On August 8 of 2006, the Office of the Inspector General (OIG) created new exceptions and safe harbors to two key federal fraud and abuse laws for arrangements involving the donation of certain electronic health information technology and services. Publication of this guidance triggered positive and negative changes in the competitive marketplace and Dark Daily has insights on this issue from a well-known attorney in this field.

The first law affected by the OIG’s new exceptions and safe harbors is the Stark Law. The OIG’s new rules create exceptions to the physician self-referral law, which prohibits a physician from referring Medicare patients for certain designated health services (DHS) to entities with which the physician has a financial relationship, unless an exception applies.

Federal Medicare and Medicaid anti-kickback statutes are the second area of law affected by the OIG’s new exceptions. The OIG identified safe harbors governing arrangements involving the provision of items and services related to electronic prescribing as well as electronic health records systems.

The new Stark exceptions and anti-kickback safe harbors establish the conditions under which:

1. Entities furnishing designated health services (and certain other entities under the safe harbor) may donate to physicians (and certain other recipients under the safe harbor) interoperable electronic health records software, information technology and training services.

2. Hospitals and certain other entities may provide physicians (and certain other recipients under the safe harbor) with hardware, software, or information technology and training services necessary and used solely for electronic prescribing.

The OIG states that these rules will give health care providers greater access to electronic health records that enable them to increase quality of service and improve efficiency. It said that these exceptions and safe harbors were necessary to promote the adoption of essential health information technology while protecting federal health care programs and beneficiaries from fraud and abuse.

Jane Pine Wood, an attorney with McDonald, Hopkins Co., LPA, explains that the electronic health records exception and safe harbor will be more important to pathology and laboratory providers than the e-prescribing exception and safe harbor. “While the new electronic health records exception and safe harbor are a step in the right direction, it is important to recognize that there are many criteria that must be met in order to fall within the exception and safe harbor” says Ms. Wood. “The software must be interoperable, meaning that it is able to communicate the exchange data with different information technology systems and the data remain preserved and unaltered. The software must contain an e-prescribing module. The recipients must pay for at least 15% of the cost of the software.

“Furthermore, donors cannot restrict donations to their clients or select recipients based on the volume or value of referrals generated by the recipients,” notes Wood. “These requirements and other criteria of the exception and safe harbor will limit the ability of pathology and laboratory providers to donate electronic health records software to their clients.”

In the long term, however, Dark Daily believes the e-prescribing and electronic health records safe harbors and exceptions should promote the expansion of this technology. The expanded technology will directly affect pathology and laboratory providers in a two important ways. First and foremost, these providers can expect computer-generated orders for tests, cleanly typed and with fewer errors, to be the norm in the future.

Second, pathology and laboratory providers themselves can benefit from the incorporation of the same electronic health records technology as physicians offices. The ability to use compatible software and hardware and share information quickly and easily with doctor’s office may be what sets one pathology provider apart from competing pathology providers.

It remains to be seen whether certain laboratory companies will push compliance boundaries in offering clients electronic health information technology and services. Although the intent of the OIG in offering new guidance on exceptions and safe harbors for these information technology services is to encourage more electronic interconnections between providers, the lab industry has historically seen compliance abuses by labs willing to stretch compliance in order to gain new business.