG safe harbor
provisions have been developed ‘‘to
limit the reach of the statute somewhat
by permitting certain non-abusive
arrangements, while encouraging
beneficial or innocuous arrangements.’’
(56 FR 35952, 35958; July 21, 1991).
Health care providers and others may
voluntarily seek to comply with safe
harbors so that they have the assurance
that their business practices will not be
subject to liability under the antikickback statute, the CMP provision for
anti-kickback violations, or the program
exclusion authority related to kickbacks.
In giving the Department of Health and
Human Services the authority to protect
certain arrangements and payment
practices from penalties under the antikickback statute, Congress intended the
safe harbor regulations to be evolving
rules that would be updated
periodically to reflect changing business
practices and technologies in the health
care industry.
B. Section 101 of MMA
Section 101 of the MMA added a new
section 1860D to the Act, establishing a
Part D prescription drug benefit in the
Medicare program. As part of the new
statutory provision, Congress, through
section 1860D–4(e) of the Act, directed
the Secretary to create standards for
electronic prescribing in connection
with the new prescription drug benefit,
with the objective of improving patient
safety, quality of care, and efficiency in
the delivery of care.2 Section 1860D–
4(e)(6) of the Act directs the Secretary,
in consultation with the Attorney
General, to create a safe harbor to the
anti-kickback statute that would protect
certain arrangements involving the
provision of nonmonetary remuneration
(consisting of items and services in the
form of hardware, software, or
information technology and training
services) that is necessary and used
solely to receive and transmit electronic
prescription information in accordance
with electronic prescribing standards
promulgated by the Secretary under
section 1860D–4(e)(4) of the Act.
Specifically, the safe harbor would set
forth conditions under which the
provision of such technology by
hospitals, group practices, and PDP
sponsors and MA organizations to
certain prescribing health care
professionals, pharmacies, and
pharmacists would be protected.
1 56 FR 35952 (July 29, 1991); 61 FR 2122
(January 25, 1996); 64 FR 63518 (November 19,
1999); 64 FR 63504 (November 19, 1999); and 66
FR 62979 (December 4, 2001).
2 See H.R. Rep. No. 108–391 at 495 (2003) (Conf.
Rep.).
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We do not believe Congress, in
enacting section 1860D–4(e)(6) of the
Act, intended to suggest that a new safe
harbor is needed for all or even most
arrangements involving the provision of
electronic prescribing items and
services. In general, fair market value
arrangements that are arm’s-length and
do not take into account in any manner
the volume or value of Federal health
care program business, or arrangements
that do not have as one purpose the
generation of business payable by a
Federal health care program, should not
raise concerns under the anti-kickback
statute. In addition, many arrangements
can be structured to fit in existing safe
harbors, including the safe harbors for
discounts (42 CFR 1001.952(h)) and for
remuneration offered to employees (42
CFR 1001.952(i)). Finally, parties may
use the OIG advisory opinion process
(42 CFR part 1008; https://oig.hhs.gov/
fraud/advisoryopinions.html) to
determine whether their particular
arrangements would be subject to OIG
sanctions.
In addition to the new safe harbor
under the anti-kickback statute, section
1860D–4(e)(6) of the Act directs the
Secretary to create a corresponding
exception to section 1877 of the Act,
commonly known as the physician selfreferral law. That exception is being
promulgated through a separate
rulemaking by the Centers for Medicare
& Medicaid Services (CMS), the agency
that administers the physician selfreferral law. We have endeavored to
ensure as much consistency as possible
between our final safe harbor and the
corresponding final physician selfreferral exception, given the differences
in the respective underlying statutes.
One significant difference in the
statutory schemes is that fitting in an
exception under section 1877 is
mandatory, whereas complying with a
safe harbor under the anti-kickback
statute is voluntary. In other words,
arrangements that do not comply with
the electronic prescribing safe harbor at
42 CFR 1001.952(x) will not necessarily
be illegal under the anti-kickback
statute. Rather, they will be subject to
the customary case-by-case review
under the statute to determine the
parties’ intent. (The same holds true for
electronic health records technology
arrangements that do not fit in the new
safe harbor at 42 CFR 1001.952(y).)
Another difference is that section 1877
applies only to referrals from
physicians, while the anti-kickback
statute applies more broadly.
C. Summary of the Proposed
Rulemaking
On October 11, 2005, we published a
notice of proposed rulemaking to
promulgate three safe harbors under the
anti-kickback statute (70 FR 59015;
October 11, 2005). The first proposed
safe harbor addressed arrangements
involving electronic prescribing
technology, as required by section 101
of the MMA. Many industry and
government stakeholders had expressed
concerns that the MMA provision was
not sufficiently useful or practical, and
would not adequately advance the goal
of achieving improved health care
quality and efficiency through
widespread adoption of interoperable
electronic health records systems.
Accordingly, we proposed two
additional safe harbors to address
donations of certain electronic health
records software and directly related
training services, using our authority at
section 1128B(b)(3)(E) of the Act. One
proposed safe harbor would have
protected certain arrangements
involving nonmonetary remuneration in
the form of interoperable electronic
health records software certified in
accordance with criteria adopted by the
Secretary (and directly related training
services). The second proposed safe
harbor would have protected certain
arrangements involving donations of
electronic health records software before
adoption of certification criteria.
D. Summary of the Final Rulemaking
In this final rulemaking, we are
adding two new safe harbors to the
existing regulations at 42 CFR 1001.952:
One protecting certain arrangements
involving electronic prescribing
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technology (new 42 CFR 1001.952(x))
and one protecting certain arrangements
involving interoperable electronic
health records software or information
technology and training services (new
42 CFR 1001.952(y)). (For purposes of
this rulemaking referred to, respectively,
as the ‘‘electronic prescribing safe
harbor’’ and the ‘‘electronic health
records safe harbor.’’) For the reasons
explained below in Section II, we are
abandoning the proposal to have
separate pre- and post-interoperability
safe harbors for electronic health
records arrangements.
OIG has a longstanding concern about
the provision of free or reduced price
goods or services to an existing or
potential referral source. There is a
substantial risk that free or reduced
price goods or services may be used as
a vehicle to disguise or confer an
unlawful payment for referrals of
Federal health care program business.
Financial incentives offered, paid,
solicited, or received to induce or in
exchange for generating Federal health
care business increase the risks of,
among other problems: (i)
Overutilization of health care items or
services; (ii) increased Federal program
costs; (iii) corruption of medical
decision making; and (iv) unfair
competition. Thus, consistent with the
structure and purpose of the antikickback statute and the regulatory
authority at section 1128B(b)(3)(E) of the
Act, we believe any safe harbor for
electronic health records arrangements
should protect beneficial arrangements
that would eliminate perceived barriers
to the adoption of electronic health
records without creating undue risk that
the arrangements might be used to
induce or reward the generation of
Federal health care program business.
For the convenience of the public, we
are providing the following chart that
lays out schematically the overall
structure and approach of the final safe
harbors, details of which are provided
below in sections II. B. and II. C.
Readers are cautioned that the final safe
harbors contain additional conditions
and information not summarized here.
MMA-mandated electronic prescribing safe
harbor
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Authority for Final Safe Harbor ..........................
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Electronic health records arrangements safe
harbor
Section 101 of the Medicare Prescription
Drug, Improvement, and Modernization Act
of 2003.
Section 1128B(b)(3)(E) of the Social Security
Act.
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MMA-mandated electronic prescribing safe
harbor
Electronic health records arrangements safe
harbor
Covered Technology ..........................................
Items and services that are necessary and
used solely to transmit and receive electronic prescription information.
Includes
hardware,
software,
internet
connectivity, and training and support services.
Standards with Which Donated Technology
Must Comply.
Final standards for electronic prescribing as
adopted by the Secretary.
Donors and Recipients ......................................
As required by statute, protected donors and
recipients are hospitals to members of their
medical staffs, group practices to physician
members, PDP sponsors and MA organizations to network pharmacists and pharmacies, and to prescribing health care professionals.
Selection of Recipients ......................................
Donors may not select recipients using any
method that takes into account the volume
or value of referrals from the recipient or
other business generated between the parties.
No limit on the value of donations of electronic prescribing technology.
Software necessary and used predominantly
to create, maintain, transmit, or receive
electronic health records. Software must include an electronic prescribing component.
(Software packages may also include functions related to patient administration, for
example, scheduling, billing, and clinical
support.) Information technology and training services, which could include, for example, internet connectivity and help desk support services.
Does not include hardware.
Electronic health records software that is
interoperable. Certified software may be
deemed interoperable under certain circumstances. Electronic prescribing capability must comply with final standards for
electronic prescribing adopted by the Secretary.
Protected donors are (i) individuals and entities that provide covered services and submit claims or requests for payment, either
directly or through reassignment, to any
Federal health care program and (ii) health
plans. Protected recipients are individuals
and entities engaged in the delivery of
health care.
Donors may not select recipients using any
method that takes into account directly the
volume or value of referrals from the recipient or other business generated between
the parties.
Recipients must pay 15% of the donor’s cost
for the donated technology.
The donor (or any affiliate) must not finance
the recipient’s payment or loan funds to the
recipient for use by the recipient to pay for
the technology.
Safe harbor sunsets on December 31, 2013.
Value of Protected Technology .........................
None .................................................................
II. Summary of Public Comments and
OIG Responses
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Expiration of the Safe Harbor ............................
specific to the electronic prescribing
safe harbor; (3) comments specific to the
electronic health records safe harbor;
and (4) comments specific to
community-wide health information
systems.
OIG received a total of 71 timely filed
comments from entities and individuals.
The majority of the comments came
from hospitals and health systems, trade
associations, and vendors. OIG also
received comments from information
technology organizations, health plans,
nonprofit organizations, pharmaceutical
manufacturers, pharmacies, and
physician organizations. In addition,
OIG participated in an Open Door
Forum organized by CMS on November
9, 2005, at which various stakeholders
addressed a wide array of issues.
Overall, the commenters welcomed
the establishment of safe harbors for
electronic prescribing and electronic
health records technology arrangements.
However, we received many specific
comments about various aspects of the
proposed rules. We have divided the
summaries of the public comments and
our responses into four parts: (1)
General comments for all of the
proposed safe harbors; (2) comments
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A. General Comments
Comment: Most commenters
supported the promulgation of safe
harbors for electronic prescribing and
electronic health records arrangements.
Commenters observed that both
Congress and the Administration have
recognized the compelling need for
rapid and widespread adoption of
electronic prescribing and electronic
health records technology. Several
commenters urged that fraud and abuse
concerns not impede the adoption of
health information technology. In this
regard, some commenters suggested that
the final regulations should better
balance the goal of preventing fraud and
abuse in the short-term with the goal of
creating incentives for health
information technology arrangements
that result in greater fraud reduction,
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increased quality and efficiency, and
better patient care. One commenter
asserted that investments in health
information technology and the desire
to provide an incentive to participate in
health information technology systems
do not raise typical fraud and abuse
concerns present with other financial
arrangements. However, another
commenter noted that the proposed rule
generally struck an appropriate balance
between the needs of physicians who
may require assistance to develop health
information technology systems and the
underlying purposes of the Federal
fraud and abuse laws.
Response: We disagree with the
commenter that suggested that financial
arrangements involving incentives in
the form of health information
technology do not pose the same fraud
and abuse concerns as other financial
arrangements between parties in a
potential referral relationship. Indeed,
our enforcement experience
demonstrates that improper
remuneration for Federal health care
program business may take many forms,
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including free computers, facsimile
machines, software, and other goods
and services. However, we recognize
that certain transfers of health
information technology between parties
with actual or potential referral
relationships may further the important
national policy of promoting
widespread adoption of health
information technology to improve
patient safety, quality of care, and
efficiency in the delivery of health care.
We believe the final rule strikes the
appropriate balance between promoting
the adoption of health information
technology and protecting against fraud
and abuse.
Comment: Several commenters urged
that Congress and the Administration
need to do more to offer meaningful
financial incentives for practitioners to
accept the increased cost and workflow
burdens associated with the
implementation of health information
technology, for example, by providing
modest add-on payments to physicians
who employ health information
technology as part of overall quality
improvement measures. Some
commenters observed that the proposed
regulations would remove a minor
impediment to the adoption of health
information technology, but that the
Department must play a larger role in
providing capital for the technologies
that assist physicians in providing
quality care and avoiding medical
errors.
Response: These comments address
matters outside the scope of this
rulemaking. The Administration
supports the adoption of health
information technology as a normal cost
of doing business. The 2007 Budget
states that ‘‘[t]he Administration
supports the adoption of health
information technology (IT) as a normal
cost of doing business to ensure patients
receive high quality care.’’
Comment: Some commenters
complained that the proposed safe
harbors were too narrow and vague.
These commenters urged that the final
safe harbors should be easy to
understand, interpret, and enforce so
that donors and recipients can readily
distinguish permissible activities from
those that violate the statute. Some
commenters believed that the proposed
rules were too complex and might have
the unintended effect of discouraging
participation in health information
technology arrangements.
Response: As described elsewhere in
this preamble, we have adopted a
number of modifications and changes
that address the commenters’ concerns.
While the final safe harbor at
§ 1001.952(x) addresses only electronic
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prescribing arrangements, the final safe
harbor at § 1001.952(y) protects a broad
scope of arrangements involving
electronic health records technology.
We have made a number of changes that
clarify and simplify the final rules. We
have endeavored to create bright line
provisions to the extent possible. We
reiterate that compliance with a safe
harbor does not necessarily distinguish
between lawful and unlawful activities
under the Federal anti-kickback statute.
Compliance with a safe harbor is
voluntary; arrangements that do not
comply are not per se illegal. As we
explained in the preamble to the 1991
final safe harbors regulations:
* * * If a person participates in an
arrangement that fully complies with a given
[safe harbor] provision, he or she will be
assured of not being prosecuted criminally or
civilly for the arrangement that is the subject
of that provision * * * This [safe harbor]
regulation does not expand the scope of
activities that the statute prohibits. The
statute itself describes the scope of illegal
activities. The legality of a particular
business arrangement must be determined by
comparing the particular facts to the
proscriptions of the statute.
The failure to comply with a safe harbor
can mean one of three things. First * * * it
may mean that the arrangement does not fall
within the ambit of the statute. In other
words, the arrangement is not intended to
induce the referral of business reimbursable
under Medicare or Medicaid; so there is no
reason to comply with the safe harbor
standards, and no risk of prosecution.
Second, at the other end of the spectrum,
the arrangement could be a clear statutory
violation and also not qualify for safe harbor
protection. In that case, assuming the
arrangement is obviously abusive,
prosecution would be very likely.
Third, the arrangement may violate the
statute in a less serious manner, although not
be in compliance with a safe harbor
provision. Here, there is no way to predict
the degree of risk. Rather, the degree of risk
depends on an evaluation of the many factors
which are part of the decision-making
process regarding case selection for
investigation and prosecution * * *. (56 FR
35952, 35954; July 29, 1991).
We do not believe Congress, in
enacting section 1860D–4(e)(6) of the
Act, intended to suggest that a new safe
harbor is needed for all or even most
arrangements involving the provision of
electronic prescribing items and
services. Nor do we believe a safe harbor
is needed for all electronic health
records arrangements. In general, fair
market value arrangements that are
arm’s-length and do not take into
account in any manner the volume or
value of Federal health care program
business, or arrangements that do not
have as one purpose the generation of
business payable by a Federal health
care program, should not raise concerns
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under the anti-kickback statute. In
addition, many arrangements can be
structured to fit in existing safe harbors.
Comment: Some commenters
observed that in describing the
nonmonetary remuneration that would
be included in the proposed safe
harbors, the proposed safe harbors did
not reflect the many existing
combinations and varieties of electronic
prescribing, electronic health records,
and similar technology.
Response: As discussed more fully
below, we believe that the final safe
harbors are sufficiently broad to
accommodate the most essential current
and evolving electronic prescribing and
electronic health records technology.
We started this rulemaking process by
looking to the guidance from the
Congress in section 101 of the MMA
with respect to electronic prescribing
technology. Using our regulatory
authority, we have added a separate safe
harbor for arrangements involving
electronic health records software or
information technology and training
services. We believe that we have
appropriately balanced the goal of
promoting widespread adoption of
health information technology against
the significant fraud and abuse concerns
that stem from the provision of free or
reduced cost goods or services to actual
or potential referral sources.
Comment: A commenter suggested
that the final regulations should include
provisions that allow CMS to evaluate
and ensure that the regulatory
requirements, once enacted, have not
negatively impacted key stakeholders or
business segments within the healthcare
industry.
Response: It would be inappropriate
for a safe harbor under the anti-kickback
statute to include a provision for
ongoing CMS evaluation. Like all
regulatory safe harbors, OIG may in
future rulemaking propose
modifications or clarifications to the
safe harbor conditions, as appropriate.
OIG annually solicits suggestions from
the industry for new and modified safe
harbors in accordance with section 205
of the Health Insurance Portability and
Accountability Act of 1996.
Comment: We solicited comments on
whether and, if so, how, to take into
account recipient access to publicly
available software at free or reduced
prices. One commenter urged that the
availability of free public software
should not impact the design of the final
safe harbors. In addition, the commenter
urged that physicians and hospitals be
granted substantial latitude in selecting
interoperable technology that best meets
their needs.
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Response: Upon further
consideration, we have concluded that
it is not necessary to take the
availability of publicly available
software into account in developing the
final safe harbors. Hospitals, physicians,
and other donors and recipients will
have great latitude in selecting
technology that will qualify for safe
harbor protection. Nothing in this rule
limits the choice of health information
technology, although certain transfers of
technology, such as non-interoperable
electronic health records software (as
discussed below), would not qualify for
safe harbor protection, because it would
not meet all safe harbor conditions. As
noted elsewhere, arrangements that fall
outside a safe harbor must be evaluated
under the anti-kickback statute on a
case-by-case basis.
Comment: Some commenters
suggested that the safe harbors under
the anti-kickback statute should mirror
the exceptions under the physician selfreferral law in all respects in order to
promote the rapid and widespread
adoption of electronic prescribing and
electronic health records technology. A
few commenters suggested that we not
adopt anti-kickback statute safe harbors
or that any safe harbors should be
stricter than any corresponding
exceptions to the physician self-referral
law.
Response: We believe consistency
between these safe harbors and the
corresponding exceptions under the
physician self-referral law is preferable.
We have attempted to ensure as much
consistency between the two sets of
regulations as possible given the
underlying differences in the two
statutory schemes.
Comment: Some commenters wanted
the final safe harbors to preempt any
State laws or regulations that conflict
with the requirements of the safe
harbors.
Response: The MMA specifically
dictated that the Part D electronic
prescribing standards would preempt
any State law or regulation that (1) is
contrary to the adopted final Part D
electronic prescribing standards or that
restricts the Department’s ability to
carry out Part D of Title XVIII and (2)
pertains to the electronic transmission
of medication history and information
on eligibility, benefits, and prescriptions
with respect to covered Part D drugs
under Part D. However, no similar
mandate was provided with respect to
the anti-kickback safe harbor for the
donation of electronic prescribing
technology. Moreover, the legal
authority for the electronic health
records safe harbor in this rule is
derived from section 1128B(b)(3)(E) of
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the Act, which similarly does not
provide authority to preempt State antikickback laws.
Comment: Some commenters inquired
whether the electronic information that
is transmitted via electronic prescribing
or electronic health records systems
would be considered remuneration for
purposes of the anti-kickback statute.
Response: Whether a particular item
or service constitutes remuneration for
purposes of the anti-kickback statute
depends on the particular facts and
circumstances. Typically, information
about a particular patient’s health
status, medical condition, or treatment
exchanged between or among the
patient’s health care providers and
suppliers for the purpose of diagnosing
or treating the patient would not
constitute remuneration to the recipient
of the information. In this regard, the
electronic exchange of patient health
care information is comparable to the
exchange of such information by mail,
courier, or telephone conversation.
Thus, when related to the care of
individual patients, information such as
test results, diagnosis codes,
descriptions of symptoms, medical
history, and prescription information
are part of the delivery of the health care
services and would not have
independent value to the recipient.
However, in other situations,
information may be a commodity with
value that could be conferred to induce
or reward referrals. For example, data
related to research or marketing
purposes, or information otherwise
obtained through a subscription or for a
fee, could constitute remuneration for
purposes of the anti-kickback statute.
B. Electronic Prescribing Safe Harbor
Required Under Section 101 of the MMA
(42 CFR 1001.952(x))
Summary of the Proposed Rule
On October 11, 2005, as mandated in
the MMA, we proposed adding a new
paragraph (x) to the existing safe harbor
regulations at 42 CFR 1001.952 for
certain electronic prescribing
arrangements. Specifically, we
proposed:
• Protecting certain arrangements
involving the provision of nonmonetary
remuneration—in the form of hardware,
software, or information technology or
training services—necessary and used
solely to receive and transmit electronic
drug prescription information. We
construed this language broadly to
include internet connectivity services
(of all types, including broadband or
wireless), and upgrades of equipment
and software that significantly enhanced
functionality.
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• Requiring that the donated
technology must be part of, or used to
access, a prescription drug program that
meets applicable standards under
Medicare Part D.
• Protecting technology provided by a
hospital to its medical staff; by a
medical group practice to its members;
and by a PDP sponsor or MA
organization to prescribing health care
professionals, as well as to pharmacies
and pharmacists in the plan’s network,
so long as all of the safe harbor
conditions were satisfied.
• Prohibiting a recipient from making
donation of technology a condition of
doing business with a donor.
• Requiring that protected
arrangements be fully and completely
documented.
• Excluding donations of technology
that replicate technology the recipient
already possesses. To ensure
compliance with this provision, we
proposed requiring recipients to certify
that they did not already possess
equivalent technology. Moreover, we
proposed that donors would not be
protected if they knew or should have
known that the recipients already
possessed equivalent technology.
• Requiring that neither a recipient’s
eligibility for donated technology, nor
the amount or nature of the technology,
could be determined in any manner that
directly or indirectly takes into account
the volume or value of referrals or other
business generated between the parties.
• Requiring that the parties not take
any action to impede the compatibility
or interoperability of the technology.
• Requiring that the donor not restrict
the ability of the recipient to use the
technology for any patient, regardless of
payor.
• Limiting the value of donated
technology that could be protected by
the safe harbor.
• In deference to the limitations
imposed by the ‘‘used solely’’ standard
set forth in the MMA, promulgating a
separate safe harbor for multi-functional
items and services used for electronic
prescribing (e.g., connectivity services
and multi-use hand held devices or
computers).
Summary of the Final Rule
The final safe harbor at 42 CFR
1001.952(x) adopts the proposed safe
harbor, with the following key
clarifications:
• The final rule protects technology
necessary and used solely to receive and
transmit any prescription information,
whether related to drugs or to other
items or services normally ordered by
prescription (e.g., laboratory tests and
durable medical equipment orders).
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• Donations may be in an unlimited
amount.
• We have abandoned our proposal to
require that recipients provide a written
certification that the donated technology
is not technically or functionally
equivalent to the technology the
recipient already possessed or had
obtained. We have added language that
permits arrangements to be
memorialized through cross-referencing
incorporation of prior agreements
between the parties.
• We are not finalizing a separate safe
harbor for multi-functional electronic
prescribing technology.
General Comments
Comment: Many commenters stated
that the proposed electronic prescribing
safe harbor was too narrow to be useful
and should be merged into an electronic
health records safe harbor, noting that
physicians would likely resist adopting
stand-alone electronic prescribing
systems. One commenter observed that
the proposed rule was generally in
accordance with congressional intent
underlying section 101 of the MMA.
Response: We agree that the proposed
safe harbor was consistent with
congressional intent. As we are not free
to ignore a congressional mandate, we
must promulgate the electronic
prescribing safe harbor described in
section 101 of the MMA. However, we
are also promulgating a separate safe
harbor for electronic health records
arrangements that also incorporate an
electronic prescribing component. This
new safe harbor should address the
commenters’ concerns.
