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Sunset of the Stark and Anti-Kickback EHR Donation Exceptions

on Thursday, 12 December 2013 in Health Law Alert: Erin E. Busch, Editor

In 2006, CMS and the OIG promulgated a Stark exception and an Anti-Kickback safe harbor to encourage the development and adoption of interoperable electronic health record systems in communities. The exception and safe harbor allowed hospitals to donate up to 85 percent of the cost of EHR software and training services to physician offices provided the other elements of the exception and safe harbor were satisfied. Both the exception and the safe harbor, however, included a December 31, 2013, sunset provision. That is, after December 31, 2013, hospitals will no longer be permitted to donate qualified EHR software to physician practices.


In April of this year, CMS and the OIG published a proposed rule that would extend the sunset provision of both the Stark exception and the Anti-Kickback safe harbor to December 31 of 2016. In putting forth these proposals, CMS and the OIG recognized that providers and physicians are still in the process of implementing and demonstrating “meaningful use” of EHRs. The proposals would match-up the last year in which meaningful use benefits are payable with the exception and safe harbor. In its comments to the proposed rule, CMS even indicated that it may consider making the EHR donation exception permanent.


As of the date of publication of this article, the proposed rules have not been finalized. Industry commentary indicates that there is no overwhelming opposition to the proposed extension of the EHR donation exception and blames the failure on the backlog of regulations due to the federal government shutdown. Unless and until the proposed rules are finalized, after December 31 of this year, hospitals will no longer be able to rely on the EHR donation exception to provide software and training to physician practices. After the New Year, providers and physicians who desire to work together to develop an interoperable EHR must do so by relying on other, more restrictive, Stark exceptions.


Andrew D. Kloeckner

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