EHR Stark Law Exception Extended

Posted by

AdrienneFinal1Carey F. KalmowitzBy Adrienne Dresevic, Esq. and Carey Kalmowitz, Esq.

January 2014—By way of brief background, in an effort to encourage physicians to adopt costly EHR systems, CMS established an exception to the Stark Law allowing hospitals to donate EHR software to physicians. Additionally the OIG established a safe harbor provision to protect such EHR donations from Anti-Kickback enforcement, provided that the physicians cover 15% of the cost of EHR technology. The exceptions to the Stark and Anti-Kickback laws were scheduled to expire on December 31, 2013.

On December 27, 2013, CMS and OIG published complementary Final Rules in the Federal Register that amend the AKS safe harbor regulation and Stark Law Exception concerning EHR.

Full text of the respective rules can be found at:

Significantly, the Final Rules extend the protections of the existing Stark Law Exception and AKSSafeHarbor to December 31, 2021. In addition to the extension, the Final Rules:

  • Limit the scope of protected donors to exclude laboratory companies;
  • Update the provision under which EHR software is deemed interoperable;
  • Remove the electronic prescribing capability requirement; and
  • Clarify the condition that prohibits a donor from taking action to limit or restrict the use, compatibility, or interoperability of the donated items or services.


Protected Donors


In order to address concerns of potential fraud and abuse by certain donors, the proposed rules sought comments on whether to limit the list of permissible donors of EHR items and services to hospitals, group practices, prescription drug plan sponsors, and Medicare Advantage organizations or other entities with front-line patient care. In light of the comments received, the Final Rules remove laboratory companies from the scope of protected donors under the safe harbor.




The Final Rules adopt the current EHR exception requirement that donated software must be interoperable at the time it is provided to the physician. However, the rules modify when such technology is deemed interoperable. Previously, software was deemed interoperable if a certifying body recognized by the Secretary of HHS has certified the software within no more than 12 months prior to the date it is provided to the recipient. Under the Final Rules, software is interoperable if, on the date it is provided to the recipient, it has been certified by certifying body authorized by the National Coordinator for Health Information Technology (ONC) to an edition of the EHR certification criteria identified in the then-applicable version of 45 CFR part 170 (eg, the HITECH Act’s definition of “Certified EHR”). CMS and OIG believe the Final Rules are consistent with their objective of ensuring that software is certified to the current required standard of interoperability when it is donated.

Electronic Prescribing


Although CMS and OIG believe that electronic prescribing is critically important, the Final Rules eliminate the requirement that donated software contain electronic prescribing capability.  CMS and OIG made this determination based upon public comments coupled with the belief there are sufficient alternative policies driving the adoption of electronic prescribing.

Data Lock-In and Exchange

Both CMS and OIG sought comments on what new or modified conditions could be added to the EHR safe harbor to achieve the goals of: (1) preventing misuse of the safe harbor that results in data and referral lock-in; and (2) encouraging the free exchange of data. In the final rule, CMS and OIG did not adopt any additional conditions, however, they did clarify that neither a donor “nor any other person in the donor’s behalf may take any action to limit or restrict the use, compatibility, or interoperability of the items or services with other electronic prescribing or EHR systems, including, but not limited to, health information technology applications, products or services.” The expanded language is intended to clarify that this prohibition applies to any donor action that limits the use of donated software with any other health information technology.



In light of the Final Rules, providers who donate or receive donated EHR items or services should review the regulations prior to making or receiving a donation after January 1, 2014 to ensure compliance.

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

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