1. Protected Nonmonetary
Remuneration
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a. Necessary and Used Solely
In the proposed rule, we proposed
protecting items and services that are
necessary and used solely to transmit
and receive electronic prescription drug
information. We stated that the safe
harbor would not protect arrangements
in which donors provided items or
services that were technically or
functionally equivalent to items that the
recipient already possessed or services
that the recipient had already obtained.
We proposed requiring the recipient to
certify that the items and services
provided were not technically or
functionally equivalent to those that the
recipient already possessed or had
already obtained. We also proposed that
arrangements would not be protected if
the donor knowingly provided
technology that duplicated the
recipient’s existing technology. We
indicated that upgrades of equipment or
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software that significantly enhanced the
functionality of the item or service
would be considered ‘‘necessary’’ for
purposes of the safe harbor.
Because the term ‘‘necessary’’
appeared in our proposed rulemaking in
the discussions of all three proposed
safe harbors, many commenters chose to
address this requirement primarily in
the context of the proposed safe harbors
for electronic health records
arrangements. Thus, there is a detailed
discussion of our interpretation of the
term ‘‘necessary’’ in section II.C.1.b of
this preamble, which addresses the new
electronic health records safe harbor.
We intend to interpret the term
‘‘necessary’’ uniformly for both new safe
harbors. We are addressing here only
those comments received on the
proposed electronic prescribing safe
harbor requirement that transferred
technology be ‘‘necessary and used
solely’’ to receive and transmit
electronic prescription information.
Comment: One commenter observed
that the ‘‘necessary and used solely’’
requirement ensures that items and
services will be used to encourage
electronic prescribing activities. This
commenter suggested including an
additional requirement that the items or
services be clearly intended to promote
interoperability of health information
and the improvement of quality in a
clinical setting.
Response: We agree that it was the
intent of Congress to encourage
electronic prescribing activities, in part,
through the development of a safe
harbor for transfers of certain items and
services necessary and used solely for
electronic prescribing transactions.
However, the intent-based additional
standard suggested by the commenter,
while reflecting laudable goals, is not
sufficiently ‘‘bright line’’ for purposes of
this safe harbor. We have included a
requirement at § 1001.952(x)(2)
intended to ensure that protected
technology meets Part D electronic
prescribing standards applicable at the
time of the donation, including any
standards relating to interoperability.
Comment: Some commenters
expressed concern that OIG has taken an
unnecessarily narrow interpretation of
the statutory language ‘‘necessary and
used solely to receive and transmit
electronic prescription information in
accordance with the standards
promulgated under this subsection
[section 101 of the MMA] * * *.’’ One
commenter explained its view that the
phrase ‘‘necessary and used solely’’
should be read so that the word
‘‘necessary’’ modifies the phrase ‘‘to
receive and transmit electronic
prescription information’’ and the
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phrase ‘‘used solely’’ modifies the
phrase ‘‘in accordance with the
standards promulgated under this
subsection.’’ In other words, in this
commenter’s view the protected
hardware, software and services must be
‘‘necessary’’ to perform electronic
prescribing transactions ‘‘solely’’ in
accordance with CMS established data
interchange standards. This commenter
explained that this interpretation would
be consistent with the purpose of the
safe harbor and the practical realities of
computers and electronic transactions.
Response: We appreciate the
comment; however, we do not believe
the commenter’s proposed
interpretation is the best or most logical
reading of the statutory language. We
believe the better and less strained
reading is that Congress intended for all
donated technology to be necessary for
the receipt and transmission of
electronic prescription information and
to be used solely for that purpose. The
requirement that the items and services
be ‘‘necessary and used solely’’ for
transmitting and receiving electronic
prescribing information helps minimize
the potential for abuse. Limiting the safe
harbor to necessary items and services
helps ensure the safe harbor does not
become a means of conveying valuable
items and services that do not further
the underlying policy goals and that
might, in reality, constitute disguised
referral payments.
As we noted in the preamble to the
proposed rulemaking, we believe
Congress included the ‘‘used solely’’
requirement to safeguard against
abusive arrangements in which the
donated technology might constitute a
payment for referrals because it might
have additional value attributable to
uses other than electronic prescribing.
See 70 FR at 59018. For example, a
computer that a physician can use to
conduct office or personal business
might have value to the physician apart
from its electronic prescribing purpose;
if this value is transferred to the
physician in connection with referrals,
the statute would be implicated.3
Accordingly, consistent with section
101 of the MMA, the final safe harbor
requires that the protected items and
services be ‘‘necessary and used solely’’
to transmit or receive electronic
prescribing information.
We note that software that bundles
general office management, billing,
scheduling, electronic health records, or
other functions with the electronic
3 See, e.g., 56 FR 35952, 35978 (July 29, 1991)
(noting that a computer that has independent value
to a physician may constitute an illegal
inducement).
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prescribing features would not meet the
‘‘used solely’’ requirement and would
not be protected by the final electronic
prescribing safe harbor. In some cases,
the provision of such bundled software
may be eligible for protection under the
new safe harbor for electronic health
records arrangements at § 1001.952(y).
Comment: A commenter suggested
that multi-functional technology be
considered ‘‘necessary’’ so long as it
includes all components required for a
physician to prescribe electronically,
even if the technology has other
functions (e.g., a handheld device that
can be used for more than electronic
prescribing).
Response: The commenter’s
suggestion, as we understand it, is not
consistent with the MMA statutory
language.
Comment: Many commenters
requested that we eliminate the
proposed requirement that recipients
provide written certification that the
donated technology is not technically or
functionally equivalent to technology
the recipient already possesses,
expressing concern about the possible
difficulty of making this determination,
the lack of technical expertise on the
part of some recipients, and the
increased cost that could arise by having
an outside expert provide a
determination of technical or functional
equivalence. One commenter supported
OIG’s interpretation of the term
‘‘necessary’’ as permitting upgrades of
equipment or software that significantly
enhance the functionality of an item or
service. Another commenter suggested
that we should not require that the
upgrades ‘‘significantly’’ enhance the
functionality of the item or service.
Rather, the commenter believed that we
should allow the marketplace to
determine whether an upgrade
constitutes a beneficial improvement.
Response: For the reasons noted in
detail below in section II.C.1.b.i, with
respect to the electronic health records
safe harbor, we are not adopting the
proposed requirement that recipients
provide written certification that the
donated technology is not technically or
functionally equivalent to technology
the recipient already possesses.
However, while we are eliminating the
certification requirement, we do not
believe items and services are
‘‘necessary’’ for electronic prescribing if
the recipient already possesses
equivalent items or services. The
provision of equivalent items and
services poses a heightened risk of
abuse, since such arrangements
potentially confer independent value on
the recipient (i.e., the value of the
existing items and services that might be
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put to other uses) unrelated to the need
for electronic prescribing technology.
Thus, if a donor knows that the
recipient already possesses the
equivalent items or services, or acts in
deliberate ignorance or reckless
disregard of that fact, the donor will not
be protected by the safe harbor. Thus,
prudent donors may want to make
reasonable inquires of potential
recipients and document the
communications. We do not believe this
requirement necessitates the hiring of
technical experts by either the donor or
the recipient. Further, with respect to
upgrades of equipment or software, we
agree with the commenter that
distinguishing ‘‘significant’’
enhancements from other beneficial
improvements introduces unnecessary
complexity. Under the final safe harbor,
any upgrade that is necessary and used
solely to transmit and receive electronic
prescribing information will be
protected (so long as all other safe
harbor conditions are satisfied).
Comment: Many commenters noted
that it would be impractical to require
physicians to acquire or use software
and hardware solely for electronic
prescribing. Several commenters noted
that, in most cases, single-use
technology is of limited value to a
physician, and could result in
inefficiencies. Another commenter
expressed concern that the ‘‘used
solely’’ standard would preclude the use
of robust electronic clinical support
tools, such as tools to identify drug-todrug interactions, or to conduct drug-tolaboratory or prescription data analysis.
This commenter urged that any
exceptions from the fraud and abuse
laws for health information technology
arrangements promote access to all
information needed by physicians to
evaluate alternative drug therapies,
identify potential drug-to-drug
interactions, and to improve safety,
quality, and efficiency of patient care.
Response: The ‘‘used solely’’
condition derives directly from the
MMA language. We believe that many of
the arrangements of interest to the
commenters are best addressed by the
electronic health records safe harbor,
which is not restricted to technology
used solely for electronic prescribing.
The MMA-mandated electronic
prescribing safe harbor is reasonably
interpreted to encompass electronic
tools that provide information necessary
to formulate, transmit, or receive a
medically appropriate prescription for a
patient. These would include electronic
clinical support tools identifying
alternative drug therapies, drug-to-drug
interactions, or a payor’s formulary
information. The nature of the
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‘‘prescription data analysis’’ tools
referenced by the commenter is not
clear. We believe the appropriate
inquiry would be whether the tool is
used to formulate and transmit or
receive a medically appropriate
prescription for a patient. To the extent
the data analysis tool (or any other
electronic item or service) is used to
transmit or receive data unrelated to a
medically appropriate prescription for a
patient (e.g., data collected for
marketing purposes), the tool would not
be necessary for electronic prescribing
and would not come within the safe
harbor.
b. Covered Technology
In our proposed rule, we proposed
protecting hardware, software, or
information technology and training
services that met the various safe harbor
conditions. We interpreted our
proposed language to include
broadband or wireless internet
connectivity, training, information
technology support services, and other
items and services used in connection
with the transmission or receipt of
electronic prescribing information.
Comment: Various commenters
suggested that the scope of covered
technology should be expanded to
include: Billing, scheduling, and other
administrative functions;
implementation and maintenance of the
system; ‘‘upgrades;’’ and licenses, rights
of use, or intellectual property.
Commenters also urged that any safe
harbor cover educational sessions and
consulting assistance related to the
electronic prescribing technology.
Commenters generally agreed that the
provision of equipment for personal,
non-medical purposes should not be
protected. One commenter suggested
that it would not be possible to develop
a comprehensive list of protected
technology transfers that would
sufficiently reflect all possible
electronic prescribing items and
services. The commenter recommended
that OIG periodically review the scope
of protected items and services, and
expand it as needed.
Response: We agree that it would be
difficult to provide a comprehensive list
of specific items and services covered
by the safe harbor. While a specific list
would provide a ‘‘bright line’’ rule, in
this case it would also impede the
ability of the safe harbor to
accommodate novel or rapidly evolving
technologies in the marketplace. For
these reasons, we are not promulgating
a specific list of protected items and
services.
Consistent with the MMA mandate,
covered items and services under
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§ 1001.952(x) include ‘‘hardware,
software, and information technology
and training services’’ that are necessary
and used solely for electronic
prescribing and that meet all other safe
harbor conditions. We believe that
licenses, rights of use, intellectual
property, upgrades, and educational and
support services (including, for
example, help desk and maintenance
services) are items and services that can
potentially fit in the safe harbor, if all
safe harbor conditions are met. Billing,
scheduling, administrative, and other
general office software cannot.
Operating software that is necessary for
the hardware to operate can qualify for
safe harbor protection because it is
integral to the hardware. Moreover,
operating software is distinct from other
software applications that are not
necessary to transmit or receive
electronic prescribing information.
Patches designed to link the donor’s
existing electronic prescribing system to
the recipient’s existing electronic
prescribing system can qualify for
protection. The provision of technology
for personal, non-medical purposes is
not protected, nor is the provision of
office staff.
Comment: We solicited comments on
whether the safe harbor should protect
electronic prescribing technology that is
used for the transmission of prescription
information for items and services that
are not drugs (e.g., durable medical
equipment or laboratory tests). Several
commenters suggested that the safe
harbor should support the use of
electronic prescribing technology for all
the functions currently accomplished
through written prescriptions, in order
to encourage provider utilization of
electronic prescribing technology to
increase safety, cost-effectiveness, and
efficiency. The commenters suggested
including electronic prescribing
technology used for prescribing medical
supplies and durable medical
equipment, physical therapy, dialysis
testing, laboratory tests, and other nondrug prescriptions. A commenter from
the clinical laboratory industry
supported a broad reach, but only if
clinical laboratories were included as
permissible donors under the safe
harbor.
Response: We agree generally with the
first set of commenters. We have
reviewed further the language in section
101 of the MMA. The MMA-mandated
safe harbor language requires that the
donated technology be capable of
receiving and transmitting ‘‘electronic
prescription information’’ in accordance
with the electronic prescribing
standards promulgated for purposes of
the MMA electronic prescription drug
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programs. We believe that the specific
term ‘‘electronic prescription
information’’ as commonly used and as
used in the MMA-mandated safe harbor
provision retains a broad meaning, to
include information about prescriptions
for any items or services that would
normally be accomplished with a
written prescription. In contrast, the
information to be transmitted under an
electronic prescription drug program
established under the MMA is clearly
limited to drug information for Part D
eligible individuals. Moreover, we do
not think that the statutory language is
intended to be construed to prohibit the
use of the donated technology for the
transmission and receipt of orders or
prescriptions for other items and
services or to require the use of separate
systems depending on the item or
service to be prescribed or ordered. We
believe this approach is consistent with
the objectives of the electronic
prescribing standards and the patient
safety, quality, and efficiency goals
underlying the mandated exception.
Accordingly, we are defining
‘‘prescription information’’ for purposes
of the safe harbor to mean information
about prescriptions for drugs or any
other item or service normally
accomplished through a written
prescription.
With respect to the clinical laboratory
commenter, consistent with the MMA
language, we are not including clinical
laboratories as permissible donors under
the safe harbor. However, we have
expanded the new safe harbor for
electronic health records arrangements
to include clinical laboratories.
2. Final Standards for Electronic
Prescribing
The MMA required that donated
electronic prescribing technology
comply with the final standards for
electronic prescribing as adopted by the
Secretary. The first set of these
standards (the ‘‘foundation standards’’)
was finalized by the Department on
November 7, 2005. See 70 FR 67568. We
received no comments on this issue.
The final safe harbor at § 1001.952(x)(2)
requires that the donated technology
comply with the applicable standards
for electronic prescribing as adopted by
the Secretary.
3. Donors and Recipients Protected by
the Safe Harbor
We proposed protecting the same
categories of donors and recipients
listed in section 101 of the MMA.
Because most commenters commented
on this issue jointly with the proposed
electronic health records arrangements
safe harbors, we have included a
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detailed description of these comments
in our discussion of the electronic
health records safe harbor below at
section II.C.3. of this preamble.
Comment: We received numerous
comments requesting that we expand
the list of protected donors and
recipients to include a variety of
providers, practitioners, suppliers, and
their affiliates.
Response: We are finalizing the safe
harbor consistent with the MMA
mandated donors and recipients. We are
not persuaded that additional donors or
recipients are necessary to achieve the
purpose of this safe harbor for electronic
prescribing. The enumerated categories
of donors and recipients reflect
individuals and entities centrally
involved in the ordering, processing,
filing, or reimbursing of prescriptions.
Accordingly, protected donors and
recipients under § 1001.953(x) are:
hospitals to members of their medical
staffs; group practices to their physician
members; and PDP sponsors and MA
organizations to network pharmacists
and pharmacies, and to prescribing
health care professionals. For the
reasons set forth in the preamble to the
proposed rulemaking, and in the
absence of any comments to the
contrary, we are adopting our proposed
definitions of group practice, member of
the group practice, prescribing health
care professional, PDP sponsor and MA
organization. Group practice shall have
the meaning set forth at § 411.352;
member of the group practice shall
mean all persons covered by the
definition of ‘‘member of the group or
member of a group practice’’ at
§ 411.351, as well as other prescribing
health care professionals who are
owners or employees of the group
practice; prescribing health care
professional shall mean a physician or
other health care professional licensed
to prescribe drugs in the State in which
the drugs are dispensed; PDP sponsor or
MA organization shall have the
meanings set forth at §§ 423.4 and 422.2,
respectively.
We have revisited the issue of
protected donors and recipients in the
context of the electronic health records
arrangements safe harbor at
§ 1001.952(y), as discussed in the
preamble below at section II.C.3.
4. Additional Conditions on the
Provision of Qualifying Electronic
Prescribing Technology
Promoting Compatibility and
Interoperability
Most commenters addressed the issue
of the compatibility and interoperability
of the donated technology with respect
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to all three proposed safe harbors. We
have included a discussion of these
comments in the section of this
preamble addressing the electronic
health records safe harbor at
§ 1001.952(y). For the reasons set forth
there, we have adopted, with clarifying
modifications, our proposed restriction
on disabling the compatibility and
interoperability of donated technology
under the electronic prescribing safe
harbor at § 1001.952(x)(3). For clarity,
we have included in § 1001.952(x) the
same definition of ‘‘electronic health
record’’ found in § 1001.952(y).
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Limit on Value of Technology
In our proposed rule, we solicited
public comments on various means by
which we might limit the value of
protected technology under the
electronic prescribing safe harbor. We
indicated that we were considering a
limit on the value of protected
technology as a further safeguard against
fraud and abuse, since, in our
experience, the risk of fraud and abuse
generally (although not always)
increases with the value of the
remuneration offered. We received a
large number of comments on this topic,
the majority of which opposed any limit
on the value of donated technology.
Because these commenters typically
commented jointly on this issue for all
three proposed safe harbors (and each
commenter typically had the same
concerns under all three proposed safe
harbors), an extensive description of
these comments is found in section
II.C.6. of this preamble. Having
considered the comments, we are
persuaded not to limit the value of the
donated technology under the new safe
harbor for electronic prescribing
arrangements at § 1001.952(x). We
believe the final conditions of the safe
harbor, including the ‘‘necessary and
used solely’’ requirement, should be
sufficient to minimize the potential for
abuse. Although we are not limiting the
value of donated technology, it is not
our expectation that donors will
necessarily want or be in a position to
donate unlimited amounts of electronic
prescribing technology.
Selection of Recipients of Donated
Technology
We proposed additional conditions in
proposed §§ 1001.952(x)(5) and (x)(6)
related to how donors select recipients
of the electronic prescribing technology.
These proposed conditions were
designed to minimize the risk that
donors would select recipients for the
improper purpose of inducing or
rewarding the generation of Federal
health care program business. Proposed
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§ 1001.952(x)(5) would require that the
recipients (including their groups,
employees, or staff) refrain from making
the donation of qualifying electronic
prescribing technology a condition of
doing business with the donor.
Proposed § 1001.952(x)(6) would
preclude safe harbor protection if the
eligibility of a recipient to receive items
and services from a donor, or the
amount or nature of the items or
services received, is determined in any
manner that takes into account the
volume or value of the recipient’s
referrals or other business generated
between the parties. We observed that
this requirement would not preclude
selecting a recipient based upon the
total number of prescriptions written by
the recipient, but would preclude
selecting the recipient based upon the
number or value of prescriptions written
by the recipient that are dispensed or
paid by the donor (as well as on any
other criteria based on any other
business generated between the parties).
(70 FR at 59021).
Comment: Commenters requested that
we confirm that donors can select
recipients of electronic prescribing
technology based upon the total number
of prescriptions written by the recipient,
but cannot select them based upon the
number or value of prescriptions written
by the recipient that are dispensed or
paid by the donor (or on any other
criteria based on any other business
generated between the parties). A
commenter supported excluding from
safe harbor protection donations that
take into account directly the volume or
value of referrals or other business
generated between the parties. This
commenter expressed concern that
donors would employ such selection
criteria to disadvantage small practices
and practices in rural or underserved
areas. To counter this potential
disadvantage, the commenter suggested
that the final rule include incentives to
promote donations to small practices,
especially in rural and underserved
areas. Other commenters suggested that
donors, such as PDP sponsors, MA
organizations, and pharmacy benefits
managers, should be permitted to
consider the volume and value of
prescriptions written by the recipient,
particularly for a donor’s patient or plan
population.
Response: To safeguard against the
use of donated technology to disguise
referral payments, we are adopting our
proposal that neither the eligibility of a
recipient to receive items and services,
nor the amount or nature of the items
or services received, may be determined
in a manner that takes into account,
directly or indirectly, the volume or
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value of the recipient’s referrals or other
business generated between the parties.
Notwithstanding, in the instant case, we
believe that prohibiting the selection of
recipients based on total number of
prescriptions written by the recipient
would be inconsistent with the MMA
mandate and congressional intent to
promote the use of electronic
prescribing. Accordingly, we confirm
our interpretation, for purposes of the
safe harbor at § 1001.952(x), that donors
may select recipients of electronic
prescribing technology based upon the
total number of prescriptions written by
the recipient, but cannot select them
based upon the number or value of
prescriptions written by the recipient
that are dispensed or paid by the donor
(or on any other criteria based on any
other business generated between the
parties). Donors also may not select
recipients based on the overall value of
prescriptions written by the recipient or
on the volume or value of prescriptions
written by the recipient that are
reimbursable by any Federal health care
program.
We are not persuaded that PDP
sponsors or MA organizations should be
permitted to offer technology selectively
based on the volume or value of
business generated for the plan by the
recipient, especially in the context of
Part D, which includes some
reimbursement based on the plan’s
costs, rather than capitated payments.
The final safe harbor does not include
pharmacy benefit managers.
The safe harbor would not protect
arrangements that seek to induce a
recipient to change loyalties from other
providers or plans to the donor (e.g., a
hospital using an electronic prescribing
technology arrangement to induce a
physician who is on the medical staff of
another hospital to join the donor
hospital’s medical staff), because such
arrangements take into account business
generated for the donor.
We understand the commenter’s
concern about donors excluding rural
and underserved area physicians from
their health information technology
arrangements. Some donors may favor
large or urban practices over small or
rural ones. However, we can discern no
‘‘incentives’’ that could be included
appropriately in a safe harbor to address
this concern, nor has the commenter
proposed any with respect to assisting
rural or solo practitioners. We note that
our decision, explained elsewhere, not
to limit the value of technology that can
qualify under the safe harbor may assist
rural and solo practices insofar as
donors may want to provide them with
greater resources in recognition of their
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greater need for assistance in adopting
electronic prescribing technology.
Comment: Some commenters
supported our proposal to exclude from
safe harbor protection donations that are
a condition of doing business with the
donor.
Response: We are retaining the
proposed requirement that recipients (or
any affiliated group, employee, or staff
member) cannot make the receipt of
items or services a condition of doing
business with the donor. We have
clarified that the condition applies with
respect to all individuals and entities
affiliated with the recipient.
Documentation
We proposed at § 1001.952(x)(7) a
requirement that the arrangement for the
donation of electronic prescribing
technology be in writing, be signed by
the parties, identify with specificity the
items or services being provided and
their values, and include a certification
that the donated items and services not
be technically or functionally equivalent
to items and services the recipient
already has. We stated that to permit
effective oversight of protected
arrangements, the writing must cover all
qualifying electronic prescribing
technology provided by the donor (or
affiliated parties) to the recipient. For
example, if a donor provides a piece of
hardware under one arrangement and
subsequently provides a software
program, the agreement regarding the
software would have to include a
description of the previously donated
hardware (including its nature and
value).
Comment: Some commenters
supported the requirement that any
transfers of technology and services be
memorialized in a written agreement.
One commenter objected to including a
written agreement requirement in the
safe harbor, arguing that the
requirement would cause an
unnecessary delay and increase
paperwork. Another commenter
suggested that the safe harbor permit the
arrangement between the donor and
recipient to be captured through a
combination of agreements between the
recipient, donor, and service provider,
rather than one agreement. Commenters
also urged OIG to remove the technical
and functional equivalency certification
requirement from the safe harbor.
Response: We have adopted the
documentation requirement in the final
safe harbor at § 1001.952(x)(7) with
several modifications. With respect to
the condition requiring that the
documentation cover all of the
electronic prescribing items and
services to be provided by the donor (or
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affiliated parties) to the recipient, we
have added language to the final safe
harbor clarifying that the written
documentation requirement can be
satisfied by incorporating by reference
other agreements between the parties or
by the use of cross references to a master
list of agreements between the parties
that is maintained and updated
centrally, is available for review by the
Secretary upon request, and preserves
the historical record of agreements. We
have eliminated the certification of
technical and functional nonequivalency. Also, given our decision
not to limit the value of protected
donations, we have eliminated the
requirement that the agreement specify
the value of the donated technology.
