New Regulations to Facilitate Adoption of Health Information Technology

HHS Secretary Mike Leavitt today announced final regulations that will support physician adoption of electronic prescribing and electronic health records technology.

"Electronic health records help doctors provide higher quality patient care, improved efficiency and with less hassle," Secretary Leavitt said. "By removing barriers, these regulation changes will help physicians get these systems in place and working for patients faster."

Electronic prescribing enables a physician to transmit a prescription electronically to the patient's choice of pharmacy or ancillary provider. It can improve patient safety by decreasing prescription errors due to hard-to-read physician handwriting and communication errors, automating the process of checking for drug interactions and allergies and eliminating duplicative laboratory and diagnostic tests.

Electronic prescribing also enables physicians and pharmacies to obtain from drug plans information about the patient's eligibility and medication history. Having access to this information at the point of care makes writing, transmitting, and filling prescriptions quicker and easier, and also makes it possible for physicians to make informed decisions about the availability of lower-cost, therapeutically appropriate alternatives to the prescribed medication.

Electronic health records technology, when interoperable among health care providers in various settings, offers benefits similar to the benefits of electronic prescribing in terms of reducing medical errors, coordinating care and improving efficiency.

Interoperable electronic health records will allow information to be more portable, moving with consumers from one point of care to another. In addition, the implementation of interoperable electronic health records technology is a critical step in achieving secure and seamless information exchange and improving our health care system.

The final rules displayed today by the Centers for Medicare & Medicaid Services (CMS) and the Office of the Inspector General (OIG) create 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.

The CMS rule creates two new 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. The law also prohibits the health care entity from billing for Medicare services that are furnished as a result of a prohibited referral.

Similar to the CMS rule, the OIG rule establishes two new safe harbors under the federal anti-kickback statute. Arrangements involving the provision of items and services that meet the requirements of the safe harbors are exempt from enforcement action under the federal anti-kickback statute related to electronic prescribing as well as electronic health records systems.

The rules finalize an exception and safe harbor for the provision of electronic health records information that is more expansive than the exception and safe harbor proposed by CMS and OIG on Oct. 11, 2005. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) mandated exception and safe harbor for arrangements involving the provision of electronic prescribing technology and services were finalized as proposed.

The exceptions and safe harbors establish the conditions under which:

  • Entities furnishing DHS (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.
  • 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.

    "These final rules will improve care by giving doctors and other health care providers needed support for interoperable health records that enable them to increase quality and improve efficiency," said CMS Administrator Mark B. McClellan, M.D., Ph.D. "Medicare plays a critical role in this important initiative, and we are committed to its success."

    "These important regulations will help promote the adoption of essential health information technology while protecting the federal health care programs and beneficiaries from fraud and abuse," said HHS Inspector General Daniel Levinson.

    The exception under the physician self-referral law for arrangements involving the donation of electronic health records technology will protect the provision of software or information technology and training services that are necessary and used predominantly to create, maintain, transmit or receive the electronic health records of the donor's or physician's patients.

    The scope of donors and recipients under the final rules is considerably broader than in the proposed rules. Donations protected under the exception may be made to any physician by entities furnishing DHS. The exception requires compliance with criteria similar to those listed in the electronic prescribing exception, as well as additional criteria, such as those requiring cost sharing and selection of physician recipients of donated technology.

    The corresponding OIG safe harbor is similar. However, consistent with underlying statutory differences, the safe harbor covers a broad array of providers, suppliers, practitioners and health plans when they provide electronic health records technology to physicians and others engaged in the delivery of health care.

    Among other conditions, the final rules for arrangements involving the donation of electronic health records technology include a cost-sharing requirement. Recipients are required to pay 15 percent of the cost of the electronic health records technology items and services. In addition, consistent with the President's goal of adoption of electronic health records technology by 2014, the exception and safe harbor protecting arrangements involving the donation of electronic health records will sunset on Dec. 31, 2013.

    The electronic prescribing exception was mandated by the MMA and signed into law by President Bush on Dec. 8, 2003. As part of the MMA, Medicare will require Prescription Drug Plans (PDPs) and Medicare Advantage (MA) organizations participating in the new prescription drug benefit to support electronic prescribing. Electronic prescribing will be voluntary for physicians and pharmacies. Although participation by physicians in electronic prescribing is optional, the exception and safe harbor are designed to encourage the adoption of effective electronic prescribing programs and will make electronic prescribing more attractive to physicians.

    These CMS and OIG final rules represent a coordinated effort to advance Secretary Mike Leavitt's goal to improve the health care of Medicare beneficiaries through the use of electronic prescribing and electronic health records systems.

    The final rules were displayed today at the Office of the Federal Register for publication on Aug. 8, 2006. For more information, visit the CMS Web site and the OIG Web site.