OIG Advisory Opinion Provides Guidance on EHR Connectivity Arrangements

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Adrienne DresevicCarey F. KalmowitzBy Adrienne Dresevic, Esq. and Carey F. Kalmowitz, Esq.

January 2013—On December 19, 2012, the Office of Inspector General (OIG) published an advisory opinion (OIG AO 12-20) wherein the agency concluded it will not impose sanctions under the Anti-kickback Statute (AKS) on a hospital for its proposal to provide a free electronic interface (the Interface) to community physicians and physician practices to allow electronic transmission of orders and results for laboratory and diagnostic services. The OIG found that the free access to the Interface did not constitute remuneration, and therefore the free provision of the Interface did not violate the AKS.

OIG considers free or below face market value goods and services as suspect because of the potential for violating the AKS. Under the AKS, it is a crime to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program. Violators face a felony conviction punishable by fines of up to $25,000 and imprisonment of up to five years. Convictions will also result in automatic exclusion from federal health care programs and possible civil monetary penalties on top of the criminal fines.

Generally, any remuneration for goods and services should be at FMV. However, the OIG has recognized a difference between goods and services that are integrally related to the offering provider or supplier’s services and those that are not. For example, in the preamble to the 1991 AKS safe harbor regulations, the OIG stated that a free computer that could only be used as part of the particular service being provided, such as a computer used to print laboratory results, had no independent value to the physician and was, therefore, not remuneration. In contrast, a personal computer that could be used for a variety of purposes could constitute illegal remuneration.

In OIG AO 12-20, a county-owned hospital in a Health Professional Shortage Area proposed to provide community physicians and practices with free access to an electronic interface that would transmit orders for and receive results from laboratory and diagnostic services provided by the hospital. Under the proposal the hospital would:

1) Provide the Interface free of charge to any physician that requested it;

2) Provide support services, through a contractor, to maintain and update the Interface; and

3) Limit the physician’s use of the Interface to transmitting orders for and receiving results from certain laboratory diagnostic services provided by the hospital.

Physicians and practices participating in the arrangement would remain responsible for all aspects of acquiring and maintaining their own EHR system, including any installation and maintenance costs.

As a threshold question, the OIG considered whether the Interface constituted remuneration. Because the Interface was limited to transmitting orders and receiving results for laboratory and diagnostic services, it was integrally related to the hospital’s services and, therefore, would have no independent value to the referring physician. Thus, the Interface was not remuneration and would not result in sanctions under the AKS. Furthermore, the OIG noted that the hospital’s proposal was the modern day equivalent to the example of the limited-use computer described in the 1991 safe harbor pre-amble.

The OIG emphasized that AO 12-20 is limited to the facts as presented by the hospital and does not mean that all connectivity arrangements or other donations are lawful. While the opinion does give imaging providers and suppliers considering their own connectivity arrangements some guidance on complying with the rules, it is important to understand that many common interface type of arrangements may not fit within the narrow facts of OIG AO 12-20. Providers and suppliers must still examine OIG guidance carefully in order to ensure arrangements do not violate the AKS.

Finally, it is important to note that connectivity and similar arrangements may pose additional issues related to other laws, for example, the Federal physician self-referral law (Stark). The Center for Medicare and Medicaid Services (CMS) has provided some guidance on the issue, including an Advisory Opinion issued in 2008 that recognized the Stark Law’s definition of remuneration excluded “the furnishing of items, devices, or supplies  . . . used solely to order or communicate the results of tests or procedures for the entity.” In addition, there are other exceptions that may apply (i.e. exceptions for EHR, non-monetary compensation), but the exceptions are narrow and may not apply to every arrangement. While the result of the 2008 CMS Advisory Opinion is similar to the OIG’s most recent opinion discussed above, imaging providers and suppliers seeking to implement connectivity or other donation of technology arrangements must carefully structure any arrangement in compliance with applicable law.

Adrienne Dresevic, Esq. graduated Magna Cum Laude from Wayne State University Law School. Practicing healthcare law, she concentrates in Stark and fraud/abuse, representing various diagnostic imaging providers, eg, IDTFs, mobile leasing entities, and radiology and multi-specialty group practices.

Carey F. Kalmowitz, Esq. graduated from NYU Law School. Practicing healthcare law, he concentrates on corporate and financial aspects, eg, structuring physician group practice transactions; diagnostic imaging and ancillary services, IDTFs, provider acquisitions, CON, compliance, and Stark and fraud/abuse.

The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.

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