However, in the interests of
transparency and accountability, we are
requiring that the parties document the
donor’s costs for the technology. We
have retained the remaining
documentation requirements, as
proposed, at § 1001.952 (x)(7). Finally,
nothing in this safe harbor requires that
agreements between donors and
recipients also be signed by third-party
vendors; however, such documentation
may be a prudent business practice.
All Payors Requirement
Comment: We proposed that, where
possible, recipients must be able to use
the protected technology for all patients
without regard to payor status.
Commenters that addressed the issue
universally supported this requirement.
Response: We agree and have
included this requirement in the final
safe harbor at § 1001.952(x)(4).
Commercial and Other Messaging
Comment: A commenter requested
clear and specific rules prohibiting
inappropriate commercial messaging
through electronic prescribing
technology, including electronic
detailing messages from a manufacturer
promoting a particular brand or brandname drug. This commenter explained
that such messaging may
inappropriately influence clinical
decision-making. The commenter gave
the following as examples of
inappropriate messaging: Messages
disguised as ‘‘clinical alerts’’ based
upon biased research not published in
the public domain and alerts purporting
to save a patient money when in reality
the out-of-pocket expense for the drug to
the patient is higher. Another
commenter suggested that OIG prohibit
commercial messaging and require that
donated technologies present
information in a neutral and transparent
manner so as not to influence clinical
decision-making improperly. Similarly,
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another commenter noted that pop-up
messaging could inappropriately
influence prescribing patterns. The
commenter provided the example of
making the procedure for prescribing
certain formulary drugs very easy and
straightforward, while attempts to
prescribe other formulary drugs trigger
multiple pop-up notices or require a
series of additional steps.
Response: Technology used for
marketing purposes would not meet the
‘‘necessary and used solely’’ standard
required by the MMA for the electronic
prescribing safe harbor, because
marketing information is not the type of
clinical support that is integral to
prescribing accurate and appropriate
items and services for patients.
We do not believe it would be feasible
or appropriate to regulate the content of
commercial messaging or formulary
compliance activities through these safe
harbors to the anti-kickback statute. The
regulation of speech is outside the scope
of this rulemaking. Nor, in any event,
would a condition in these safe harbors
related to the accuracy or objectivity of
the content of messages or formulary
activities be sufficiently ‘‘bright line’’ to
be practical or readily enforceable. That
said, the commenter raises important
concerns about messaging and
formulary activities. Nothing in this
rulemaking (either for the electronic
prescribing safe harbor at § 1001.952(x)
or for the electronic health records safe
harbor at § 1001.952(y)) should be
construed to approve of or authorize any
commercial messaging or formulary
compliance activity (or any other
conduct) that is prohibited by any
Federal, State, or local law or regulation.
Nothing in this rulemaking protects
parties from liability for improper
messaging or formulary activities,
including, without limitation, liability
for the promotion of adulterated,
misbranded, or unapproved drug or
devices, off-label marketing, consumer
fraud, inappropriate formulary
activities, and the like.
5. Multi-Functional Technology
We proposed using our regulatory
authority under section 1128B(b)(3)(E)
of the Act to create an additional safe
harbor to protect the provision by
donors to recipients of some limited
hardware (including necessary
operating system software) and
connectivity services used for more than
one function, so long as a substantial
use of the item or service is to receive
or transmit electronic prescription
information.
Comment: Most commenters
supported a safe harbor that would
extend protection to technology beyond
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that which is ‘‘necessary and used
solely’’ for electronic prescribing. Many
commenters expressed the hope that
multi-functional technology would
ultimately be captured in an electronic
health records safe harbor.
Response: We have decided not to
create a separate safe harbor for multifunctional hardware and connectivity.
Instead, we are creating a new safe
harbor for the protection of certain
arrangements involving electronic
health records software and services
(including connectivity services) that
will more directly further the overall
goal of widespread adoption of
interoperable electronic health records
technology without some of the fraud
and abuse risks inherent in gifts of
multi-functional hardware. The public
comments support this approach, as
more fully described in the next section.
As set forth below at § 1001.952(y), we
have finalized a single safe harbor for
certain electronic health records
software or information technology and
training services.
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C. Electronic Health Records
Arrangements Safe Harbor (42 CFR
1001.952(y))
Summary of the Proposed Rule
Prior to publication of the proposed
rulemaking, many in the hospital
industry, among others, raised the issue
of the need for safe harbor protection for
arrangements involving technology
other than technology used for
electronic prescribing. To encourage the
adoption of electronic health records
technology consistent with the ultimate
goal of achieving fully interoperable
electronic health records for all patients,
we proposed using our legal authority at
section 1128B(b)(3)(E) of the Act to
promulgate two safe harbors related to
electronic health records software and
directly related training services that are
necessary and used solely to receive,
transmit, or maintain electronic health
records of the donor’s or recipient’s
patients. We did not propose protecting
hardware in either safe harbor, because
we believed electronic health records
software and training services were the
components of electronic health records
systems most likely to be needed by
recipients, and because gifts of valuable,
multi-functional hardware (such as
computers and servers) would
inherently pose a higher risk of
constituting a disguised payment for
referrals.
The first proposed safe harbor would
have applied to donations made before
adoption by the Secretary of product
certification criteria, including criteria
for interoperability, functionality, and
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privacy and security of electronic health
records technology (‘‘product
certification criteria’’). (We referred to
this proposed safe harbor as the ‘‘preinteroperability’’ safe harbor.) See 70 FR
at 59022–23. Among other provisions,
we proposed:
• That the electronic health records
software would have to be essential to
and used solely for the transmission,
receipt, and maintenance of patients’
electronic health records and
prescription drug information.
• That the software would have to
include an electronic prescribing
component in accordance with the final
standards established by the Secretary
under the Part D electronic prescription
drug program.
• That the pre-interoperability safe
harbor would not protect the provision
of other types of technology (e.g.,
billing, scheduling, or general office
management software) or any software
used by the recipient to conduct
business or engage in activities
unrelated to the recipient’s medical
practice. We also proposed to exclude
from the safe harbor the provision of
staff to the recipient or its office.
• That we would define the term
‘‘electronic health records.’’
• That the safe harbor would include
documentation provisions comparable
to those proposed for the electronic
prescribing safe harbor.
• That the safe harbor would
preclude protection for any arrangement
in which the donor or its agents disable
the interoperability of any component of
the software or otherwise imposed
barriers to compatibility.
• That the safe harbor might limit the
aggregate value of protected technology
that a donor could provide to a recipient
under the pre-interoperability safe
harbor or in combination with the other
proposed safe harbors. We noted that we
were considering the same alternatives
we proposed for setting a value for the
electronic prescribing safe harbor. These
could include an aggregate dollar cap; a
limitation that would require cost
sharing by the recipient; or another
methodology, including a reduction in
the amount of any cap over time.
• That the safe harbor would prohibit
donors from shifting the costs of the
donated technology to the Federal
health care programs or beneficiaries.
• That the safe harbor would include
the same categories of donors and
recipients that we proposed for the
electronic prescribing arrangements safe
harbor.
• That the safe harbor would include
other requirements drawn from the
proposed electronic prescribing safe
harbor, including the restriction on
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arrangements tied to the volume or
value of referrals or other business
generated (proposed § 1001.952(x)(6));
the anti-solicitation provision (proposed
§ 1001.952(x)(5)); and the proposed all
payors condition (proposed
§ 1001.952(x)(4)).
• That the pre-interoperability safe
harbor might sunset once
interoperability standards were
finalized.
Recognizing that once standards and
product certification criteria were
developed and adopted by the Secretary
for electronic health records (including
standards for interoperability), some
enhanced flexibility in the conditions
applicable under a safe harbor for
electronic health records arrangements
might be appropriate, we proposed a
second safe harbor, which we referred to
as the ‘‘post-interoperability’’ safe
harbor. We noted that adoption of
uniform interoperability standards, as
well as product certification standards
to ensure that products meet those
standards, would help prevent certified
technology from being used by
unscrupulous parties to lock in streams
of referrals or other business. While
interoperability does not eliminate the
risk of improper referral payments
(parties might still use the offer or grant
of interoperable technology as a vehicle
to induce referrals), it potentially
mitigates the risk sufficiently to warrant
different or modified safe harbor
conditions.
In summary, for the postinteroperability safe harbor, we
proposed:
• Requiring protected technology to
be certified in accordance with product
certification criteria adopted by the
Secretary, and to include an electronic
prescribing component that complies
with the electronic prescribing
standards established by the Secretary
for the Part D program, to the extent
those standards are not incorporated
into the product certification criteria;
and
• Including the same conditions
proposed for the pre-interoperability
safe harbor, with the following
differences: (1) Some additional
software applications might be
included, so long as electronic health
records and electronic prescribing
remained core functions; (2) additional
categories of donors and recipients
might be included; (3) specific selection
criteria might be included to identify
acceptable methods for selecting
recipients; and (4) there might be a
potentially larger limit on the value of
protected technology.
When we issued the proposed
rulemaking, we indicated that, given the
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number of important variables and the
inherent risk of fraud and abuse
typically posed by gifts of items and
services to potential referral sources, we
did not have sufficient information to
draft safe harbor regulatory language.
We proposed and solicited extensive
public comment on the scope and
conditions for the electronic health
records arrangements safe harbors.
Summary of the Final Rule
Consistent with the majority of public
comments, we have finalized one safe
harbor for arrangements involving
electronic health records that,
effectively, combines the pre- and postinteroperability proposals. Separate safe
harbors are no longer necessary, in part,
because criteria for product certification
are available. The final safe harbor
protects arrangements involving
electronic health records software or
information technology and training
services necessary and used
predominantly to create, maintain,
transmit, or receive electronic health
records. In many respects, the provision
of electronic health records technology
to physicians and others poses greater
risk of fraud or abuse than the provision
of electronic prescribing technology;
electronic health records technology is
inherently more valuable to physicians
and other recipients in terms of actual
cost, avoided overhead, and
administrative expenses of an office
practice. The final safe harbor
conditions, in combination, should
promote the important national policy
goal of open, interconnected,
interoperable electronic health records
systems that improve the quality of
patient care and efficiency in the
delivery of health care to patients,
without protecting arrangements that
pose an undue risk of fraud and abuse.
In summary, the final safe harbor
includes the following conditions:
• The safe harbor protects transfers of
electronic health records software or
information technology and training
services necessary and used
predominantly to create, maintain,
transmit, or receive electronic health
records (provided all safe harbor
conditions are satisfied). We have not
included hardware. We have clarified
that the safe harbor covers ‘‘information
technology services,’’ which we
interpret as including, for example,
connectivity and maintenance services.
We interpret ‘‘training services’’ to
include help desk and other similar
support. We have eliminated the
language that required the training
services to be ‘‘directly related’’ because
it was superfluous in light of the
language requiring the training services
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to be ‘‘necessary and used’’ for
electronic health records purposes.
• We have not adopted the proposal
that the protected technology be used
solely for electronic health records
purposes. Instead, we have included a
condition making clear that electronic
health records purposes must be
predominant. Thus, depending on the
circumstances, some software that
relates to patient administration,
scheduling functions, and billing and
clinical support can be included. We
have expressly excluded the provision
of any technology used primarily to
conduct personal business or business
unrelated to the recipient’s clinical
practice or clinical operations, as well
as the provision of staff to the recipient
or the recipient’s office.
• In order to qualify for protection, at
the time of donation the software must
be interoperable. Products that are
certified by a certifying body recognized
by the Secretary will be deemed
interoperable under circumstances set
forth in the regulation. Software must
contain an electronic prescribing
capability, either through an electronic
prescribing component or the ability to
interface with the recipient’s existing
electronic prescribing system which
complies with the foundation standards
set forth in 70 FR 67568 (November 7,
2005) and other final electronic
prescribing standards, when adopted.
Moreover, the donor (or any agent) must
not take any steps to disable the
interoperability of any technology or
otherwise impose barriers to
compatibility of the donated technology
with other technology.
• The final safe harbor protects
arrangements involving donors that are
(i) health plans or (ii) individuals or
entities that provide covered services
and submit claims or requests for
payment to a Federal health care
program, and recipients that are
individuals or entities engaged in the
delivery of health care.
• The final rule clarifies that donors
cannot select recipients in a manner that
directly takes into account the volume
or value of referrals or other business
generated between the parties. However,
donors may select recipients of donated
electronic health records technology
using means that do not directly take
into account the volume or value of
referrals from the recipient or other
business generated between the parties.
The final rule sets forth examples of
specific criteria that will be deemed to
meet this condition.
• The final rule does not limit the
aggregate value of technology that may
qualify for safe harbor protection. It
does contain a requirement that the
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recipient pay 15 percent of the donor’s
costs. No portion of this contribution
may be funded by the donor (or any
affiliate of the donor).
• The final safe harbor adopts the
proposed documentation requirements
and includes a requirement that the
donor’s costs and recipient’s
contribution be documented in the
written agreement between the parties.
The final safe harbor does not require
that recipients certify that they do not
already possess equivalent technology.
The final safe harbor precludes
protection if the donor knows that the
recipient already has equivalent
technology or acts in deliberate
ignorance or reckless disregard of that
fact. The final safe harbor permits
documentation through crossreferencing or incorporation of other
agreements between the parties.
• The final safe harbor adopts the
proposed conditions related to use of
the technology by all payors; nonsolicitation by recipients; and the bar on
cost shifting to Federal programs.
• The final safe harbor sunsets on
December 31, 2013.
General Comments
Comment: Several commenters urged
that OIG set out specific regulatory
language for an electronic health records
safe harbor. Some commenters believed
that the lack of specific proposed safe
harbor regulatory text meant that we
had not proposed safe harbors.
Response: These commenters
misconstrued our proposed rulemaking.
Nothing in the Administrative
Procedure Act governing notice and
comment rulemaking requires an agency
to propose specific regulatory text;
rather, the notice shall include ‘‘either
the terms or substance of the proposed
rule or a description of the subjects and
issues involved.’’ 55 U.S.C. 553(b)(3).
We proposed safe harbors for electronic
health records technology, as described
in detail in the preamble to our
proposed rulemaking. Virtually all
commenters responded to these
proposals. The final regulations set forth
specific regulatory language for a new
safe harbor at § 1001.952(y).
Comment: Most commenters
expressed concern with the pre- and
post-interoperability bifurcated
approach to the safe harbors, asserting
that a bifurcated process was not
necessary, too confusing, and contrary
to the goal of achieving widespread
adoption of health information
technology. These commenters urged
OIG to abandon the bifurcated approach
and publish one final safe harbor for
remuneration in the form of electronic
health records technology. Commenters
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urged OIG and CMS to adopt similar
approaches to a post-interoperability
safe harbor under the anti-kickback
statute and exception under the
physician self-referral law. However, the
commenters believed that the product
certification provision should be
omitted at this time and added if
necessary when all of the product
certification standards have been
developed.
Response: We have finalized one safe
harbor for arrangements involving
electronic health records software or
information technology and training
services. We have coordinated with
CMS to ensure as much consistency
between the two sets of regulations as
possible, given the underlying
differences in the two statutory
schemes.
Comment: Some commenters
suggested that the general concept of
interoperability should be incorporated
into the pre-interoperability safe harbor,
even if product certification is not
required. Many commenters stated that
encouraging electronic health records
arrangements before interoperability
standards would be bad public policy.
Some commenters believed that a
product certification process that would
include interoperability standards is
already underway and within the
timeframe for this rulemaking. Others
expressed that OIG should either not
wait until certification standards are
adopted before finalizing the postinteroperability safe harbor or should
not finalize either of the safe harbors
until the certification standards are
adopted. One commenter expressed that
since timetables for the safe harbor
rulemaking and for the certification
standards were not known, OIG should
consider writing the regulation from the
pre-interoperability perspective and
should address the post-interoperability
era in the future.
Response: We agree with the
commenters that a bifurcated approach
is not necessary. We are not
promulgating separate safe harbors. The
industry has made considerable
progress in developing certification
criteria for electronic health records
products within a very short time. One
certification organization has already
completed an initial set of certification
criteria for ambulatory electronic health
records. In some cases, there may be
products for which no certification
standards are available. To address this
situation and to ensure interoperability
to the extent possible, the final safe
harbor requires that donated software be
interoperable and bars donors or their
agents from taking any actions to disable
or limit interoperability. This latter
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condition also protects against donors
who may improperly attempt to create
closed or limited electronic health
records systems by offering technology
that functionally or practically locks in
business for the donor.
Comment: Some commenters
suggested that early adopters of
electronic health records technology
should be offered incentives or rewards,
because otherwise physicians or other
recipients might delay investing their
own funds in electronic health records
systems while waiting for a donor to
offer them free technology. The
commenters stated that this delay would
have a detrimental effect on the
adoption of electronic health records
technology.
Response: It is unclear what types of
incentives or rewards the commenters
are requesting. We note that the safe
harbor does not provide incentives or
rewards for early adopters, nor would it
be appropriate for a safe harbor to do so;
rather, the safe harbor protects the
transfer of certain electronic health
records technology when all conditions
of the safe harbor are satisfied. The safe
harbor would not protect any cash
reimbursement paid to recipients for
costs they incurred in adopting
technology.
Comment: One commenter requested
that OIG and CMS coordinate with the
Internal Revenue Service (IRS) to
provide guidance through an IRS
revenue ruling publication to alleviate
tax exemption concerns.
Response: This comment addresses a
matter outside the scope of this
rulemaking.
1. Protected Nonmonetary
Remuneration
a. ‘‘Electronic Health Record’’
Comment: We requested comments on
how to define ‘‘electronic health
record.’’ One commenter suggested that
electronic health record be defined as
electronically originated and/or
maintained clinical health information,
that may incorporate data derived from
multiple sources and that replaces the
paper record as the primary source of
patient information. Another
commenter suggested that OIG protect
any interoperable component or module
of an electronic health record. A third
commenter suggested that ‘‘electronic
health records’’ be defined for safe
harbor purposes to accomplish two
objectives: (1) To promote a connected
system of electronic healthcare
information available to all doctors and
patients whenever and wherever
possible and (2) to promote the
collection of quality and outcome
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measures to facilitate pay-forperformance payment methodologies.
This commenter pointed to the
Medicare Payment Advisory
Commission (MedPAC) description of
electronic health record clinical
information technology and suggested
that we define ‘‘electronic health
record’’ to include applications that
permit the following functions: Tracking
patients’ care over time; allowing
physicians to order medications,
laboratory work, and other tests
electronically and access test results;
providing alerts and reminders for
physicians; and producing and
transmitting prescriptions
electronically. See MedPac Report to the
Congress Medicare Payment Policy at
206 (2005) (available at https://
www.medpac.gov/publications/
congressional_reports/
Mar05_EntireReport.pdf.) A commenter
requested that ‘‘electronic health
records’’ be defined broadly enough to
include applications that capture
clinical trial data. Another commenter
did not think it was in the best interest
of the industry for OIG to propose such
a definition at this time.
Response: For the purpose of this
rulemaking, we are adopting a broad
definition of ‘‘electronic health record.’’
An electronic health record will be
defined as: ‘‘A repository of consumer
health status information in computer
processable form used for clinical
diagnosis and treatment for a broad
array of clinical conditions.’’ We are
adopting a broad definition consistent
with our goal of encouraging
widespread adoption of electronic
health records technology.
Comment: A commenter stated that
the term ‘‘electronic health record,’’ as
used in the proposed rule, is
inconsistent with the same terminology
when used within the information
technology industry, and is therefore
confusing. The commenter suggested
that we might have meant to use the
term ‘‘electronic medical record.’’
According to the commenter, an
‘‘electronic health record’’ is commonly
used to describe the broad concept of
the total health care data that exists
regarding an individual within an
electronic universe (including, for
example, the patient’s personal health
record, medication history stored by an
insurance plan, electronic imaging
results stored at a hospital, etc.),
whereas an ‘‘electronic medical record’’
typically refers to patient-centric,
electronically maintained information
about an individual’s health status and
care that focuses on tasks and events
related to patient care, is optimized for
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use by a physician, and relates to care
within a single clinical delivery system.
Response: We recognize that there are
several ways in which information
technology terms are used, including
the terminology ‘‘electronic health
record’’ and ‘‘electronic medical
record.’’ For purposes of this safe
harbor, we have opted to use the term
‘‘electronic health record,’’ and we have
included a definition of ‘‘electronic
health record’’ in this final rule.
b. Necessary
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i. Technical and Functional Equivalency
We proposed requiring the recipient
to certify that the items and services to
be provided are not technically or
functionally equivalent to items or
services the recipient already possesses
or has obtained. The certification would
have needed to be updated prior to the
provision of any necessary upgrades or
items and services not reflected in the
original certifications. We expressed our
concern that the certification process
would be ineffective as a safeguard
against fraud and abuse if it were a mere
formality or if recipients simply
executed a form certification provided
by a donor. Therefore, we proposed that
the donor must not have actual
knowledge of, and not act in reckless
disregard or deliberate ignorance of, the
fact that the recipient possessed or had
obtained items and services that were
technically or functionally equivalent to
those donated by the donor and that the
recipient would be protected only if the
certification were truthful.
Comment: Several commenters
requested further clarification regarding
the meaning of ‘‘technically or
functionally equivalent’’ and the
meaning of ‘‘significantly enhance the
functionality’’ as those terms were used
in the proposed rulemaking. Other
commenters expressed concerns about
the requirement, asserting that it would
deter recipients who are not technology
experts from adopting health
information technology, and might
result in recipients hiring costly
technology consultants to evaluate their
existing systems. A commenter
expressed concern that the safe harbor
not hinder the goals of widespread
adoption of electronic health records by,
for example, excluding from protection
technology that would standardize the
technology used by all recipients, or
updated, user-friendly technology that
would replace outdated, outmoded, or
unusable technology. For these reasons,
several commenters argued that
technical and functional equivalency
was not an appropriate or workable
standard for assessing whether donated
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items and services are necessary and
that, accordingly, the requirement
should not be adopted.
Other commenters suggested
modifications to the proposed
regulations. One commenter suggested
that hospitals should incorporate
inquiries regarding the technological
items and services physicians possess
into the surveys physicians must
complete to acquire and maintain
physician privileges. Another suggested
that any costs associated with the
certification process should be included
as part of the services offered by the
donor. A few commenters suggested that
the Government should provide
financial assistance in evaluating the
existing technology, while another
commenter proposed that CMS publish
guidelines for technological equivalence
upon which all donors and recipients
could rely. Some commenters urged that
the certification requirement
incorporate a ‘‘good faith’’ standard for
compliance, while other commenters
expressed concern that donors would
not be in a position to evaluate the
technology already possessed by
potential recipients and, therefore, that
safe harbor protection for donors should
not hinge on the recipient’s
certification.
Another commenter requested that
OIG provide ‘‘templates’’ for the written
certification to ensure a simple and
transparent certification process. One
commenter expressed concern that a
requirement for ongoing certification to
account for upgrades or new software,
hardware, or services would create an
unnecessary burden. Another
commenter proposed that there should
be one certification required once final
interoperability standards for all health
information technology components are
finalized.
Response: Having reviewed the public
comments, we have concluded that our
proposal to require recipients to certify
in writing that they do not possess
equivalent technology might become
unnecessarily burdensome. We are not
requiring a written certification. The
final safe harbor requires that protected
donations be limited to electronic health
records software or information
technology and training services that are
necessary and used predominantly to
create, maintain, transmit, or receive
electronic health records. We do not
believe software and services are
‘‘necessary’’ if the recipient already
possesses the equivalent software or
services. The provision of equivalent
items and services poses a heightened
risk of abuse, since such arrangements
potentially confer independent value on
the recipient (i.e., the value of the
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existing items and services that might be
put to other uses) unrelated to the need
for electronic health records technology.
Thus, if a donor knows that the
recipient already possesses the
equivalent items or services, or acts in
deliberate ignorance or reckless
disregard of that fact, the donor will not
be protected by the safe harbor. Prudent
donors may want to make reasonable
inquiries to potential recipients and
document the communications. We do
not believe this requirement necessitates
the hiring of technical experts by either
the donor or recipient. The ‘‘necessary’’
requirement in the final safe harbor
would not preclude upgrades of items or
services that enhance the functionality
of the items or services, including, for
example, upgrades that make software
more user-friendly or current. Nor
would it preclude items and services
that result in standardization of systems
among donors and recipients, provided
that the standardization enhances the
functionality of the electronic health
records system (and any software is
interoperable).
Comment: A commenter suggested
that, instead of including a recipient
certification, as we proposed, the
written agreement between the donor
and recipient could affirm their intent to
comply with the anti-kickback statute
and relevant regulations, and the parties
could sign a statement that their
business transactions do not take into
account the volume or value of referrals
or business generated between the
parties.
Response: We are not adopting the
commenter’s suggestion. While the
suggested affirmation and statements
may be useful to the parties, they are
necessarily self-serving and offer little,
if any, protection against fraud and
abuse. We note that the critical inquiry
under the anti-kickback statute is not
what terms appear on the face of an
agreement but how the arrangement is
actually conducted. It is not sufficient
for safe harbor purposes for
documentation to contain facially the
correct terms; the underlying
arrangement itself must meet all the safe
harbor conditions.
Comment: Many commenters
requested further clarification of OIG’s
concern about the risk of recipients
intentionally divesting themselves of
technically or functionally equivalent
technology that they already possess or
have obtained in order to shift costs to
the donor. See 70 FR 59018. These
commenters expressed the opinion that
recipients would not intentionally
divest themselves of health information
technology given the low adoption rate
of health information technology and
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the time and resource commitment
necessary to implement and maintain a
health information technology system.
Response: When a party that desires
referrals assumes costs that are
otherwise the obligation of a party in a
position to generate referrals, the party
assuming the costs offers something of
value to the party with the referrals.
This cost shifting can occur in many
ways, including, without limitation,
shifting the costs of staff, office space,
or equipment. In the context of
electronic health records technology,
this cost-shifting might occur in
connection with, by way of example,
ongoing maintenance and help desk
support for previously purchased
electronic health records systems.
Likewise, a recipient might shift costs
by moving previously purchased
technology to other uses and replacing
it with equivalent new technology
obtained from a donor. We solicited
comments on how we might address
this risk.
Having reviewed the public
comments, we are not persuaded that
this risk is particularly reduced in the
context of electronic health records
technology. Nonetheless, we believe
that the totality of final safe harbor
conditions, including, for example, the
cost sharing requirement and the sunset
provision, should adequately address
our concerns. We are not including any
separate condition specifically
addressing divestiture of technology.
Comment: One commenter requested
that OIG clarify that the term
‘‘necessary’’ would not preclude the
provision of outpatient-focused (also
referred to as ‘‘ambulatory-focused’’)
electronic health records software to
recipients that may already have access
through the internet or otherwise to an
inpatient-focused electronic health
records systems.
Response: The final rule does not
preclude the provision of outpatient or
ambulatory electronic health records
software to recipients that already have
access to inpatient-focused systems.
ii. Covered Technology
We proposed to protect software and
directly related training services that are
necessary and used solely to receive,
transmit, and maintain electronic health
records of the donor’s or recipient’s
patients, provided that the software
includes an electronic prescribing
component. Importantly, we stated our
intention to protect systems that
improve patient care rather than
systems comprised solely or primarily
of technology that is incidental to the
core functions of electronic prescribing
and electronic health records.
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Comment: Some commenters asked
whether our proposal to protect certain
technology necessary and used to
‘‘receive, transmit, and maintain’’
electronic health records would include
technology used to develop, implement,
operate, facilitate, produce, and
supplement electronic health records.
Response: We intended that the final
rule would encompass the types of uses
described by the commenters. To make
this intent clear, we have clarified the
final rule to provide that the protected
technology must be necessary and used
predominantly to ‘‘create, maintain,
transmit, or receive’’ electronic health
records.
Comment: Most commenters believed
that the proposed scope of the protected
donation was too narrow. Commenters
variously suggested that the safe harbor
should also protect transfers of
hardware, operating software,
connectivity items, support services,
secure messaging, storage devices,
clinical decision support technology,
services related to training and ongoing
maintenance, rights, licenses, and
intellectual property, as well as
interfaces and translation software to
allow recipient offices to exchange data
with hospital systems, all of which the
commenters considered necessary for a
fully functioning electronic health
records system.
Some commenters encouraged OIG to
exclude from protection hardware and
broadband wireless Internet
connectivity and to tailor the safe harbor
protection narrowly to cover software,
training, and information technology
support services. One commenter
opined that ongoing support, such as
help desk support, could pose a risk of
abuse, because the recipient would
become dependent on the donor for the
help desk support, and might feel
obligated to refer to the donor to ensure
continuation of that support. This
commenter suggested that we protect
initial, start-up support services, but not
long-term, ongoing system support. A
few commenters suggested that the
scope of support services, training, and
other items and services should be a
defined contribution not to exceed 365
person-days.
Several commenters urged OIG to
protect arrangements involving the
donation of billing software and other
software for administrative functions,
such as registration and patient
scheduling, because much of the ‘‘return
on investment’’ (i.e., value) for
physicians who incorporate electronic
health records systems into their
practices is the integration of clinical
and administrative systems.
Commenters noted that the scope of the
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safe harbor should account for the fact
that the products on the market
increasingly integrate administrative
functions with the clinical electronic
health records functions. One
commenter suggested that the safe
harbor should at least prohibit the
donation of technology that is unrelated
to the actual electronic health records
software, such as technology related to
office administration. The commenter
requested that the safe harbor protect
integrated bundles of applications that
include an electronic health records
component, provided that the recipient
pays for the technology that is unrelated
to the electronic health records
software. Another commenter suggested
that the safe harbor should not protect
clearly separable administrative
software (e.g., billing, coding, and
practice management software), but
should protect those elements of an
electronic health records system that
incidentally facilitate administrative
functions, such as software that links to
diagnosis codes for billing purposes.
The commenter suggested that dual
functions that support patient care and
administrative functions are valuable to
the physician and a driving force behind
adoption of electronic health records
systems.
Response: We have carefully
considered the comments in light of our
intention to promote the adoption of
electronic health records without undue
risk of fraud and abuse. The final rule
protects electronic health records
software or information technology and
training services necessary and used
predominantly to create, maintain,
transmit, or receive electronic health
records.
To ensure that the safe harbor is only
available for software, information
technology and training services that are
closely related to electronic health
records, the safe harbor provides that
electronic health records functions must
be predominant. The core functionality
of the technology must be the creation,
maintenance, transmission, or receipt of
individual patients’ electronic health
records. There must be an electronic
prescribing component. While
electronic health records purposes must
be predominant, the safe harbor protects
arrangements involving software
packages that include other
functionality related to the care and
treatment of individual patients (e.g.,
patient administration, scheduling
functions, billing, and clinical support).
This condition reflects the fact that it is
common for electronic health records
software to be integrated with other
features.
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Further, we interpret ‘‘software,
information technology and training
services necessary and used
predominantly’’ for electronic health
records purposes to include the
following, by way of example: Interface
and translation software; rights,
licenses, and intellectual property
related to electronic health records
software; connectivity services,
including broadband and wireless
internet services; clinical support and
information services related to patient
care (but not separate research or
marketing support services);
maintenance services; secure messaging
(e.g., permitting physicians to
communicate with patients through
electronic messaging); and training and
support services (such as access to help
desk services).
We interpret the scope of covered
electronic health records technology to
exclude: Hardware (and operating
software that makes the hardware
function); storage devices; software with
core functionality other than electronic
health records (e.g., human resources or
payroll software or software packages
focused primarily on practice
management or billing); or items or
services used by a recipient primarily to
conduct personal business or business
unrelated to the recipient’s clinical
practice or clinical operations. Further,
the safe harbor does not protect the
provision of staff to recipients or their
offices. For example, the provision of
staff to transfer paper records to the
electronic format would not be
protected.
While we share the concerns of those
commenters worried that ongoing help
desk or other assistance could create
long-term ties between referral seekers
and referral sources, we believe the cost
sharing, interoperability, and sunset
provisions, among others, should
address these concerns. We do not
believe it would be feasible to set
specific temporal limits on such
services or specific aspects of such
services. (We note that, in the context of
the electronic prescribing safe harbor at
§ 1001.952(x), the risks associated with
long-term transfers of remuneration are
mitigated by the narrower scope of the
covered technology and the ‘‘used
solely’’ restriction.)
Comment: With respect to Internet
connectivity services, some commenters
suggested that donations for
connectivity should be limited to any
necessary devices for connectivity and
technical support for selecting and
installing the appropriate connectivity
services, but should not include
connectivity fees, which should be an
ongoing expense of the recipient. Other
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commenters suggested that covered
technology should include ‘‘T1’’ lines or
other enhanced broadband connectivity
(including connectivity needed to
transfer medical images and EKGs
(especially in rural areas)), routers to
speed download times, secure
connections and messaging, ongoing
maintenance and support, and
interfaces.
Response: The final safe harbor
protects the donation of all forms of
connectivity services. We believe the
choice of appropriate connectivity
services is an individual determination
best made by the donors and recipients
given their specific circumstances. We
note that the cost sharing requirement of
§ 1001.952(y)(11) will apply to these
services, including connectivity fees.
Because hardware is not protected
remuneration under the safe harbor,
routers or modems necessary to access
or enhance connectivity would not be
protected.
Comment: A commenter asked for
further clarification on whether the
donation of an electronic health records
system operating within an
‘‘Application Service Provider’’ model
(a business model that provides
computer-based services over a
network) would be covered by the safe
harbors.
Response: Subject to the cost sharing
requirement and other conditions of the
final safe harbor, the donation of an
electronic health records system
operating within an ‘‘Application
Service Provider’’ model would be
considered covered technology.
Comment: A few commenters
requested that the final rule require
donors to provide data-migration
services to a recipient if the recipient
chooses to abandon the donated
electronic health record system and
purchase its own electronic health
record system.
Response: We do not believe it would
be appropriate to require donors to
provide data migration or any other
specific service to recipients that choose
to switch electronic health records
systems. Donors may provide services if
they wish, so long as the arrangement
fits in the safe harbor or otherwise
complies with the anti-kickback statute.
We note that, to the extent the data
migration services involve the provision
of staff to the recipient’s office in order
to transfer the data, the services would
not be protected.
Comment: A commenter
recommended that the safe harbor
specifically protect the provision of
patient portal software that enables
patients to maintain on-line personal
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medical records, including scheduling
functions.
Response: Nothing in this final safe
harbor precludes protection for patient
portal software if it meets all safe harbor
conditions.
Comment: Some commenters urged us
to remove the proposed requirement
that an electronic health records system
include an electronic prescribing
component, because such a requirement
may stifle investment in electronic
health records technology in situations
where electronic prescribing is not
considered a significant need. These
commenters suggested that patients
would most benefit if donors are
permitted to first adopt electronic health
records technology and then add
electronic prescribing. Other
commenters supported making an
electronic prescribing component a
mandatory part of the donated
electronic health record.
Response: Nothing in this safe harbor
rule prevents parties from adopting any
particular form of technology. However,
to qualify for safe harbor protection for
arrangements in which the donor
provides electronic health records
technology to actual or potential referral
sources, we are requiring that the
donated electronic health records
system include an electronic prescribing
capability, either through an electronic
prescribing component or the ability to
interface with the recipient’s existing
electronic prescribing system that meets
the final standards adopted by the
Secretary. We are including this
requirement, in part, because of the
critical importance of electronic
prescribing in producing the overall
benefits of health information
technology, as evidenced by section 101
of the MMA. It is our understanding that
most electronic health records systems
already include an electronic
prescribing component.
Comment: We solicited comments on
whether the safe harbors should require
that electronic health records software
include a computerized physician order
entry (CPOE) component. Many
commenters said that, without either
agreed upon standards or product
criteria, a CPOE component should not
be required. These commenters noted
that CPOE and electronic prescribing
functionalities can be quite similar and
may be redundant. These commenters
were concerned that mandating
implementation of CPOE technology
along with electronic health records
software could deter development of
either system. Another commenter
noted that most of the off-the-shelf
generic CPOE programs have proven
ineffective to date. Some commenters
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supported permitting CPOE as part of
the electronic health record software, so
long as it is not a particular type of
CPOE.
Response: We are persuaded not to
require that safe harbored transfers of
electronic health records technology
include a CPOE component. We note
that nothing in this safe harbor
mandates the implementation of any
particular technology or functions.
Comment: Most commenters opposed
our proposal to require that electronic
health record software be compatible
with Public Health Information Network
preparedness standards or BioSense
standards in order to qualify for safe
harbor protection. These commenters
pointed out that there is currently no
industry consensus on preparedness
standards, nor are there product criteria
established for these programs. These
commenters were concerned that
clinicians and patients might be
alarmed by the idea of clinician systems
being linked to Government systems for
Biosurveillance purposes.
Response: We have not included this
requirement in the final safe harbor.
2. Interoperability
We proposed two types of conditions
that would make compatibility and
interoperability of donated technology
key features of protected arrangements.
These features would encourage the
adoption of open, interconnected,
interoperable systems and thereby
reduce the risk of fraud and abuse. First,
we proposed that once interoperability
criteria had been recognized, electronic
health records technology would need
to be certified in accordance with
standards adopted by the Secretary.
Second, we proposed that donors (or
their agents) not limit or restrict the use
of the technology with other electronic
prescription or health records systems,
or otherwise impose barriers to
compatibility.
Comment: Many commenters
supported OIG’s proposal to require all
donations to meet approved
functionality, interoperability, and
security certification criteria. Some
commenters supported the standards of
the Certification Commission for
Healthcare Information Technology
(CCHIT). One commenter suggested that
we measure interoperability based on
accepted, consensus-driven standards
that are already in place, such as the
Electronic Health Record-Lab
Interoperability and Connectivity
Standards or other interoperability
standards adopted by the Federal
Government as part of the Consolidated
Health Informatics (CHI) initiative. See
www.hhs.gov/healthit/chi.
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Some commenters expressed concern
that clinicians who adopt health
information technology prior to the
existence of final certification standards
would be unfairly penalized. These
commenters were also concerned that
some early adoption arrangements
might be chilled where certification
standards are not yet available. These
commenters requested that we consider
‘‘grandfathering’’ clinicians whose
existing health information technology
systems are not compliant with the
certification standards by permitting
them a one-time opportunity to upgrade
their systems to be compliant. As an
alternative, a few commenters
recommended that we condition the
ongoing use of the safe harbor on the
donated software being capable of
exchanging health care information in
compliance with applicable standards
once adopted by the Secretary and on
no action being taken that would pose
a barrier to the information exchange.
Response: Having considered the
options, and consistent with
Department policy, we have concluded
that software will qualify for safe harbor
protection if it is interoperable as
defined in this final rule (discussed
further below). Software will be deemed
to be interoperable if it is certified by a
certifying body recognized by the
Secretary. Nothing in the final rule
precludes donors from providing
recipients with upgrades to software
that meet the definition of
‘‘interoperable’’ in § 1001.952(y) or
would make the software comply with
then-existing certification standards. As
noted below, we are including a
provision requiring that donors refrain
from impeding interoperability.
Comment: We indicated in the
proposed rulemaking that we were
considering defining the term
‘‘interoperable’’ for purposes of the safe
harbor to mean ‘‘the ability of different
operating and software systems,
applications, and networks to
communicate and exchange data in an
accurate, secure, effective, useful, and
consistent manner.’’ See 44 U.S.C.
3601(6) (pertaining to the management
and promotion of electronic
Government services). One commenter
agreed with this proposed definition.
Another commenter suggested that we
incorporate the definition of
interoperability that has been
promulgated by CCHIT. Another
commenter suggested that we adopt the
definition developed by the National
Alliance for Health Information
Technology: ‘‘The ability of different
information technology systems and
software applications to communicate,
to exchange data accurately, effectively,
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and consistently, and to use the
information that has been exchanged.’’
One commenter suggested that the
definition of interoperability be flexible
to adapt to evolving industry standards.
Several commenters suggested defining
interoperability as ‘‘the uniform and
efficient movement of electronic
healthcare data from one system to
another, such that the clinical or
operational purpose and meaning of the
data is preserved and unaltered.’’ One
commenter opposed any definition of
interoperability that would require a
donor to support electronic
transmissions from technology supplied
by other vendors or to host applications
accessible by software supplied by other
vendors.
Response: Having reviewed the public
comments and upon further
consideration, we have crafted a
definition of ‘‘interoperable’’ for
purposes of the safe harbor that
combines elements of our original
proposal and the suggestions of the
commenters. Under the final safe
harbor, ‘‘interoperable’’ is defined to
mean that, at the time of the donation,
the software is able to (i) communicate
and exchange data accurately,
effectively, securely, and consistently
with different information technology
systems, software applications, and
networks, in various settings, and (ii)
exchange data such that the clinical or
operational purpose and meaning of the
data are preserved and unaltered. This
interoperability must apply in various
settings, meaning that the software must
be capable of being interoperable with
respect to systems, applications, and
networks that are both internal and
external to the donor’s or recipient’s
systems, applications, and networks. In
other words, software will not be
considered interoperable if it is capable
of communicating or exchanging data
only within a limited health care system
or community.
We believe this definition reflects our
intent to protect only those
arrangements that will foster open,
interconnected, interoperable electronic
health records systems that help
improve the quality of patient care and
efficiency in the delivery of health care
to patients, without undue risk that
donors might use arrangements to lock
in referrals from recipients.
We are mindful that the ability of
software to be interoperable is evolving
as technology develops. In assessing
whether software is interoperable, we
believe the appropriate inquiry is
whether the software is as interoperable
as feasible given the prevailing state of
technology at the time the items or
services are provided to the recipient.
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Parties should have a reasonable basis
for determining that software is
interoperable. We believe it would be
appropriate—and indeed advisable—for
parties to consult any standards and
criteria related to interoperability
recognized by the Department.
Compliance with these standards and
criteria will provide greater certainty to
donors and recipients that products
meet the interoperability requirement
and may be relevant in any enforcement
activities. We note further that parties
wishing to avoid any uncertainty can
avail themselves of the ‘‘deeming’’
provision, which provides that software
that is certified by a body recognized by
the Secretary will be deemed
interoperable for purposes of the safe
harbor. In order to ensure
interoperability, products must have an
up-to-date certification at the time of
donation, and we are requiring that, to
meet the deeming provision, the
software must have been certified
within 12 months prior to the date of
the donation.
We are including a condition that the
donor (or any person on the donor’s
behalf) must not take any actions to
limit or restrict the use, compatibility,
or interoperability of the items and
services with other electronic
prescribing or electronic health records
technology. We believe this language
clearly reflects our intent that donors
should not limit or restrict the use,
compatibility, or interoperability of
donated technology. We note that
compliance with this condition in
§ 1001.952(y)(3) is a separate
requirement from compliance with
§ 1001.952(y)(2), which requires that
products must be interoperable and will
be deemed interoperable if a certifying
body recognized by the Secretary has
certified the software within no more
than 12 months prior to the date it is
provided to the recipient.
If a donor takes actions that would
cause a certified product to fall out of
compliance with the interoperability
standards that apply to the certified
product, we would consider that to be
an action to limit or restrict the use,
compatibility, or interoperability of the
items or services for purposes of
§ 1001.952(y)(3). We are not persuaded
to protect arrangements where use,
compatibility, or interoperability is
limited to the products of specific
vendors; to the contrary, we believe that
inherent in the concept of
interoperability is that technology can
communicate with products of other
vendors.
Comment: Many commenters
supported the proposed prohibition
against donors or their agents taking any
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actions to disable or limit
interoperability or otherwise impose
barriers to compatibility of the donated
technology with other technology,
including technology owned or operated
by competing providers and suppliers.
Response: As explained above, we
have included this requirement in the
final safe harbor at § 1001.952(y)(3). We
believe this condition will help ensure
that transfers of health information
technology will further the policy goal
of fully interoperable health information
systems and will not be misused to steer
business to the donor.
3. Protected Donors
We proposed to limit the scope of
protected donors under § 1001.952(y) to
hospitals, group practices, PDP
sponsors, and MA organizations,
consistent with the MMA-mandated
donors for the electronic prescribing
safe harbor.
Comment: Most commenters said that
the proposed scope of potential donors
was too limited. Commenters variously
suggested that the protected donors
include some or all of the following
categories: Nursing facilities; assisted
living and residential care facilities;
intermediate care facilities for persons
with mental retardation; mental health
facilities; organizations providing
population health management services
(such as disease and care management
programs and services); all components
of an Integrated Delivery System (IDS)
(including network providers or other
entities that operate, support or manage
network providers); clinical
laboratories; pharmaceutical
manufacturers; durable medical
equipment suppliers; radiation oncology
centers; community health centers;
Federally Qualified Health Centers
(FQHCs), physician-hospital
organizations; health plans; Regional
Health Information Organizations
(RHIOs); dialysis facilities; and other
entities that, from the commenters’
perspective, enhance the overall health
of a community.
One commenter, representing dialysis
facilities, suggested that the safe harbor
should protect nonmonetary donations
by all providers that maintain medical
staffs to members of the medical staff.
Another commenter suggested that a
clinical data exchange (or communitywide health information system) should
be included as a protected donor,
because individual stakeholders in
health information technology projects
are unlikely to develop, purchase, or
donate items necessary to implement
and maintain a true community-wide
clinical data exchange.
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A few commenters asserted that
health plans and pharmacy benefits
managers (PBMs) should be protected
donors, since, according to the
commenters, these entities develop
health information technology and are
engaged with physicians on a direct
level to increase the utilization of
electronic prescribing and health
records technology. These commenters
urged that the fraud and abuse risks are
reduced because health plans and PBMs
have business incentives to limit
utilization of prescriptions. A
commenter recommended permitting all
entities that bill Medicare to donate
electronic health records technology. A
few commenters suggested that any
entity that has an interest in donating
health information technology should
be permitted to do so.
Response: Mindful that broad safe
harbor protection may significantly
further the important public policy goal
of promoting electronic health records,
and after carefully considering the
recommendations of the commenters,
we have concluded that the safe harbor
should protect any donor that is an
individual or entity that provides
patients with health care items or
services covered by a Federal health
care program and submits claims or
requests for payment for those items or
services (directly or pursuant to
reassignment) to Medicare, Medicaid, or
other Federal health care programs (and
otherwise meets the safe harbor
conditions). This approach incorporates
a bright line test focused on those
individuals and entities that participate
directly in the provision of health care
to patients and are therefore in the best
position to advance the implementation
of electronic health records adoption
through participation in interoperable
electronic health records systems. In
other words, the test focuses on those
individuals and entities with a
substantial and central stake in patients’
electronic health records. Individuals
and entities that can satisfy this
definition include, for example,
hospitals, group practices, physicians,
nursing and other facilities, pharmacies,
laboratories, oncology centers,
community health centers, FQHCs, and
dialysis facilities.
In addition, we are persuaded that
health plans, which generally arrange
for the provision of health care items
and services rather than providing them
directly, should be protected donors.
We originally proposed including only
PDP sponsors and MA organizations.
However, in the final rule, we are
including any health plan that meets the
definition of ‘‘health plan’’ set forth at
§ 1001.952(l)(2), an existing safe harbor
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under the anti-kickback statute for
certain managed care arrangements.
This definition includes a broad array of
health plans that may cover Federal
health care program beneficiaries,
including, but not limited to, PDP
sponsors, MA organizations, and
Medicaid managed care plans. We note
that our decision to include health plans
as protected donors does not reflect our
endorsement of the proposition that
health plans necessarily present a lower
risk of fraud and abuse because they
have economic incentives to limit
utilization. Rather, our decision reflects
the direction provided by Congress with
respect to PDP sponsors and MA
organizations, as well as the important
and central role health plans play in the
adoption and use of electronic
prescribing and health records systems.
In the preamble to the proposed rule,
we noted our concern that providers
and suppliers of ancillary services
would not have a comparable stake in
advancing the goal of interoperable
electronic health records for patients, as
well as our concern about instances of
abusive referral payments by ancillary
services providers, such as laboratories.
Having reviewed the public comments,
we are persuaded that ancillary services
providers and suppliers have a stake in
the development of interoperable
electronic health records sufficient to
warrant safe harbor protection. We
remain concerned about the potential
for abuse by laboratories, durable
medical equipment suppliers, and
others, but believe that the safe harbor
conditions in the final rule and the fact
that the safe harbor is temporary should
adequately address our concerns. We
intend to monitor the situation. If
abuses occur, we may revisit our
determination. Among other things, we
will be alert to patterns of increased
utilization correlated with transfers of
nonmonetary remuneration in the form
of electronic health records technology.
While increased utilization would not
necessarily indicate fraud or abuse (and
might, in some circumstances, reflect
improved quality of care), the
determination must be made on a caseby-case basis. We note that,
notwithstanding the safe harbor, parties
remain liable under various Federal and
State laws for billing abuses, including
over-billing and billing for items and
services that are not medically
necessary.
We have not included as protected
donors pharmaceutical, device, or
durable medical equipment
manufacturers, or other manufacturers
or vendors that indirectly furnish items
and services used in the care of patients.
These entities do not provide health
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care items or services to patients or
submit claims for those services. Our
enforcement experience demonstrates
that unscrupulous manufacturers have
offered remuneration in the form of free
goods and services to induce referrals of
their products. Given this enforcement
history, and the lack of a direct and
central patient care role that justifies
safe harbor protection for the provision
of electronic health records technology,
we are not including manufacturers as
protected donors. We believe there is a
substantial risk that, in many cases,
manufacturers’ primary interest in
offering technology to potential referral
sources would be to market their
products.
Nothing in this preamble discussion
should be construed to suggest that only
parties that provide covered services or
have the ability to bill Federal programs
are in a position to make unlawful
payments for referrals. To the contrary,
under the anti-kickback statute, the
party offering or paying the illegal
remuneration need not be a party that
provides a covered service or a party in
a position to bill a Federal health care
program. Rather, in this final regulation
we have focused on parties that provide
covered services and bill the programs
as a bright line way to identify those
individuals and entities with direct,
frontline patient care responsibilities
and, therefore, a substantial stake in
promoting interoperable electronic
health records systems.
With respect to categories of
individuals and entities that are not
included in the safe harbor, depending
on the facts and circumstances, safe
harbor protection might not be needed
or safe harbor protection may be
available under other safe harbors. The
anti-kickback statute is implicated by
remunerative arrangements that might
induce or reward the generation of
Federally payable health care business.
Arrangements between parties where
there is no potential or actual Federal
program business of any kind generally
should not raise concerns under the
anti-kickback statute. Moreover, even
where the statute is implicated,
arrangements that do not qualify for safe
harbor protection are not necessarily
illegal. Thus, the fact that an entity is
not included as a protected donor does
not mean that a transfer of electronic
health records technology by that entity
necessarily would violate the antikickback statute. Rather, a
determination would depend on the
facts and circumstances, including the
intent of the parties. Parties seeking
assurance that their arrangement does
not violate the anti-kickback statute may
have the arrangement evaluated through
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the OIG’s voluntary advisory opinion
process.
Comment: A commenter requested
that the list of protected donors be
expanded to include research and
manufacturing entities and suggested
that blind trusts could be established
utilizing funds from several
pharmaceutical companies to reduce the
risk of fraud and abuse. Another
commenter requested that we include
entities in the research-based
biopharmaceutical industry as
permissible donors, noting that the
widespread adoption of health
information technology could reduce
the need for proprietary systems used
solely for purposes of clinical trial
programs.
Response: As noted in the preceding
response, we are not including research
and manufacturing entities, or entities
in the research-based biopharmaceutical
industry, as protected donors for
purposes of this final safe harbor. These
entities do not provide covered services
to beneficiaries and do not submit
claims to a Federal health care program.
Arrangements involving remuneration
in the form of electronic health records
technology provided by these entities
would need to be evaluated on a caseby-case basis under the anti-kickback
statute. We believe the ‘‘blind trust’’
proposal offered by the commenter is
also more appropriately addressed caseby-case under the anti-kickback statute
based on the totality of facts and
circumstances of the particular
arrangement.
Comment: One commenter strongly
urged OIG to expand the list of
protected donors to give physicians the
opportunity to choose between different
software offerings. Other commenters
suggested that the safe harbor require an
open, transparent Request for Proposal
(RFP) process whereby the donating
entity would be required to offer
technology from a minimum of three
vendors for the recipient to select. These
commenters expressed the view that a
multi-vendor, open RFP process would
ensure competitive market pricing and
would allow recipients to participate in
the selection process to ensure that
services meet the needs of their clinical
practices, while also protecting against
the recipient being locked-in by the
donating entity. Another commenter
requested that the rulemaking clearly
state that physicians should be free to
choose their own electronic health
records systems or should be offered a
choice by entities providing subsidies or
assistance for purchasing these systems.
Response: Physicians and other
recipients remain free to choose any
electronic health technology that suits
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their needs. Nothing in the safe harbor
is to the contrary. However, we are not
requiring donors to facilitate that choice
for purposes of the safe harbor. Donors
must offer interoperable products and
must not impede the interoperability of
any technology they decide to offer. We
decline to require the type of RFP
process requested by the commenter, as
it would be unnecessarily burdensome
and impractical and would potentially
impose substantial transaction costs on
donors. In addition, nothing in this safe
harbor requires donors to give any
particular level, scope, or combination
of items and services. Some donors may
choose to offer comprehensive packages,
while others may elect to offer only
individual components of an electronic
health records system.
Comment: Commenters from the
laboratory industry strongly urged OIG
to include laboratories as protected
donors. They argued that reducing
duplicative laboratory testing is a
potential benefit to the implementation
of interoperable electronic health
records. These commenters stated that
clinical laboratories should be included
in the safe harbor to achieve a level
playing field and the goal of widespread
adoption of technology. They also
objected to OIG’s characterization of the
industry with respect to historical and
current fraud and abuse concerns.
Response: We are including clinical
laboratories as protected donors for the
reasons noted above. However, in our
experience, laboratories and others have
used free or deeply discounted goods,
such as computers and fax machines, to
influence referrals improperly, and we
remain concerned about potentially
abusive kickback schemes involving free
or deeply discounted goods. However,
we believe the potential public benefit
from interoperable electronic health
records is so significant that some
additional safe harbor protection is
warranted for the limited purposes of
this safe harbor. In this rule, it is our
expectation that the combination of
conditions in the safe harbor, including
the sunset provision, will protect the
programs from abuse during a limited
period of time for the purpose of
spurring widespread adoption of
interoperable electronic health records
technology. We intend to monitor the
situation; if we discover instances of
abuse, we may revisit our determination
to include clinical laboratories (or any
other category of potential donor).
Comment: A commenter requested
that health information technology
vendors be included as protected
donors.
Response: We decline to include
health information technology vendors
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as protected donors. In many cases, no
safe harbor protection will be needed.
Moreover, we are concerned that if
vendors are included as protected
donors, entities that are not included in
the safe harbor will expand their lines
of business to become vendors to
circumvent the safe harbor limitations.
Comment: Some commenters
suggested that the safe harbor should
protect nonmonetary donations offered
by partnerships or consortia of
otherwise permissible donors, so that
parties could work together and share
the cost of expanding needed health
information technology in the
community.
Response: Because consortia and
partnerships can be structured in
various ways, it is difficult for us to
conclude with confidence that in all
circumstances they would not pose an
undue risk of abuse. We believe the
better approach to the issue of consortia
and partnerships is a case-by-case
approach.
4. Protected Recipients
Comment: Most commenters
expressed the view that the categories of
protected recipients were too limited
and urged OIG to be more expansive.
Commenters suggested that all or some
of the following should be included:
Non-staff physicians; physicians who
are network providers; physicians who
have contracted with an IDS; physicians
and other licensed health care
professionals whose patients regularly
receive inpatient and/or outpatient care
at the donor hospital or health system;
hospitalists; intensivists; physician
assistants; nurse practitioners;
audiologists; and independent
contractors of group practices.
Commenters noted that many nonphysician providers would greatly
benefit from safe harbor protection,
given the fact that non-physician
providers generally have limited
resources available to fund office
technology. A commenter suggested
including all non-physician providers
that furnish Medicare or Medicaid
covered services and might benefit from
the adoption of electronic health records
systems.
Many commenters suggested that the
categories of permissible recipients be
expanded to include the following
providers and suppliers and their staffs:
nursing facilities, assisted living and
residential care facilities, intermediate
care facilities for persons with mental
retardation, mental health facilities,
clinical laboratories, durable medical
equipment providers, pharmacies
(including long-term care pharmacies),
community health centers, network
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providers or other entities that operate,
support or manage network providers,
physician-hospital organizations, health
plans, RHIOs, and other entities
designed to enhance the overall health
of the community. Commenters also
requested that FQHCs, as defined in the
Medicaid statute and Medicare
regulations, be included as permissible
recipients.
Response: We agree with the
commenters that additional protection
would further the goal, and achieve the
benefits, of widespread adoption of
electronic health records technology
and, given the overall design of the safe
harbor, can be accomplished without
undue risk of fraud and abuse. The final
rule permits donation of protected
remuneration to any individual or entity
engaged in the delivery of health care,
without regard to whether the recipient
is on a medical staff, is a member of a
group practice, or is in network of a PDP
sponsor or MA organization. Protected
recipients would include practitioners,
providers, and suppliers that furnish
services directly to Federal health care
program beneficiaries, as well as those
that furnish services to health plan
enrollees. Protected recipients can
include, among others, physicians,
group practices, physician assistants,
nurse practitioners, nurses, therapists,
audiologists, pharmacists, nursing and
other facilities, FQHCs and community
health centers, laboratories and other
suppliers, and pharmacies.
Comment: Many commenters
requested that protected donors be
permitted to donate technology to all
members of a group practice, or to the
group practice as a whole, even if all
members do not routinely provide
services to the donor. Some commenters
suggested that group practices should be
permitted to donate to other group
practices. One commenter asked for
clarification as to whether the proposed
safe harbor would apply only to the
specific physician recipient of the
donated technology or whether, for
example, all members of a group
practice could use the technology that
was donated to the physician.
Response: The final rule contains no
limitation on the recipient’s
membership on a donor’s medical staff.
Further, the safe harbor protects the
donation of the technology to a
physician or group practice. As such,
donors are permitted to provide
technology to the group practice as a
whole, which should address the
concerns raised by the commenters.
Comment: Some commenters stated
that hospital donors may not want to
donate the full value of an electronic
health records system to physicians
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outside of their medical staff. These
commenters suggest permitting outside
physicians to have access to the
information in the hospital’s electronic
health records system by allowing the
outside physicians to use or sublicense
the hospital’s electronic health records
system at the hospital’s cost. These
commenters also suggested allowing
outside physicians to take advantage of
the pricing obtained by the hospitals for
electronic health records technology
and related services.
Response: The final safe harbor has
been expanded to include all physicians
as recipients, regardless of whether the
physician is a member of the donor’s
medical staff. Nothing in the safe harbor
requires hospitals or other donors to
offer recipients a full electronic health
records system. We interpret the
commenters’ suggestion that community
physicians be permitted to access
electronic data at the hospital’s cost to
be a comment seeking clarification that
any aggregate dollar limit on donated
technology be calculated based on the
donor’s costs rather than retail value to
the recipient. In this regard, the final
safe harbor incorporates a cost sharing
requirement based on the donor’s costs.
It does not incorporate an aggregate
dollar limit.
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5. Selection of Recipients
In light of the enhanced protection
against some types of fraud and abuse
offered by certified, interoperable
systems, the final rule permits donors to
use selective criteria for choosing
recipients, provided that neither the
eligibility of a recipient, nor the amount
or nature of the items or services, is
determined in a manner that directly
takes into account the volume or value
of referrals or other business generated
between the parties. We have
enumerated several selection criteria
which, if met, are deemed not to be
directly related to the volume or value
of referrals or other business generated
between the parties (for example, a
determination based on the total
number of hours that the recipient
practices medicine or a determination
based on the size of the recipient’s
medical practice). Selection criteria that
are based upon the total number of
prescriptions written by a recipient are
not prohibited, but the final regulation
does prohibit criteria based upon the
number or value of prescriptions written
by the recipient that are dispensed or
paid by the donor, as well as any criteria
directly based on any other business
generated between the parties. The final
safe harbor would not protect
arrangements that seek to induce a
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recipient to change loyalties from other
providers or plans to the donor.
We expect that this approach will
ensure that donated technology can be
targeted at recipients who use it the
most in order to promote a public policy
favoring adoption of electronic health
records, while discouraging especially
problematic direct correlations with
Federal health care program referrals.
This approach is a deliberate departure
from other safe harbors under the antikickback statute based on the unique
public policy considerations
surrounding electronic health records
and the Department’s goal of
encouraging widespread adoption of
interoperable electronic health records.
We caution, however, that outside of the
context of electronic health records, as
specifically addressed in this final rule,
both direct and indirect correlations
between the provision of free or deeply
discounted goods or services and the
volume or value of referrals or other
business generated between the parties
are highly suspect under the antikickback statute (and may evidence
outright violations) and do not meet the
requirements of other safe harbors under
the statute or § 1001.952.
Comment: Several commenters
commended OIG for its efforts to
prevent fraud and abuse by prohibiting
efforts to increase referrals or other
changes in practice patterns. Some
commenters noted that donors should
not be allowed to choose physicians
selectively based upon the volume of
their prescribing, size of practice, or
whether they would be likely to adopt
the technology, and stated that donors
should give technology to all of their
physicians. One commenter suggested
eliminating the criteria permitting
donors to select recipients based on any
reasonable and verifiable manner that is
not directly related to the volume or
value of referrals or other business
generated between the parties. The
commenter stated that this criteria is too
open-ended and subjective and could
become a major loophole.
Other commenters supported the use
of such criteria and expressed the view
that the use of selection criteria to select
recipients will improve quality of care
and ensure successful adoption of
health technology by physicians. These
commenters offered suggestions on the
standards for selection criteria. Some
commenters suggested that OIG
consider broad criteria for selection of
recipients, and that donors should be
permitted to make this decision based
upon their own financial model. One
commenter requested that OIG confirm
that donations based on total number of
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prescriptions are allowed under all of
the proposed safe harbors.
One commenter recommended that
selection criteria related to the volume
or value of referrals should be
permitted, as long as the criteria are
linked to achieving greater improvement
in quality of patient care or greater
success in adoption of health
information technology. The commenter
provided the following examples:
Participation in hospital quality
improvement activities; participation in
medical staff meetings and activities;
specialty; department (if information
technology is rolled out by department);
readiness to use health information
technology; consistent use of hospital
based information technology systems;
acting as a ‘‘physician champion’’ of
hospital based information technology
systems; willingness to serve as a trainer
for other physicians; size of medical
practice; or willingness to contribute
some resources to the information
technology project. Another commenter
requested that any list of criteria
included in the regulation be inclusive,
rather than exclusive, and that we
provide further guidance on how to
interpret the criteria.
Response: Some of the commenters’
suggestions are too subjective,
impractical, and insufficiently bright
line to be ‘‘deeming’’ provisions for
purposes of this rulemaking. Although
we believe it is important to provide
some guidance with respect to selection
criteria, we do not think it is possible to
enumerate a comprehensive list.
Therefore, we are providing several
bright line criteria in the final rule,
along with a general provision that
permits other reasonable and verifiable
selection criteria that do not relate
directly to the volume or value of
referrals or other business generated
between the parties. Specifically, we are
including the following criteria:
• The determination is based on the
total number of prescriptions written by
the recipient (but not the volume or
value of prescriptions dispensed or paid
by the donor or billed to a Federal
health care program);
• The determination is based on the
size of the recipient’s medical practice
(for example, total patients, total patient
encounters, or total relative value units);
• The determination is based on the
total number of hours that the recipient
practices medicine;
• The determination is based on the
recipient’s overall use of automated
technology in his or her medical
practice (without specific reference to
the use of technology in connection
with referrals made to the donor);
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• The determination is based on
whether the physician is a member of
the donor’s medical staff, if the donor is
a hospital or other entity with a formal
medical staff;
• The determination is based on the
level of uncompensated care provided
by the recipient; or
• The determination is made in any
reasonable and verifiable manner that
does not directly take into account the
volume or value of referrals or other
business generated between the parties.
Comment: Some commenters inquired
whether it would be permissible under
the safe harbor for a donor to offer a
staggered roll-out of electronic health
records technology, so that the
technology could be provided on a
selective basis, either by specialty,
hospital department, or otherwise.
These commenters suggested that the
safe harbor should not enumerate
specific examples of when a staggered
offering is deemed ‘‘not directly related
to’’ referrals or other business, but rather
should allow donors to offer
information technology, as appropriate
for each hospital’s individual financial
situation.
Response: The final rule prohibits the
selection of recipients using any method
that takes into account directly the
volume or value of referrals from the
recipient or other business generated
between the parties. The final rule
provides some examples of acceptable
criteria and also permits any other
determination that is reasonable and
verifiable. Given the potential variation
in arrangements, it is not entirely clear
to us how the commenters would
implement their ‘‘staggered roll-out.’’
Such arrangements should be evaluated
for compliance with the safe harbor on
a case-by-case basis. We note that
nothing in the safe harbor requires that
technology be provided to all potential
recipients contemporaneously.
Comment: One commenter
recommended that OIG reaffirm that
physicians who receive donated
technology remain free to choose what
health information may or may not be
shared with the hospital or entity
providing the technology, consistent
with current law and the wishes of
patients and physicians.
Response: Nothing in this final rule
regulates the sharing of health
information. Nothing in this final rule
permits donors to influence the medical
decision-making of recipients or
requires recipients to act in a manner
that would violate any law or ethical
obligation to patients.
Comment: A commenter requested
that OIG prohibit donors from selecting
recipients in a manner that punishes or
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rewards past prescribing practices or
influences future prescribing practices.
Another commenter recommended that
any incidental increase in the volume of
referrals that results from increased
quality and patient care be expressly
permitted.
Response: Any selection criteria
directly related to past, present, or
future volume of prescriptions
dispensed or paid by the donor or billed
to a Federal health care program, or to
any other business generated between
the parties are strictly prohibited. Any
selection criteria that punish or reward
past prescribing practices or influence
future prescribing practices would give
rise to an inference that the selection
criteria are tied directly to the volume
or value of referrals. We are not
adopting the commenter’s suggestion
that we expressly permit increases in
the volume or value of referrals
attributable to increased quality and
patient care. Whether an increase in the
volume of referrals between a donor and
recipient is attributable to increased
quality and patient care, rather than an
impermissible incentive, requires an
evaluation of the particular facts and
circumstances.
Comment: A commenter requested
that PDP sponsors and MA
organizations be permitted to determine
eligibility, or the amount or nature of
the items and services, in a manner that
takes into account the volume and value
of prescriptions written by the recipient
that are paid by the PDP sponsor or MA
organization. This commenter believed
that PDP sponsors and MA
organizations have the financial
incentive to control drug utilization
costs to compete effectively in the
Medicare Part D marketplace.
Response: We are not persuaded. The
fact that PDP sponsors and MA
organizations have some incentives to
control costs is not sufficient to warrant
different safe harbor treatment. Neither
eligibility for, nor the amount or nature
of the items or services, may be
determined by taking into account the
volume or value of prescriptions written
by the recipient for enrollees of the MA
organization or PDP sponsor. Nothing in
the safe harbor precludes PDP sponsors
and MA organizations from offering
protected items and services to health
care professionals with whom they have
network agreements.
Comment: One commenter requested
that we protect donations when
provided to a physician or clinic that
provides a certain level of
uncompensated charity care or
combination of charity care and volume
of Medicaid patients.
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Response: The provision of
uncompensated care would be an
acceptable selection criterion (e.g., a
hospital can elect to provide technology
only to rural and solo practitioners that
provide high levels of uncompensated
care when selecting among eligible
recipients). We have included a
criterion in the final regulations at
§ 1001.952(y)(5) that expressly permits
selection of recipients based on the level
of uncompensated care provided by the
recipient. We do not believe it would be
appropriate for us to establish a
particular level of uncompensated care
necessary to qualify for safe harbor
protection. Donors should have
flexibility to respond to the particular
needs of their communities by selecting
recipients based on levels of
uncompensated care that reflect those
needs. The total number of Medicaid
patients served by the practice could
also be acceptable, so long as there is no
direct correlation with Medicaid
patients referred between the donor and
recipient.
Comment: We proposed including a
requirement that the prescribing health
care professional, practitioner,
pharmacy, or pharmacist (or any
affiliated group, employee, or staff
member) does not make the receipt of
items or services a condition of doing
business with the donor. Those
commenters that commented on this
condition favored it. A commenter
noted that, as proposed by CMS for the
proposed exception under the physician
self-referral law, the anti-solicitation
provision would be a core protection
against fraud and abuse. The commenter
suggested that our final rule should
mirror the language proposed by CMS,
which barred making the receipt, as
well as the amount or nature, of items
or services a condition of doing business
with the donor. See 70 FR 59182, 59187
(October 11, 2005).
Response: We agree that a provision
barring recipients from conditioning
their business on donations of
technology can safeguard against fraud
and abuse and should be included in
the final safe harbor. We further agree
that, in this regard, the safe harbor
under the anti-kickback statute should
be consistent with the exception under
the physician self-referral law.
Accordingly, we are including a
provision that mirrors the provision
proposed by CMS, with modifications
appropriate to the different nature of
recipients addressed by the two rules.
For consistency, we are making the
same modifications to the comparable
condition in the electronic prescribing
arrangements safe harbor.
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6. Value of Technology
We proposed, as a further safeguard
against fraud and abuse, to limit the
aggregate value of the qualifying
electronic prescribing technology that a
donor could provide to a recipient. We
solicited public comment on the
applicable amount and methodology for
limiting the aggregate value of donated
technology.
We also indicated that we were
considering setting an initial cap, for
both the electronic prescribing and
electronic health records safe harbors,
which would be lowered after a certain
period of time sufficient to promote the
initial adoption of the technology. This
approach would have the effect of
encouraging investments in the desired
technology while also ensuring that,
once the technology has been widely
adopted and, as often occurs with
technology, costs decrease as technology
becomes more widely adopted, the safe
harbor cannot be abused to disguise
payments for referrals.
Comment: We solicited public
comments that address the retail and
nonretail costs (i.e., the costs of
purchasing from manufacturers,
distributors, or other nonretail sources).
Only a few commenters provided
concrete information on the cost of
health information technology, while
most commenters simply noted the cost
was high, that financial incentives were
imperative, and that adoption was not
equally affordable by all sectors of the
health care field.
Response: We appreciate commenters
providing this information, and we have
taken the information into consideration
in finalizing the safe harbor. The
Administration supports the adoption of
health information technology as a
normal cost of doing business to ensure
patients receive high quality care.
Comment: Most commenters shared
the opinion that there should not be a
cap on the value of donated technology,
stating that there is not a consistent or
appropriate way to determine fair
market value or establish a monetary
cap that would accommodate all
situations and account for the rapid
advancement in technology. Some
commenters believed that the attempt to
ascertain the value of donations for the
purpose of fraud protection would
become a barrier to adoption of
electronic health records, unnecessarily
discourage potential donors from
providing technology, or would result in
a reduction on the ‘‘return on
investment’’ for electronic prescribing
and electronic health records. Other
commenters expressed concern that a
low cap might discourage the
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implementation of electronic health
records technology, while a high cap
may serve to pressure hospitals to
provide the maximum allowable
amount.
However, a few commenters shared
the concern of OIG that allowing donors
to provide items or services without
limiting the value of such support could
provide a potential for fraud and abuse.
One commenter asserted that the value
of donations will be self-limiting,
because donors are unlikely to spend
more than is necessary, thereby
eliminating the need for a cap. Another
commenter argued that a cap is not
necessary so long as the donation is
made without limiting or restricting the
use of the electronic prescribing or
electronic health records technology to
services provided by the donating
entity, and so long as the donation does
not take into account the volume or
value of referrals. Another commenter
recommended that OIG limit the design
or utility of the protected donated
technology by requiring that it not have
more than incidental value to the
recipient, beyond the function for which
it is intended.
Response: We agree with the
commenters that determining the value
of donated technology poses certain
difficulties, and we are not including a
cap on the amount of protected
donations in the final safe harbor. While
gifts of valuable items and services to
existing or potential referral sources
typically pose a high risk of fraud and
abuse, we believe that the combination
of safe harbor conditions in the final
safe harbor, including the sunset
provision, should adequately safeguard
against abusive electronic health records
arrangements.
Comment: Many commenters, while
opposing the imposition of a cap,
offered other suggestions for limiting the
value of protected nonmonetary
remuneration. Several commenters
suggested a limit on the value of
protected nonmonetary remuneration in
the form of a percentage contribution
from the recipient, i.e., cost sharing by
the recipient. These commenters
suggested requiring either a set
percentage contribution by the recipient
or a scaled percentage contribution by
the recipient that would lower the
required percentage contribution once a
pre-determined threshold amount was
reached. Some commenters also
suggested that we consider a cost
sharing method that would be based on
set amounts that would be donated,
with the recipient paying any remaining
costs. The amounts could be revised
over time to account for the fluctuating
expense of technology and other
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changes that may arise. One commenter
noted that studies have shown that
individuals value services more when a
portion of the cost is shared. This
commenter suggested that recipients
should, at a minimum, be required to
contribute towards the purchase of
wireless internet access.
Response: We agree that cost sharing
is an appropriate method to address
some of the fraud and abuse risks
inherent in unlimited donations of
technology. Accordingly, the safe harbor
establishes a percentage contribution
that must be incurred by the recipient
of the electronic health records
technology. Specifically, the final rule
offers safe harbor protection only if the
recipient pays 15 percent of the donor’s
cost of the technology. We believe the
15 percent cost sharing requirement is
high enough to encourage prudent and
robust electronic health records
arrangements, without imposing a
prohibitive financial burden on
recipients. Requiring financial
participation by a recipient should
result in selection of technology
appropriate for the recipient’s practice
and increase the likelihood that the
recipient will actually use the
technology. Moreover, this approach
requires recipients to contribute toward
the benefits they may experience from
the adoption of interoperable electronic
health records (for example, a decrease
in practice expenses or access to
incentive payments related to the
adoption of health information
technology). We note that, depending on
the circumstances, a differential in the
amount of cost sharing imposed by a
donor on different recipients could give
rise to an inference that an arrangement
is directly related to the volume or value
of referrals or other business generated
between the parties, thus rendering the
arrangement ineligible for safe harbor
protection. In this regard, the reason and
basis for the differential should be
closely scrutinized.
We note that all donated software and
health information technology and
training services would be subject to the
cost sharing requirements. It is our
understanding that many updates and
upgrades are included in the initial
purchase price of the technology and
would not trigger additional cost
sharing responsibility on the part of the
recipient at the time the update or
upgrade is provided to the recipient.
Any updates, upgrades, or modifications
to the donated electronic health records
system that were not covered under the
initial purchase price for the donated
technology would be subject to separate
cost sharing obligations by the recipient
(to the extent that the donor incurs
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additional costs). To ensure that
recipients incur the requisite 15 percent
of the costs, donors (and their affiliates)
are prohibited from providing financing
or making loans to recipients to fund the
recipient’s payment for the technology.
With respect to calculation of the
costs for internally-developed
(‘‘homegrown’’) software (that is,
software that is not purchased from an
outside vendor), and internallydeveloped add-on modules and
components (that is, software purchased
from an outside vendor and internally
customized to ensure operational
functionality), parties should use a
reasonable and verifiable method for
allocating costs and are strongly
encouraged to maintain
contemporaneous and accurate
documentation. Methods of cost
allocation will be scrutinized to ensure
that they do not inappropriately shift
costs in a manner that provides an
excess benefit to the recipient or results
in the recipient effectively paying less
than 15 percent of the donor’s true cost
of the technology.
Comment: One commenter suggested
that the entire electronic health records
safe harbor sunset no later than five
years from the date of publication of the
final rulemaking, with the possibility for
the sunset to be delayed upon an
administrative finding by the Secretary
that there is still a need for the safe
harbor. The commenter observed that,
in the future, electronic health records
technology will be a standard and
necessary part of a medical practice, and
there will no longer be a need for third
parties to donate it to physicians to spur
adoption of the technology. Moreover,
the commenter observed that
incompatibility across a network of
providers will cease to be an issue once
interoperability of technology becomes
the norm. For these reasons, the
commenter concluded that the rationale
for establishing a safe harbor to the antikickback statute will decrease over time.
Response: We agree with this
commenter that the need for a safe
harbor for donations of electronic health
records technology should diminish
substantially over time as the use of
such technology becomes a standard
and expected part of medical practice.
Over time, physicians and others who
receive donated technology from third
parties may begin to realize the
economic benefits from increased
efficiencies and quality of care, at which
point they may be expected to shoulder
the costs associated with producing
those benefits. As we indicated earlier
in this rulemaking, we are promulgating
an anti-kickback safe harbor for
donations of valuable technology to
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promote its use in the interests of
quality of care, patient safety, and
health care efficiency, notwithstanding
the substantial risk of fraud and abuse
normally associated with gifts of
valuable goods and services to referral
sources. Our goal is to promote the
beneficial uses of technology without
undue risk of fraud and abuse. As the
technology becomes widely used and an
accepted part of medical practice, the
balance between promoting health
information technology and preventing
fraud and abuse changes.
A sunset provision would also
address some of our concerns about gifts
of unlimited amounts of valuable
technology. As noted above, we have
concluded that we cannot readily
develop an appropriate cap on the
amount of protected technology. A
sunset provision, in effect, would cap
the amount of protected technology that
could be donated by third parties in a
different way, thereby safeguarding
against fraud and abuse in the long run.
All arrangements occurring after the
sunset date would be subject to case-bycase evaluation under the anti-kickback
statute.
We solicited comments on our overall
approach to crafting a set of safe harbor
conditions and how we might ensure
that the conditions, taken as a whole,
provide sufficient protection against
fraud and abuse. Given the difficulties
inherent in limiting the value of
donated technology and our relaxing of
the ordinary principle that
remuneration cannot be linked in any
manner to the volume or value of
referrals, we believe the sunset
provision suggested by the commenter
will provide appropriate additional
protection.
For all of these reasons, we are
adopting the suggestion of the
commenter, with modifications. We are
sunsetting the safe harbor on December
31, 2013. This date is consistent with
the President’s goal of adoption of
electronic health records technology by
2014. See President George W. Bush’s
Health Information Technology Plan
announced April 26, 2004; https://
www.whitehouse.gov/infocus/
technology/economic_policy200404/
chap3.html. Under § 1001.952(y)(13), all
transfers of items and services must
occur, and all conditions of the safe
harbor must have been satisfied, on or
before December 31, 2013. Nothing in
the safe harbor would preclude the
Secretary from extending the time
period in accordance with notice-andcomment rulemaking. However, we do
not believe it would be appropriate to
have a condition in a regulation that is
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contingent on an administrative
determination.
We observe that the sunset provision
is also consistent with the language in
the preamble to the proposed rule that
stated:
‘‘We are considering setting an initial cap,
which would be lowered after a certain
period of time sufficient to promote the
initial adoption of the technology. This
would have the effect of encouraging
investments in the desired technology while
also ensuring that, once the technology has
been widely adopted and its costs have come
down, the safe harbor cannot be abused to
disguise payments for referrals.’’ 70 FR at
59020.
(We note that we are not similarly
sunsetting the electronic prescribing
safe harbor at § 1001.952(x), as that safe
harbor is mandated by statute, and we
do not have authority to limit its
duration. Moreover, the risk of fraud
and abuse is substantially greater with
respect to donations of electronic health
records technology than it is for
donations of technology necessary and
used solely for electronic prescribing
under § 1001.952(x).)
Comment: A few commenters
suggested that we not sunset the preinteroperability safe harbor once the
post-interoperability safe harbor was
finalized, as we had proposed.
Response: We are not finalizing a
separate pre-interoperability safe harbor.
Comment: One commenter stated that
CMS should study the issue of a cap
since health information technology
capabilities and costs are rapidly
evolving.
Response: This comment addresses
matters outside the scope of this
rulemaking.
Comment: A few commenters
suggested that the final rule should
allow the donors to reimburse recipients
for previously implemented electronic
health records systems in an amount
equal to the lesser of the fair market
value of the donated technology or the
donated value cap, should a cap be
adopted. These commenters also
requested that recipients be given
assurance by the donor that any
technology previously purchased that is
equivalent to donated technology and
meets the applicable interoperability
standards would be integrated into the
donor’s system.
Response: We are not adopting these
suggestions. The commenters’
suggestions go beyond the scope of the
safe harbor and appear to be a request
for the safe harbor to provide retroactive
protection for previously purchased
technology. The safe harbor protects the
donation of technology that meets all of
the conditions of the safe harbor.
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Reimbursement for previously incurred
expenses is not protected and poses a
substantial risk of fraud and abuse.
Comment: We solicited comment in
the proposed rulemaking about our
proposal to prohibit donors from
shifting the financial burden of
providing electronic health records
technology to the Federal health care
programs or beneficiaries. Some
commenters suggested that a cap on the
value of donated technology would
address our concern. One commenter
suggested that the Department mandate
savings that must be realized over a
particular period of time. This
commenter believed that pay for
performance incentives should
eventually mitigate the risk of cost
shifting.
Response: For the reasons noted
above, we are not including a cap on the
value of donated technology. Moreover,
we do not believe it is feasible for us to
mandate particular levels of savings as
a condition of safe harbor protection or
to rely on the future implementation of
pay for performance incentives. We
continue to believe that our proposed
condition is prudent and the best way
to prevent cost shifting to the Federal
programs and their beneficiaries. We
have included the condition in the final
safe harbor at § 1001.952(y)(12).
7. Documentation
Comment: One commenter suggested
omitting any requirement that the
written agreement documenting the
arrangement specify the covered items
and services and their values. Another
commenter requested clarification as to
whether all parties to a three-tier
technology arrangement (i.e., the donordistributor of the technology, the vendor
of the technology, and the recipient of
the technology) would be required to
sign the written agreement required by
the safe harbor.
Response: In light of the cost sharing
condition of the final safe harbor, we are
requiring documentation of the cost to
the donor of the donated technology,
and the recipient’s expected
contribution thereto. Moreover, we are
requiring that the cost sharing
contribution be made and documented
before the items and services can qualify
for safe harbor protection. The
documentation must be specific as to
the items and services donated, the
actual cost to the donor, and the amount
of the recipient’s cost sharing obligation.
The documentation must cover all of the
electronic health records items and
services to be provided by the donor (or
affiliated parties) to the recipient. With
respect to this requirement, we have
added language to the final safe harbor
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clarifying that the written
documentation requirement can be
satisfied by incorporating by reference
the agreements between the parties or
by the use of cross references to a master
list of agreements between the parties
that is maintained and updated
centrally, is available for review by the
Secretary upon request, and preserves
the historical record of agreements.
Nothing in the safe harbor requires that
agreements between donors and
recipients also be signed by third-party
vendors; however, such documentation
may be a prudent business practice.
D. Community-Wide Health Information
Systems
Comment: Some commenters
responded to our request for public
comments on the need for, and the
conditions that should pertain to, a safe
harbor for community-wide health
information systems. These commenters
supported the creation of a safe harbor
and suggested the safe harbor mirror the
community-wide health information
systems exception under section 1877 of
the Act, with certain suggested
revisions, including, for example, that
the safe harbor should protect all types
of providers, not just physicians.
Another commenter offered suggestions
on revisions to the section 1877
exception.
Response: We are not addressing a
safe harbor for community-wide health
information systems at this time;
however, we will take into
consideration the comments received
should we develop a proposal for such
a safe harbor. Comments on the section
1877 exception should be addressed to
CMS.
III. Regulatory Impact Statement
We have examined the impact of this
rule as required by Executive Order
12866, the Unfunded Mandates Reform
Act of 1995, the Regulatory Flexibility
Act (RFA) of 1980, and Executive Order
13132.
Executive Order 12866
Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). A regulatory impact
analysis must be prepared for major
rules with economically significant
effects (i.e., $100 million or more in any
given year).
This is not a major rule, as defined at
5 U.S.C. 804(2), and it is not
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economically significant, since it will
not have a significant effect on program
expenditures, and there are no
additional substantive costs to
implement the resulting provisions.
This final rule will create new safe
harbors under the anti-kickback statute
for certain entities to provide
technology-related items and services to
certain parties for electronic prescribing
and health records purposes in doing so,
this rulemaking imposes no
requirements on any party. Parties may
voluntarily seek to comply with this
provision so that they have assurance
that their actions will not subject them
to any enforcement actions under the
anti-kickback statute.
The safe harbors should facilitate the
adoption of electronic prescribing and
health records technology by filling a
gap rather than creating the primary
means by which physicians or other
recipients will adopt these technologies.
In other words, donors will not fund all
of the health information technology
used by recipients. However, since we
cannot predict which entities will offer
these items and services, we cannot
determine with certainty the aggregate
economic impact of this final
rulemaking. We do not believe,
however, that the impact of this
electronic prescribing safe harbor rule
would approach $100 million annually.
Therefore, this final rule is not a major
rule. We note that this final rule will
remove a perceived obstacle to the
provision of qualifying electronic
prescribing technology and electronic
health records software or information
technology and training services (for
purposes of this Regulatory Impact
Statement, herein referred to as
‘‘qualifying health information
technology’’) by certain entities, which
effort advances the goal of the adoption
of interoperable information technology.
Although this final rule applies to
donations of qualifying health
information technology by hospitals,
group practitioners, PDP sponsors, MA
plans, and other donors, we do not
expect that all entities would use these
final safe harbors (in some cases,
existing safe harbors may also be
available or parties may use the OIG’s
advisory opinion process).
Our analysis under Executive Order
12866 of the expenditures that entities
may choose to make under this final
rule is restricted by potential effects of
outside factors, such as technological
progress and other market forces, future
certification standards, and the
companion final physician self-referral
exceptions. Furthermore, both the costs
and potential savings of electronic
prescribing, electronic health records,
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and other functional components vary
to the extent to which each element
operates as a stand alone system or as
part of an integrated system.
As noted in the proposed electronic
prescribing standards rule, which was
published on February 4, 2005 (70 FR
6256, 6268–6273), donors may
experience net savings with electronic
prescribing in place and patients would
experience significant, positive health
effects. We have not repeated that
analysis in this final rule. Moreover, we
have not replicated the extensive
analysis of costs, benefits, and potential
impact on patient care contained in the
companion physician self-referral final
rule. We believe the analysis set forth
there may be similarly relevant to the
potential impact of the final safe
harbors. As also noted there, we assume
that qualifying health information
technology costs and benefits will be
realized eventually. Even without
government intervention, there is a
lively market today, and as consensus
standards evolve, that market will grow.
The question as to the regulatory impact
of this final rule is: to what extent
would the use of these final antikickback safe harbors accelerate
adoption of electronic prescribing and
electronic health records, taking into
account available policy instruments,
notably the development of
interoperability criteria? The baseline
information is uncertain. As described
in more detail in the physician selfreferral final rule, there are numerous
estimates of adoption of electronic
prescribing by health plans, hospitals,
physicians, and (for prescribing of drugs
only) pharmacies. As noted there, these
estimates are highly sensitive to
assumptions. For example, the costs
may be higher or lower depending on
the nature of, and information
technology needs of, donors and
recipients. The rate of adoption might
be higher or lower than estimated. We
believe the substantial majority of
recipients will be physicians. The
proportion receiving remuneration
could be lower or higher than estimated,
depending on willingness of hospitals,
group practices, MA organizations, and
PDP sponsors and other donors to
subsidize investments in health
information technology.
The Office of Management and Budget
(OMB) has reviewed this rule in
accordance with Executive Order 12866.
Unfunded Mandates Reform Act
Section 202 of the Unfunded
Mandates Reform Act of 1995 requires
that agencies assess the anticipated
costs and benefits of Federal mandates
before issuing any rule that may result
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in the mandated expenditure by State,
local, or tribal Governments, in the
aggregate, or by the private sector, of
$100 million in 1995 dollars (a
threshold adjusted annually for inflation
and now approximately $120 million).
This final rule would impose no
mandates. Any actions taken under this
rule would be voluntary. Any
expenditures would be undertaken by
Government-owned hospitals in their
business capacity, without any
necessary impact on State, local, or
tribal Governments, or their expenditure
budgets, as such.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
and the Small Business Regulatory
Enforcement and Fairness Act of 1996,
which amended the RFA, require
agencies to analyze options for
regulatory relief of small businesses. For
purposes of the RFA, small entities
include small businesses, nonprofit
organizations, and Government
agencies. Most hospitals and most other
providers and suppliers are small
entities, either by nonprofit status or by
having revenues of $6 million to $29
million in any one year. Individuals and
States are not included in the definition
of a small entity. We are not preparing
an analysis for the RFA because we have
determined that this final rule will not
have a significant impact on small
businesses. We base our decision on the
fact that we expect the rulemaking on
electronic prescribing and health
records to be beneficial to the affected
entities because it will allow them to
better reap the benefits of increased use
of electronic prescribing and health
records technology, including reduction
of medical errors and increased
operational efficiencies.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 603 of the
RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a Metropolitan Statistical Area and has
fewer than 100 beds. We are not
preparing an analysis for section 1102(b)
of the Act because we have determined
that this rule will not have a substantial
negative impact on the operations of a
substantial number of small rural
hospitals. If this rule has any impact, it
would be a substantial positive impact
in reducing medical errors and
increasing operational efficiencies
through the use of technology.
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Executive Order 13132
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a final
rule that imposes substantial direct
requirement costs on State and local
Governments, preempts State law, or
otherwise has Federalism implications.
Since this regulation does not impose
any costs on State or local Governments,
preempt State or local law, or otherwise
have Federalism implications, the
requirements of Executive Order 13132
are not applicable.
IV. Paperwork Reduction Act
In accordance with section
3506(c)(2)(A) of the Paperwork
Reduction Act of 1995, we are required
to solicit public comments, and receive
final OMB approval, on any information
collection requirements set forth in
rulemaking. The safe harbors
promulgated in this final rule impose
some minimal information collection
requirements. Specifically, for an
arrangement to fall within the final safe
harbors it would have to fulfill the
following documentation requirements:
(1) There must be a writing signed by
the parties; (2) the written agreement
must identify the items or services being
provided and their cost; and (3) the
written agreement must incorporate or
cross-reference prior relevant
agreements.
Compliance with a safe harbor under
the Federal anti-kickback statute is
voluntary, and no party is ever required
to comply with a safe harbor. Instead,
safe harbors merely offer an optional
framework for structuring business
arrangements to ensure compliance with
the anti-kickback statute. All parties
remain free to enter into arrangements
without regard to a safe harbor, so long
as the arrangements do not involve
unlawful payments for referrals under
the anti-kickback statute. Thus, we
believe that the documentation
requirements necessary to enjoy safe
harbor protection do not qualify as an
added paperwork burden in accordance
with 5 CFR 1320.3(b)(2), because the
requirements are consistent with usual
and customary business practices and
because the time, effort, and financial
resources necessary to comply with the
requirements would largely be incurred
in the normal course of business
activities.
List of Subjects in 42 CFR Part 1001
Administrative practice and
procedure, Fraud, Health facilities,
Health professionals, Medicare.
I Accordingly, 42 CFR part 1001 is
amended as follows:
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Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Rules and Regulations
PART 1001—[AMENDED]
1. The authority citation for part 1001
is revised to read as follows:
I
Authority: 42 U.S.C. 1302, 1320a–7,
1320a–7b, 1395u(j), 1395u(k), 1395w–
104(e)(6), 1395y(d), 1395y(e),
1395cc(b)(2)(D), (E) and (F), and 1395hh; and
sec. 2455, Pub. L. 103–355, 108 Stat. 3327 (31
U.S.C. 6101 note).
2. Section 1001.952 is amended by
republishing the introductory text, by
adding and reserving paragraph (w), and
by adding new paragraphs (x) and (y) to
read as follows:
I
sroberts on PROD1PC70 with RULES
§ 1001.952
Exceptions.
The following payment practices shall
not be treated as a criminal offense
under section 1128B of the Act and
shall not serve as the basis for an
exclusion:
*
*
*
*
*
(x) Electronic prescribing items and
services. As used in section 1128B of the
Act, ‘‘remuneration’’ does not include
nonmonetary remuneration (consisting
of items and services in the form of
hardware, software, or information
technology and training services)
necessary and used solely to receive and
transmit electronic prescription
information, if all of the following
conditions are met:
(1) The items and services are
provided by a—
(i) Hospital to a physician who is a
member of its medical staff;
(ii) Group practice to a prescribing
health care professional who is a
member of the group practice; and
(iii) A PDP sponsor or MA
organization to pharmacists and
pharmacies participating in the network
of such sponsor or organization and to
prescribing health care professionals.
(2) The items and services are
provided as part of, or are used to
access, an electronic prescription drug
program that meets the applicable
standards under Medicare Part D at the
time the items and services are
provided.
(3) The donor (or any person on the
donor’s behalf) does not take any action
to limit or restrict the use or
compatibility of the items or services
with other electronic prescribing or
electronic health records systems.
(4) For items or services that are of the
type that can be used for any patient
without regard to payor status, the
donor does not restrict, or take any
action to limit, the recipient’s right or
ability to use the items or services for
any patient.
(5) Neither the recipient nor the
recipient’s practice (or any affiliated
individual or entity) makes the receipt
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of items or services, or the amount or
nature of the items or services, a
condition of doing business with the
donor.
(6) Neither the eligibility of a
recipient for the items or services, nor
the amount or nature of the items or
services, is determined in a manner that
takes into account the volume or value
of referrals or other business generated
between the parties.
(7) The arrangement is set forth in a
written agreement that—
(i) Is signed by the parties;
(ii) Specifies the items and services
being provided and the donor’s cost of
the items and services; and
(iii) Covers all of the electronic
prescribing items and services to be
provided by the donor (or affiliated
parties). This requirement will be met if
all separate agreements between the
donor (and affiliated parties) and the
recipient incorporate each other by
reference or if they cross-reference a
master list of agreements that is
maintained and updated centrally and is
available for review by the Secretary
upon request. The master list should be
maintained in a manner that preserves
the historical record of agreements.
(8) The donor does not have actual
knowledge of, and does not act in
reckless disregard or deliberate
ignorance of, the fact that the recipient
possesses or has obtained items or
services equivalent to those provided by
the donor.
Note to paragraph (x): For purposes of
paragraph (x) of this section, group practice
shall have the meaning set forth at 42 CFR
411.352; member of the group practice shall
mean all persons covered by the definition of
‘‘member of the group or member of a group
practice’’ at 42 CFR 411.351, as well as other
prescribing health care professionals who are
owners or employees of the group practice;
prescribing health care professional shall
mean a physician or other health care
professional licensed to prescribe drugs in
the State in which the drugs are dispensed;
PDP sponsor or MA organization shall have
the meanings set forth at 42 CFR 423.4 and
422.2, respectively; prescription information
shall mean information about prescriptions
for drugs or for any other item or service
normally accomplished through a written
prescription; and electronic health record
shall mean a repository of consumer health
status information in computer processable
form used for clinical diagnosis and
treatment for a broad array of clinical
conditions.
(y) Electronic health records items
and services. As used in section 1128B
of the Act, ‘‘remuneration’’ does not
include nonmonetary remuneration
(consisting of items and services in the
form of software or information
technology and training services)
PO 00000
Frm 00028
Fmt 4701
Sfmt 4700
necessary and used predominantly to
create, maintain, transmit, or receive
electronic health records, if all of the
following conditions are met:
(1) The items and services are
provided to an individual or entity
engaged in the delivery of health care
by—
(i) An individual or entity that
provides services covered by a Federal
health care program and submits claims
or requests for payment, either directly
or through reassignment, to the Federal
health care program; or
(ii) A health plan.
(2) The software is interoperable at
the time it is provided to the recipient.
For purposes of this subparagraph,
software is deemed to be interoperable
if a certifying body recognized by the
Secretary has certified the software
within no more than 12 months prior to
the date it is provided to the recipient.
(3) The donor (or any person on the
donor’s behalf) does not take any action
to limit or restrict the use, compatibility,
or interoperability of the items or
services with other electronic
prescribing or electronic health records
systems.
(4) Neither the recipient nor the
recipient’s practice (or any affiliated
individual or entity) makes the receipt
of items or services, or the amount or
nature of the items or services, a
condition of doing business with the
donor.
(5) Neither the eligibility of a
recipient for the items or services, nor
the amount or nature of the items or
services, is determined in a manner that
directly takes into account the volume
or value of referrals or other business
generated between the parties. For the
purposes of this paragraph (y)(5), the
determination is deemed not to directly
take into account the volume or value of
referrals or other business generated
between the parties if any one of the
following conditions is met:
(i) The determination is based on the
total number of prescriptions written by
the recipient (but not the volume or
value of prescriptions dispensed or paid
by the donor or billed to a Federal
health care program);
(ii) The determination is based on the
size of the recipient’s medical practice
(for example, total patients, total patient
encounters, or total relative value units);
(iii) The determination is based on the
total number of hours that the recipient
practices medicine;
(iv) The determination is based on the
recipient’s overall use of automated
technology in his or her medical
practice (without specific reference to
the use of technology in connection
with referrals made to the donor);
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sroberts on PROD1PC70 with RULES
(v) The determination is based on
whether the recipient is a member of the
donor’s medical staff, if the donor has
a formal medical staff;
(vi) The determination is based on the
level of uncompensated care provided
by the recipient; or
(vii) The determination is made in
any reasonable and verifiable manner
that does not directly take into account
the volume or value of referrals or other
business generated between the parties.
(6) The arrangement is set forth in a
written agreement that —
(i) Is signed by the parties;
(ii) Specifies the items and services
being provided, the donor’s cost of those
items and services, and the amount of
the recipient’s contribution; and
(iii) Covers all of the electronic health
records items and services to be
provided by the donor (or any affiliate).
This requirement will be met if all
separate agreements between the donor
(and affiliated parties) and the recipient
incorporate each other by reference or if
they cross-reference a master list of
agreements that is maintained and
updated centrally and is available for
review by the Secretary upon request.
The master list should be maintained in
a manner that preserves the historical
record of agreements.
(7) The donor does not have actual
knowledge of, and does not act in
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reckless disregard or deliberate
ignorance of, the fact that the recipient
possesses or has obtained items or
services equivalent to those provided by
the donor.
(8) For items or services that are of the
type that can be used for any patient
without regard to payor status, the
donor does not restrict, or take any
action to limit, the recipient’s right or
ability to use the items or services for
any patient.
(9) The items and services do not
include staffing of the recipient’s office
and are not used primarily to conduct
personal business or business unrelated
to the recipient’s clinical practice or
clinical operations.
(10) The electronic health records
software contains electronic prescribing
capability, either through an electronic
prescribing component or the ability to
interface with the recipient’s existing
electronic prescribing system, that
meets the applicable standards under
Medicare Part D at the time the items
and services are provided.
(11) Before receipt of the items and
services, the recipient pays 15 percent
of the donor’s cost for the items and
services. The donor (or any affiliated
individual or entity) does not finance
the recipient’s payment or loan funds to
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45137
be used by the recipient to pay for the
items and services.
(12) The donor does not shift the costs
of the items or services to any Federal
health care program.
(13) The transfer of the items and
services occurs, and all conditions in
this paragraph (y) have been satisfied,
on or before December 31, 2013.
Note to paragraph (y): For purposes of
paragraph (y) of this section, health plan
shall have the meaning set forth at
§ 1001.952(l)(2); interoperable shall mean
able to communicate and exchange data
accurately, effectively, securely, and
consistently with different information
technology systems, software applications,
and networks, in various settings, and
exchange data such that the clinical or
operational purpose and meaning of the data
are preserved and unaltered; and electronic
health record shall mean a repository of
consumer health status information in
computer processable form used for clinical
diagnosis and treatment for a broad array of
clinical conditions.
Dated: June 15, 2006.
Daniel R. Levinson,
Inspector General.
Approved: July 14, 2006.
Michael O. Leavitt,
Secretary.
[FR Doc. 06–6666 Filed 8–1–06; 8:45 am]
BILLING CODE 4152–01–P
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Agencies
[Federal Register Volume 71, Number 152 (Tuesday, August 8, 2006)]
[Rules and Regulations]
[Pages 45110-45137]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-6666]
[[Page 45109]]
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Part II
Department of Health and Human Services
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Office of Inspector General
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42 CFR Part 1001
Medicare and State Health Care Programs: Fraud and Abuse; Safe Harbors
for Certain Electronic Prescribing and Electronic Health Records
Arrangements Under the Anti-Kickback Statute; Final Rule
Federal Register / Vol. 71 , No. 152 / Tuesday, August 8, 2006 /
Rules and Regulations
[[Page 45110]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
42 CFR Part 1001
RIN 0991-AB39
Medicare and State Health Care Programs: Fraud and Abuse; Safe
Harbors for Certain Electronic Prescribing and Electronic Health
Records Arrangements Under the Anti-Kickback Statute
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Final rule.
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SUMMARY: As required by the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA), Public Law 108-173, this final
rule establishes a new safe harbor under the Federal anti-kickback
statute for certain arrangements involving the provision of electronic
prescribing technology. Specifically, the safe harbor would protect
certain arrangements involving hospitals, group practices, and
prescription drug plan (PDP) sponsors and Medicare Advantage (MA)
organizations that provide to specified recipients certain nonmonetary
remuneration in the form of hardware, software, or information
technology and training services necessary and used solely to receive
and transmit electronic prescription information. In addition, in
accordance with section 1128B(b)(3)(E) of the Social Security Act (the
Act), this final rule creates a separate new safe harbor for certain
arrangements involving the provision of nonmonetary remuneration in the
form of electronic health records software or information technology
and training services necessary and used predominantly to create,
maintain, transmit, or receive electronic health records.
DATES: Effective Date: These regulations are effective October 10,
2006.
FOR FURTHER INFORMATION CONTACT: Catherine Martin, Office of Counsel to
the Inspector General, (202) 619-0335.
SUPPLEMENTARY INFORMATION:
I. Background
Overview--Establishing New Safe Harbors for Arrangements Involving
Electronic Prescribing and Electronic Health Records Technology
This final rule establishes safe harbor protection for certain
arrangements involving the donation of electronic prescribing and
electronic health records technology. Section I contains a brief
background discussion addressing the anti-kickback statute and safe
harbors; a summary of the relevant MMA provisions; a summary of the
proposed safe harbors; and a summary of the final safe harbors. Section
II contains a summary of the public comments and our responses.
A. The Anti-Kickback Statute and Safe Harbors
Section 1128B(b) of the Act (42 U.S.C. 1320a-7b(b), the ``anti-
kickback statute'') provides criminal penalties for individuals or
entities that knowingly and willfully offer, pay, solicit, or receive
remuneration in order to induce or reward the referral of business
reimbursable under any of the Federal health care programs, as defined
in section 1128B(f) of the Act. The offense is classified as a felony
and is punishable by fines of up to $25,000 and imprisonment for up to
five years. Violations of the anti-kickback statute may also result in
the imposition of civil money penalties (CMPs) under section
1128A(a)(7) of the Act (42 U.S.C. 1320a-7a(a)(7)), program exclusion
under section 1128(b)(7) of the Act (42 U.S.C. 1320a-7(b)(7)), and
liability under the False Claims Act, (31 U.S.C. 3729-33).
The types of remuneration prohibited specifically include, without
limitation, kickbacks, bribes, and rebates, whether made directly or
indirectly, overtly or covertly, in cash or in kind. Prohibited conduct
includes not only the payment of remuneration intended to induce or
reward referrals of patients, but also the payment of remuneration
intended to induce or reward the purchasing, leasing, or ordering of,
or arranging for or recommending the purchasing, leasing, or ordering
of, any good, facility, service, or item reimbursable by any Federal
health care program.
Because of the broad reach of the statute, concern was expressed
that some relatively innocuous commercial arrangements were covered by
the statute and, therefore, potentially subject to criminal
prosecution. In response, Congress enacted section 14 of the Medicare
and Medicaid Patient and Program Protection Act of 1987, Public Law
100-93 (section 1128B(b)(3)(E) of the Act), which specifically required
the development and promulgation of regulations, the so-called ``safe
harbor'' provisions, which would specify various payment and business
practices that would not be treated as criminal offenses under the
anti-kickback statute, even though they may potentially be capable of
inducing referrals of business under the Federal health care programs.
Since July 29, 1991, we have published in the Federal Register a series
of final regulations establishing ``safe harbors'' in various areas.\1\
These OIG safe harbor provisions have been developed ``to limit the
reach of the statute somewhat by permitting certain non-abusive
arrangements, while encouraging beneficial or innocuous arrangements.''
(56 FR 35952, 35958; July 21, 1991).
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\1\ 56 FR 35952 (July 29, 1991); 61 FR 2122 (January 25, 1996);
64 FR 63518 (November 19, 1999); 64 FR 63504 (November 19, 1999);
and 66 FR 62979 (December 4, 2001).
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Health care providers and others may voluntarily seek to comply
with safe harbors so that they have the assurance that their business
practices will not be subject to liability under the anti-kickback
statute, the CMP provision for anti-kickback violations, or the program
exclusion authority related to kickbacks. In giving the Department of
Health and Human Services the authority to protect certain arrangements
and payment practices from penalties under the anti-kickback statute,
Congress intended the safe harbor regulations to be evolving rules that
would be updated periodically to reflect changing business practices
and technologies in the health care industry.
B. Section 101 of MMA
Section 101 of the MMA added a new section 1860D to the Act,
establishing a Part D prescription drug benefit in the Medicare
program. As part of the new statutory provision, Congress, through
section 1860D-4(e) of the Act, directed the Secretary to create
standards for electronic prescribing in connection with the new
prescription drug benefit, with the objective of improving patient
safety, quality of care, and efficiency in the delivery of care.\2\
Section 1860D-4(e)(6) of the Act directs the Secretary, in consultation
with the Attorney General, to create a safe harbor to the anti-kickback
statute that would protect certain arrangements involving the provision
of nonmonetary remuneration (consisting of items and services in the
form of hardware, software, or information technology and training
services) that is necessary and used solely to receive and transmit
electronic prescription information in accordance with electronic
prescribing standards promulgated by the Secretary under section 1860D-
4(e)(4) of the Act. Specifically, the safe harbor would set forth
conditions under which the provision of such technology by hospitals,
group practices, and PDP sponsors and MA organizations to certain
prescribing health care professionals, pharmacies, and pharmacists
would be protected.
---------------------------------------------------------------------------
\2\ See H.R. Rep. No. 108-391 at 495 (2003) (Conf. Rep.).
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[[Page 45111]]
We do not believe Congress, in enacting section 1860D-4(e)(6) of
the Act, intended to suggest that a new safe harbor is needed for all
or even most arrangements involving the provision of electronic
prescribing items and services. In general, fair market value
arrangements that are arm's-length and do not take into account in any
manner the volume or value of Federal health care program business, or
arrangements that do not have as one purpose the generation of business
payable by a Federal health care program, should not raise concerns
under the anti-kickback statute. In addition, many arrangements can be
structured to fit in existing safe harbors, including the safe harbors
for discounts (42 CFR 1001.952(h)) and for remuneration offered to
employees (42 CFR 1001.952(i)). Finally, parties may use the OIG
advisory opinion process (42 CFR part 1008; https://oig.hhs.gov/fraud/
advisoryopinions.html) to determine whether their particular
arrangements would be subject to OIG sanctions.
In addition to the new safe harbor under the anti-kickback statute,
section 1860D-4(e)(6) of the Act directs the Secretary to create a
corresponding exception to section 1877 of the Act, commonly known as
the physician self-referral law. That exception is being promulgated
through a separate rulemaking by the Centers for Medicare & Medicaid
Services (CMS), the agency that administers the physician self-referral
law. We have endeavored to ensure as much consistency as possible
between our final safe harbor and the corresponding final physician
self-referral exception, given the differences in the respective
underlying statutes. One significant difference in the statutory
schemes is that fitting in an exception under section 1877 is
mandatory, whereas complying with a safe harbor under the anti-kickback
statute is voluntary. In other words, arrangements that do not comply
with the electronic prescribing safe harbor at 42 CFR 1001.952(x) will
not necessarily be illegal under the anti-kickback statute. Rather,
they will be subject to the customary case-by-case review under the
statute to determine the parties' intent. (The same holds true for
electronic health records technology arrangements that do not fit in
the new safe harbor at 42 CFR 1001.952(y).) Another difference is that
section 1877 applies only to referrals from physicians, while the anti-
kickback statute applies more broadly.
C. Summary of the Proposed Rulemaking
On October 11, 2005, we published a notice of proposed rulemaking
to promulgate three safe harbors under the anti-kickback statute (70 FR
59015; October 11, 2005). The first proposed safe harbor addressed
arrangements involving electronic prescribing technology, as required
by section 101 of the MMA. Many industry and government stakeholders
had expressed concerns that the MMA provision was not sufficiently
useful or practical, and would not adequately advance the goal of
achieving improved health care quality and efficiency through
widespread adoption of interoperable electronic health records systems.
Accordingly, we proposed two additional safe harbors to address
donations of certain electronic health records software and directly
related training services, using our authority at section
1128B(b)(3)(E) of the Act. One proposed safe harbor would have
protected certain arrangements involving nonmonetary remuneration in
the form of interoperable electronic health records software certified
in accordance with criteria adopted by the Secretary (and directly
related training services). The second proposed safe harbor would have
protected certain arrangements involving donations of electronic health
records software before adoption of certification criteria.
D. Summary of the Final Rulemaking
In this final rulemaking, we are adding two new safe harbors to the
existing regulations at 42 CFR 1001.952: One protecting certain
arrangements involving electronic prescribing technology (new 42 CFR
1001.952(x)) and one protecting certain arrangements involving
interoperable electronic health records software or information
technology and training services (new 42 CFR 1001.952(y)). (For
purposes of this rulemaking referred to, respectively, as the
``electronic prescribing safe harbor'' and the ``electronic health
records safe harbor.'') For the reasons explained below in Section II,
we are abandoning the proposal to have separate pre- and post-
interoperability safe harbors for electronic health records
arrangements.
OIG has a longstanding concern about the provision of free or
reduced price goods or services to an existing or potential referral
source. There is a substantial risk that free or reduced price goods or
services may be used as a vehicle to disguise or confer an unlawful
payment for referrals of Federal health care program business.
Financial incentives offered, paid, solicited, or received to induce or
in exchange for generating Federal health care business increase the
risks of, among other problems: (i) Overutilization of health care
items or services; (ii) increased Federal program costs; (iii)
corruption of medical decision making; and (iv) unfair competition.
Thus, consistent with the structure and purpose of the anti-kickback
statute and the regulatory authority at section 1128B(b)(3)(E) of the
Act, we believe any safe harbor for electronic health records
arrangements should protect beneficial arrangements that would
eliminate perceived barriers to the adoption of electronic health
records without creating undue risk that the arrangements might be used
to induce or reward the generation of Federal health care program
business.
For the convenience of the public, we are providing the following
chart that lays out schematically the overall structure and approach of
the final safe harbors, details of which are provided below in sections
II. B. and II. C. Readers are cautioned that the final safe harbors
contain additional conditions and information not summarized here.
------------------------------------------------------------------------
MMA-mandated Electronic health
electronic records
prescribing safe arrangements safe
harbor harbor
------------------------------------------------------------------------
Authority for Final Safe Harbor. Section 101 of the Section
Medicare 1128B(b)(3)(E) of
Prescription the Social
Drug, Security Act.
Improvement, and
Modernization Act
of 2003.
[[Page 45112]]
Covered Technology.............. Items and services Software necessary
that are and used
necessary and predominantly to
used solely to create, maintain,
transmit and transmit, or
receive receive
electronic electronic health
prescription records. Software
information. must include an
Includes hardware, electronic
software, prescribing
internet component.
connectivity, and (Software
training and packages may also
support services. include functions
related to
patient
administration,
for example,
scheduling,
billing, and
clinical
support.)
Information
technology and
training
services, which
could include,
for example,
internet
connectivity and
help desk support
services.
Does not include
hardware.
Standards with Which Donated Final standards Electronic health
Technology Must Comply. for electronic records software
prescribing as that is
adopted by the interoperable.
Secretary. Certified
software may be
deemed
interoperable
under certain
circumstances.
Electronic
prescribing
capability must
comply with final
standards for
electronic
prescribing
adopted by the
Secretary.
Donors and Recipients........... As required by Protected donors
statute, are (i)
protected donors individuals and
and recipients entities that
are hospitals to provide covered
members of their services and
medical staffs, submit claims or
group practices requests for
to physician payment, either
members, PDP directly or
sponsors and MA through
organizations to reassignment, to
network any Federal
pharmacists and health care
pharmacies, and program and (ii)
to prescribing health plans.
health care Protected
professionals. recipients are
individuals and
entities engaged
in the delivery
of health care.
Selection of Recipients......... Donors may not Donors may not
select recipients select recipients
using any method using any method
that takes into that takes into
account the account directly
volume or value the volume or
of referrals from value of
the recipient or referrals from
other business the recipient or
generated between other business
the parties. generated between
the parties.
Value of Protected Technology... No limit on the Recipients must
value of pay 15% of the
donations of donor's cost for
electronic the donated
prescribing technology.
technology. The donor (or any
affiliate) must
not finance the
recipient's
payment or loan
funds to the
recipient for use
by the recipient
to pay for the
technology.
Expiration of the Safe Harbor... None.............. Safe harbor
sunsets on
December 31,
2013.
------------------------------------------------------------------------
II. Summary of Public Comments and OIG Responses
OIG received a total of 71 timely filed comments from entities and
individuals. The majority of the comments came from hospitals and
health systems, trade associations, and vendors. OIG also received
comments from information technology organizations, health plans,
nonprofit organizations, pharmaceutical manufacturers, pharmacies, and
physician organizations. In addition, OIG participated in an Open Door
Forum organized by CMS on November 9, 2005, at which various
stakeholders addressed a wide array of issues.
Overall, the commenters welcomed the establishment of safe harbors
for electronic prescribing and electronic health records technology
arrangements. However, we received many specific comments about various
aspects of the proposed rules. We have divided the summaries of the
public comments and our responses into four parts: (1) General comments
for all of the proposed safe harbors; (2) comments specific to the
electronic prescribing safe harbor; (3) comments specific to the
electronic health records safe harbor; and (4) comments specific to
community-wide health information systems.
A. General Comments
Comment: Most commenters supported the promulgation of safe harbors
for electronic prescribing and electronic health records arrangements.
Commenters observed that both Congress and the Administration have
recognized the compelling need for rapid and widespread adoption of
electronic prescribing and electronic health records technology.
Several commenters urged that fraud and abuse concerns not impede the
adoption of health information technology. In this regard, some
commenters suggested that the final regulations should better balance
the goal of preventing fraud and abuse in the short-term with the goal
of creating incentives for health information technology arrangements
that result in greater fraud reduction, increased quality and
efficiency, and better patient care. One commenter asserted that
investments in health information technology and the desire to provide
an incentive to participate in health information technology systems do
not raise typical fraud and abuse concerns present with other financial
arrangements. However, another commenter noted that the proposed rule
generally struck an appropriate balance between the needs of physicians
who may require assistance to develop health information technology
systems and the underlying purposes of the Federal fraud and abuse
laws.
Response: We disagree with the commenter that suggested that
financial arrangements involving incentives in the form of health
information technology do not pose the same fraud and abuse concerns as
other financial arrangements between parties in a potential referral
relationship. Indeed, our enforcement experience demonstrates that
improper remuneration for Federal health care program business may take
many forms,
[[Page 45113]]
including free computers, facsimile machines, software, and other goods
and services. However, we recognize that certain transfers of health
information technology between parties with actual or potential
referral relationships may further the important national policy of
promoting widespread adoption of health information technology to
improve patient safety, quality of care, and efficiency in the delivery
of health care. We believe the final rule strikes the appropriate
balance between promoting the adoption of health information technology
and protecting against fraud and abuse.
Comment: Several commenters urged that Congress and the
Administration need to do more to offer meaningful financial incentives
for practitioners to accept the increased cost and workflow burdens
associated with the implementation of health information technology,
for example, by providing modest add-on payments to physicians who
employ health information technology as part of overall quality
improvement measures. Some commenters observed that the proposed
regulations would remove a minor impediment to the adoption of health
information technology, but that the Department must play a larger role
in providing capital for the technologies that assist physicians in
providing quality care and avoiding medical errors.
Response: These comments address matters outside the scope of this
rulemaking. The Administration supports the adoption of health
information technology as a normal cost of doing business. The 2007
Budget states that ``[t]he Administration supports the adoption of
health information technology (IT) as a normal cost of doing business
to ensure patients receive high quality care.''
Comment: Some commenters complained that the proposed safe harbors
were too narrow and vague. These commenters urged that the final safe
harbors should be easy to understand, interpret, and enforce so that
donors and recipients can readily distinguish permissible activities
from those that violate the statute. Some commenters believed that the
proposed rules were too complex and might have the unintended effect of
discouraging participation in health information technology
arrangements.
Response: As described elsewhere in this preamble, we have adopted
a number of modifications and changes that address the commenters'
concerns. While the final safe harbor at Sec. 1001.952(x) addresses
only electronic prescribing arrangements, the final safe harbor at
Sec. 1001.952(y) protects a broad scope of arrangements involving
electronic health records technology. We have made a number of changes
that clarify and simplify the final rules. We have endeavored to create
bright line provisions to the extent possible. We reiterate that
compliance with a safe harbor does not necessarily distinguish between
lawful and unlawful activities under the Federal anti-kickback statute.
Compliance with a safe harbor is voluntary; arrangements that do not
comply are not per se illegal. As we explained in the preamble to the
1991 final safe harbors regulations:
* * * If a person participates in an arrangement that fully
complies with a given [safe harbor] provision, he or she will be
assured of not being prosecuted criminally or civilly for the
arrangement that is the subject of that provision * * * This [safe
harbor] regulation does not expand the scope of activities that the
statute prohibits. The statute itself describes the scope of illegal
activities. The legality of a particular business arrangement must
be determined by comparing the particular facts to the proscriptions
of the statute.
The failure to comply with a safe harbor can mean one of three
things. First * * * it may mean that the arrangement does not fall
within the ambit of the statute. In other words, the arrangement is
not intended to induce the referral of business reimbursable under
Medicare or Medicaid; so there is no reason to comply with the safe
harbor standards, and no risk of prosecution.
Second, at the other end of the spectrum, the arrangement could
be a clear statutory violation and also not qualify for safe harbor
protection. In that case, assuming the arrangement is obviously
abusive, prosecution would be very likely.
Third, the arrangement may violate the statute in a less serious
manner, although not be in compliance with a safe harbor provision.
Here, there is no way to predict the degree of risk. Rather, the
degree of risk depends on an evaluation of the many factors which
are part of the decision-making process regarding case selection for
investigation and prosecution * * *. (56 FR 35952, 35954; July 29,
1991).
We do not believe Congress, in enacting section 1860D-4(e)(6) of
the Act, intended to suggest that a new safe harbor is needed for all
or even most arrangements involving the provision of electronic
prescribing items and services. Nor do we believe a safe harbor is
needed for all electronic health records arrangements. In general, fair
market value arrangements that are arm's-length and do not take into
account in any manner the volume or value of Federal health care
program business, or arrangements that do not have as one purpose the
generation of business payable by a Federal health care program, should
not raise concerns under the anti-kickback statute. In addition, many
arrangements can be structured to fit in existing safe harbors.
Comment: Some commenters observed that in describing the
nonmonetary remuneration that would be included in the proposed safe
harbors, the proposed safe harbors did not reflect the many existing
combinations and varieties of electronic prescribing, electronic health
records, and similar technology.
Response: As discussed more fully below, we believe that the final
safe harbors are sufficiently broad to accommodate the most essential
current and evolving electronic prescribing and electronic health
records technology. We started this rulemaking process by looking to
the guidance from the Congress in section 101 of the MMA with respect
to electronic prescribing technology. Using our regulatory authority,
we have added a separate safe harbor for arrangements involving
electronic health records software or information technology and
training services. We believe that we have appropriately balanced the
goal of promoting widespread adoption of health information technology
against the significant fraud and abuse concerns that stem from the
provision of free or reduced cost goods or services to actual or
potential referral sources.
Comment: A commenter suggested that the final regulations should
include provisions that allow CMS to evaluate and ensure that the
regulatory requirements, once enacted, have not negatively impacted key
stakeholders or business segments within the healthcare industry.
Response: It would be inappropriate for a safe harbor under the
anti-kickback statute to include a provision for ongoing CMS
evaluation. Like all regulatory safe harbors, OIG may in future
rulemaking propose modifications or clarifications to the safe harbor
conditions, as appropriate. OIG annually solicits suggestions from the
industry for new and modified safe harbors in accordance with section
205 of the Health Insurance Portability and Accountability Act of 1996.
Comment: We solicited comments on whether and, if so, how, to take
into account recipient access to publicly available software at free or
reduced prices. One commenter urged that the availability of free
public software should not impact the design of the final safe harbors.
In addition, the commenter urged that physicians and hospitals be
granted substantial latitude in selecting interoperable technology that
best meets their needs.
[[Page 45114]]
Response: Upon further consideration, we have concluded that it is
not necessary to take the availability of publicly available software
into account in developing the final safe harbors. Hospitals,
physicians, and other donors and recipients will have great latitude in
selecting technology that will qualify for safe harbor protection.
Nothing in this rule limits the choice of health information
technology, although certain transfers of technology, such as non-
interoperable electronic health records software (as discussed below),
would not qualify for safe harbor protection, because it would not meet
all safe harbor conditions. As noted elsewhere, arrangements that fall
outside a safe harbor must be evaluated under the anti-kickback statute
on a case-by-case basis.
Comment: Some commenters suggested that the safe harbors under the
anti-kickback statute should mirror the exceptions under the physician
self-referral law in all respects in order to promote the rapid and
widespread adoption of electronic prescribing and electronic health
records technology. A few commenters suggested that we not adopt anti-
kickback statute safe harbors or that any safe harbors should be
stricter than any corresponding exceptions to the physician self-
referral law.
Response: We believe consistency between these safe harbors and the
corresponding exceptions under the physician self-referral law is
preferable. We have attempted to ensure as much consistency between the
two sets of regulations as possible given the underlying differences in
the two statutory schemes.
Comment: Some commenters wanted the final safe harbors to preempt
any State laws or regulations that conflict with the requirements of
the safe harbors.
Response: The MMA specifically dictated that the Part D electronic
prescribing standards would preempt any State law or regulation that
(1) is contrary to the adopted final Part D electronic prescribing
standards or that restricts the Department's ability to carry out Part
D of Title XVIII and (2) pertains to the electronic transmission of
medication history and information on eligibility, benefits, and
prescriptions with respect to covered Part D drugs under Part D.
However, no similar mandate was provided with respect to the anti-
kickback safe harbor for the donation of electronic prescribing
technology. Moreover, the legal authority for the electronic health
records safe harbor in this rule is derived from section 1128B(b)(3)(E)
of the Act, which similarly does not provide authority to preempt State
anti-kickback laws.
Comment: Some commenters inquired whether the electronic
information that is transmitted via electronic prescribing or
electronic health records systems would be considered remuneration for
purposes of the anti-kickback statute.
Response: Whether a particular item or service constitutes
remuneration for purposes of the anti-kickback statute depends on the
particular facts and circumstances. Typically, information about a
particular patient's health status, medical condition, or treatment
exchanged between or among the patient's health care providers and
suppliers for the purpose of diagnosing or treating the patient would
not constitute remuneration to the recipient of the information. In
this regard, the electronic exchange of patient health care information
is comparable to the exchange of such information by mail, courier, or
telephone conversation. Thus, when related to the care of individual
patients, information such as test results, diagnosis codes,
descriptions of symptoms, medical history, and prescription information
are part of the delivery of the health care services and would not have
independent value to the recipient. However, in other situations,
information may be a commodity with value that could be conferred to
induce or reward referrals. For example, data related to research or
marketing purposes, or information otherwise obtained through a
subscription or for a fee, could constitute remuneration for purposes
of the anti-kickback statute.
B. Electronic Prescribing Safe Harbor Required Under Section 101 of the
MMA (42 CFR 1001.952(x))
Summary of the Proposed Rule
On October 11, 2005, as mandated in the MMA, we proposed adding a
new paragraph (x) to the existing safe harbor regulations at 42 CFR
1001.952 for certain electronic prescribing arrangements. Specifically,
we proposed:
Protecting certain arrangements involving the provision of
nonmonetary remuneration--in the form of hardware, software, or
information technology or training services--necessary and used solely
to receive and transmit electronic drug prescription information. We
construed this language broadly to include internet connectivity
services (of all types, including broadband or wireless), and upgrades
of equipment and software that significantly enhanced functionality.
Requiring that the donated technology must be part of, or
used to access, a prescription drug program that meets applicable
standards under Medicare Part D.
Protecting technology provided by a hospital to its
medical staff; by a medical group practice to its members; and by a PDP
sponsor or MA organization to prescribing health care professionals, as
well as to pharmacies and pharmacists in the plan's network, so long as
all of the safe harbor conditions were satisfied.
Prohibiting a recipient from making donation of technology
a condition of doing business with a donor.
Requiring that protected arrangements be fully and
completely documented.
Excluding donations of technology that replicate
technology the recipient already possesses. To ensure compliance with
this provision, we proposed requiring recipients to certify that they
did not already possess equivalent technology. Moreover, we proposed
that donors would not be protected if they knew or should have known
that the recipients already possessed equivalent technology.
Requiring that neither a recipient's eligibility for
donated technology, nor the amount or nature of the technology, could
be determined in any manner that directly or indirectly takes into
account the volume or value of referrals or other business generated
between the parties.
Requiring that the parties not take any action to impede
the compatibility or interoperability of the technology.
Requiring that the donor not restrict the ability of the
recipient to use the technology for any patient, regardless of payor.
Limiting the value of donated technology that could be
protected by the safe harbor.
In deference to the limitations imposed by the ``used
solely'' standard set forth in the MMA, promulgating a separate safe
harbor for multi-functional items and services used for electronic
prescribing (e.g., connectivity services and multi-use hand held
devices or computers).
Summary of the Final Rule
The final safe harbor at 42 CFR 1001.952(x) adopts the proposed
safe harbor, with the following key clarifications:
The final rule protects technology necessary and used
solely to receive and transmit any prescription information, whether
related to drugs or to other items or services normally ordered by
prescription (e.g., laboratory tests and durable medical equipment
orders).
[[Page 45115]]
Donations may be in an unlimited amount.
We have abandoned our proposal to require that recipients
provide a written certification that the donated technology is not
technically or functionally equivalent to the technology the recipient
already possessed or had obtained. We have added language that permits
arrangements to be memorialized through cross-referencing incorporation
of prior agreements between the parties.
We are not finalizing a separate safe harbor for multi-
functional electronic prescribing technology.
General Comments
Comment: Many commenters stated that the proposed electronic
prescribing safe harbor was too narrow to be useful and should be
merged into an electronic health records safe harbor, noting that
physicians would likely resist adopting stand-alone electronic
prescribing systems. One commenter observed that the proposed rule was
generally in accordance with congressional intent underlying section
101 of the MMA.
Response: We agree that the proposed safe harbor was consistent
with congressional intent. As we are not free to ignore a congressional
mandate, we must promulgate the electronic prescribing safe harbor
described in section 101 of the MMA. However, we are also promulgating
a separate safe harbor for electronic health records arrangements that
also incorporate an electronic prescribing component. This new safe
harbor should address the commenters' concerns.
1. Protected Nonmonetary Remuneration
a. Necessary and Used Solely
In the proposed rule, we proposed protecting items and services
that are necessary and used solely to transmit and receive electronic
prescription drug information. We stated that the safe harbor would not
protect arrangements in which donors provided items or services that
were technically or functionally equivalent to items that the recipient
already possessed or services that the recipient had already obtained.
We proposed requiring the recipient to certify that the items and
services provided were not technically or functionally equivalent to
those that the recipient already possessed or had already obtained. We
also proposed that arrangements would not be protected if the donor
knowingly provided technology that duplicated the recipient's existing
technology. We indicated that upgrades of equipment or software that
significantly enhanced the functionality of the item or service would
be considered ``necessary'' for purposes of the safe harbor.
Because the term ``necessary'' appeared in our proposed rulemaking
in the discussions of all three proposed safe harbors, many commenters
chose to address this requirement primarily in the context of the
proposed safe harbors for electronic health records arrangements. Thus,
there is a detailed discussion of our interpretation of the term
``necessary'' in section II.C.1.b of this preamble, which addresses the
new electronic health records safe harbor. We intend to interpret the
term ``necessary'' uniformly for both new safe harbors. We are
addressing here only those comments received on the proposed electronic
prescribing safe harbor requirement that transferred technology be
``necessary and used solely'' to receive and transmit electronic
prescription information.
Comment: One commenter observed that the ``necessary and used
solely'' requirement ensures that items and services will be used to
encourage electronic prescribing activities. This commenter suggested
including an additional requirement that the items or services be
clearly intended to promote interoperability of health information and
the improvement of quality in a clinical setting.
Response: We agree that it was the intent of Congress to encourage
electronic prescribing activities, in part, through the development of
a safe harbor for transfers of certain items and services necessary and
used solely for electronic prescribing transactions. However, the
intent-based additional standard suggested by the commenter, while
reflecting laudable goals, is not sufficiently ``bright line'' for
purposes of this safe harbor. We have included a requirement at Sec.
1001.952(x)(2) intended to ensure that protected technology meets Part
D electronic prescribing standards applicable at the time of the
donation, including any standards relating to interoperability.
Comment: Some commenters expressed concern that OIG has taken an
unnecessarily narrow interpretation of the statutory language
``necessary and used solely to receive and transmit electronic
prescription information in accordance with the standards promulgated
under this subsection [section 101 of the MMA] * * *.'' One commenter
explained its view that the phrase ``necessary and used solely'' should
be read so that the word ``necessary'' modifies the phrase ``to receive
and transmit electronic prescription information'' and the phrase
``used solely'' modifies the phrase ``in accordance with the standards
promulgated under this subsection.'' In other words, in this
commenter's view the protected hardware, software and services must be
``necessary'' to perform electronic prescribing transactions ``solely''
in accordance with CMS established data interchange standards. This
commenter explained that this interpretation would be consistent with
the purpose of the safe harbor and the practical realities of computers
and electronic transactions.
Response: We appreciate the comment; however, we do not believe the
commenter's proposed interpretation is the best or most logical reading
of the statutory language. We believe the better and less strained
reading is that Congress intended for all donated technology to be
necessary for the receipt and transmission of electronic prescription
information and to be used solely for that purpose. The requirement
that the items and services be ``necessary and used solely'' for
transmitting and receiving electronic prescribing information helps
minimize the potential for abuse. Limiting the safe harbor to necessary
items and services helps ensure the safe harbor does not become a means
of conveying valuable items and services that do not further the
underlying policy goals and that might, in reality, constitute
disguised referral payments.
As we noted in the preamble to the proposed rulemaking, we believe
Congress included the ``used solely'' requirement to safeguard against
abusive arrangements in which the donated technology might constitute a
payment for referrals because it might have additional value
attributable to uses other than electronic prescribing. See 70 FR at
59018. For example, a computer that a physician can use to conduct
office or personal business might have value to the physician apart
from its electronic prescribing purpose; if this value is transferred
to the physician in connection with referrals, the statute would be
implicated.\3\ Accordingly, consistent with section 101 of the MMA, the
final safe harbor requires that the protected items and services be
``necessary and used solely'' to transmit or receive electronic
prescribing information.
---------------------------------------------------------------------------
\3\ See, e.g., 56 FR 35952, 35978 (July 29, 1991) (noting that a
computer that has independent value to a physician may constitute an
illegal inducement).
---------------------------------------------------------------------------
We note that software that bundles general office management,
billing, scheduling, electronic health records, or other functions with
the electronic
[[Page 45116]]
prescribing features would not meet the ``used solely'' requirement and
would not be protected by the final electronic prescribing safe harbor.
In some cases, the provision of such bundled software may be eligible
for protection under the new safe harbor for electronic health records
arrangements at Sec. 1001.952(y).
Comment: A commenter suggested that multi-functional technology be
considered ``necessary'' so long as it includes all components required
for a physician to prescribe electronically, even if the technology has
other functions (e.g., a handheld device that can be used for more than
electronic prescribing).
Response: The commenter's suggestion, as we understand it, is not
consistent with the MMA statutory language.
Comment: Many commenters requested that we eliminate the proposed
requirement that recipients provide written certification that the
donated technology is not technically or functionally equivalent to
technology the recipient already possesses, expressing concern about
the possible difficulty of making this determination, the lack of
technical expertise on the part of some recipients, and the increased
cost that could arise by having an outside expert provide a
determination of technical or functional equivalence. One commenter
supported OIG's interpretation of the term ``necessary'' as permitting
upgrades of equipment or software that significantly enhance the
functionality of an item or service. Another commenter suggested that
we should not require that the upgrades ``significantly'' enhance the
functionality of the item or service. Rather, the commenter believed
that we should allow the marketplace to determine whether an upgrade
constitutes a beneficial improvement.
Response: For the reasons noted in detail below in section
II.C.1.b.i, with respect to the electronic health records safe harbor,
we are not adopting the proposed requirement that recipients provide
written certification that the donated technology is not technically or
functionally equivalent to technology the recipient already possesses.
However, while we are eliminating the certification requirement, we do
not believe items and services are ``necessary'' for electronic
prescribing if the recipient already possesses equivalent items or
services. The provision of equivalent items and services poses a
heightened risk of abuse, since such arrangements potentially confer
independent value on the recipient (i.e., the value of the existing
items and services that might be put to other uses) unrelated to the
need for electronic prescribing technology. Thus, if a donor knows that
the recipient already possesses the equivalent items or services, or
acts in deliberate ignorance or reckless disregard of that fact, the
donor will not be protected by the safe harbor. Thus, prudent donors
may want to make reasonable inquires of potential recipients and
document the communications. We do not believe this requirement
necessitates the hiring of technical experts by either the donor or the
recipient. Further, with respect to upgrades of equipment or software,
we agree with the commenter that distinguishing ``significant''
enhancements from other beneficial improvements introduces unnecessary
complexity. Under the final safe harbor, any upgrade that is necessary
and used solely to transmit and receive electronic prescribing
information will be protected (so long as all other safe harbor
conditions are satisfied).
Comment: Many commenters noted that it would be impractical to
require physicians to acquire or use software and hardware solely for
electronic prescribing. Several commenters noted that, in most cases,
single-use technology is of limited value to a physician, and could
result in inefficiencies. Another commenter expressed concern that the
``used solely'' standard would preclude the use of robust electronic
clinical support tools, such as tools to identify drug-to-drug
interactions, or to conduct drug-to-laboratory or prescription data
analysis. This commenter urged that any exceptions from the fraud and
abuse laws for health information technology arrangements promote
access to all information needed by physicians to evaluate alternative
drug therapies, identify potential drug-to-drug interactions, and to
improve safety, quality, and efficiency of patient care.
Response: The ``used solely'' condition derives directly from the
MMA language. We believe that many of the arrangements of interest to
the commenters are best addressed by the electronic health records safe
harbor, which is not restricted to technology used solely for
electronic prescribing.
The MMA-mandated electronic prescribing safe harbor is reasonably
interpreted to encompass electronic tools that provide information
necessary to formulate, transmit, or receive a medically appropriate
prescription for a patient. These would include electronic clinical
support tools identifying alternative drug therapies, drug-to-drug
interactions, or a payor's formulary information. The nature of the
``prescription data analysis'' tools referenced by the commenter is not
clear. We believe the appropriate inquiry would be whether the tool is
used to formulate and transmit or receive a medically appropriate
prescription for a patient. To the extent the data analysis tool (or
any other electronic item or service) is used to transmit or receive
data unrelated to a medically appropriate prescription for a patient
(e.g., data collected for marketing purposes), the tool would not be
necessary for electronic prescribing and would not come within the safe
harbor.
b. Covered Technology
In our proposed rule, we proposed protecting hardware, software, or
information technology and training services that met the various safe
harbor conditions. We interpreted our proposed language to include
broadband or wireless internet connectivity, training, information
technology support services, and other items and services used in
connection with the transmission or receipt of electronic prescribing
information.
Comment: Various commenters suggested that the scope of covered
technology should be expanded to include: Billing, scheduling, and
other administrative functions; implementation and maintenance of the
system; ``upgrades;'' and licenses, rights of use, or intellectual
property. Commenters also urged that any safe harbor cover educational
sessions and consulting assistance related to the electronic
prescribing technology. Commenters generally agreed that the provision
of equipment for personal, non-medical purposes should not be
protected. One commenter suggested that it would not be possible to
develop a comprehensive list of protected technology transfers that
would sufficiently reflect all possible electronic prescribing items
and services. The commenter recommended that OIG periodically review
the scope of protected items and services, and expand it as needed.
Response: We agree that it would be difficult to provide a
comprehensive list of specific items and services covered by the safe
harbor. While a specific list would provide a ``bright line'' rule, in
this case it would also impede the ability of the safe harbor to
accommodate novel or rapidly evolving technologies in the marketplace.
For these reasons, we are not promulgating a specific list of protected
items and services.
Consistent with the MMA mandate, covered items and services under
[[Page 45117]]
Sec. 1001.952(x) include ``hardware, software, and information
technology and training services'' that are necessary and used solely
for electronic prescribing and that meet all other safe harbor
conditions. We believe that licenses, rights of use, intellectual
property, upgrades, and educational and support services (including,
for example, help desk and maintenance services) are items and services
that can potentially fit in the safe harbor, if all safe harbor
conditions are met. Billing, scheduling, administrative, and other
general office software cannot. Operating software that is necessary
for the hardware to operate can qualify for safe harbor protection
because it is integral to the hardware. Moreover, operating software is
distinct from other software applications that are not necessary to
transmit or receive electronic prescribing information. Patches
designed to link the donor's existing electronic prescribing system to
the recipient's existing electronic prescribing system can qualify for
protection. The provision of technology for personal, non-medical
purposes is not protected, nor is the provision of office staff.
Comment: We solicited comments on whether the safe harbor should
protect electronic prescribing technology that is used for the
transmission of prescription information for items and services that
are not drugs (e.g., durable medical equipment or laboratory tests).
Several commenters suggested that the safe harbor should support the
use of electronic prescribing technology for all the functions
currently accomplished through written prescriptions, in order to
encourage provider utilization of electronic prescribing technology to
increase safety, cost-effectiveness, and efficiency. The commenters
suggested including electronic prescribing technology used for
prescribing medical supplies and durable medical equipment, physical
therapy, dialysis testing, laboratory tests, and other non-drug
prescriptions. A commenter from the clinical laboratory industry
supported a broad reach, but only if clinical laboratories were
included as permissible donors under the safe harbor.
Response: We agree generally with the first set of commenters. We
have reviewed further the language in section 101 of the MMA. The MMA-
mandated safe harbor language requires that the donated technology be
capable of receiving and transmitting ``electronic prescription
information'' in accordance with the electronic prescribing standards
promulgated for purposes of the MMA electronic prescription drug
programs. We believe that the specific term ``electronic prescription
information'' as commonly used and as used in the MMA-mandated safe
harbor provision retains a broad meaning, to include information about
prescriptions for any items or services that would normally be
accomplished with a written prescription. In contrast, the information
to be transmitted under an electronic prescription drug program
established under the MMA is clearly limited to drug information for
Part D eligible individuals. Moreover, we do not think that the
statutory language is intended to be construed to prohibit the use of
the donated technology for the transmission and receipt of orders or
prescriptions for other items and services or to require the use of
separate systems depending on the item or service to be prescribed or
ordered. We believe this approach is consistent with the objectives of
the electronic prescribing standards and the patient safety, quality,
and efficiency goals underlying the mandated exception. Accordingly, we
are defining ``prescription information'' for purposes of the safe
harbor to mean information about prescriptions for drugs or any other
item or service normally accomplished through a written prescription.
With respect to the clinical laboratory commenter, consistent with
the MMA language, we are not including clinical laboratories as
permissible donors under the safe harbor. However, we have expanded the
new safe harbor for electronic health records arrangements to include
clinical laboratories.
2. Final Standards for Electronic Prescribing
The MMA required that donated electronic prescribing technology
comply with the final standards for electronic prescribing as adopted
by the Secretary. The first set of these standards (the ``foundation
standards'') was finalized by the Department on November 7, 2005. See
70 FR 67568. We received no comments on this issue. The final safe
harbor at Sec. 1001.952(x)(2) requires that the donated technology
comply with the applicable standards for electronic prescribing as
adopted by the Secretary.
3. Donors and Recipients Protected by the Safe Harbor
We proposed protecting the same categories of donors and recipients
listed in section 101 of the MMA. Because most commenters commented on
this issue jointly with the proposed electronic health records
arrangements safe harbors, we have included a detailed description of
these comments in our discussion of the electronic health records safe
harbor below at section II.C.3. of this preamble.
Comment: We received numerous comments requesting that we expand
the list of protected donors and recipients to include a variety of
providers, practitioners, suppliers, and their affiliates.
Response: We are finalizing the safe harbor consistent with the MMA
mandated donors and recipients. We are not persuaded that additional
donors or recipients are necessary to achieve the purpose of this safe
harbor for electronic prescribing. The enumerated categories of donors
and recipients reflect individuals and entities centrally involved in
the ordering, processing, filing, or reimbursing of prescriptions.
Accordingly, protected donors and recipients under Sec. 1001.953(x)
are: hospitals to members of their medical staffs; group practices to
their physician members; and PDP sponsors and MA organizations to
network pharmacists and pharmacies, and to prescribing health care
professionals. For the reasons set forth in the preamble to the
proposed rulemaking, and in the absence of any comments to the
contrary, we are adopting our proposed definitions of group practice,
member of the group practice, prescribing health care professional, PDP
sponsor and MA organization. Group practice shall have the meaning set
forth at Sec. 411.352; member of the group practice shall mean all
persons covered by the definition of ``member of the group or member of
a group practice'' at Sec. 411.351, as well as other prescribing
health care professionals who are owners or employees of the group
practice; prescribing health care professional shall mean a physician
or other health care professional licensed to prescribe drugs in the
State in which the drugs are dispensed; PDP sponsor or MA organization
shall have the meanings set forth at Sec. Sec. 423.4 and 422.2,
respectively.
We have revisited the issue of protected donors and recipients in
the context of the electronic health records arrangements safe harbor
at Sec. 1001.952(y), as discussed in the preamble below at section
II.C.3.
4. Additional Conditions on the Provision of Qualifying Electronic
Prescribing Technology
Promoting Compatibility and Interoperability
Most commenters addressed the issue of the compatibility and
interoperability of the donated technology with respect
[[Page 45118]]
to all three proposed safe harbors. We have included a discussion of
these comments in the section of this preamble addressing the
electronic health records safe harbor at Sec. 1001.952(y). For the
reasons set forth there, we have adopted, with clarifying
modifications, our proposed restriction on disabling the compatibility
and interoperability of donated technology under the electronic
prescribing safe harbor at Sec. 1001.952(x)(3). For clarity, we have
included in Sec. 1001.952(x) the same definition of ``electronic
health record'' found in Sec. 1001.952(y).
Limit on Value of Technology
In our proposed rule, we solicited public comments on various means
by which we might limit the value of protected technology under the
electronic prescribing safe harbor. We indicated that we were
considering a limit on the value of protected technology as a further
safeguard against fraud and abuse, since, in our experience, the risk
of fraud and abuse generally (although not always) increases with the
value of the remuneration offered. We received a large number of
comments on this topic, the majority of which opposed any limit on the
value of donated technology. Because these commenters typically
commented jointly on this issue for all three proposed safe harbors
(and each com