CMS and OIG Proposed Rule for EHR Donations

On April 10, 2013, both the Centers for Medicare & Medicaid Services ("CMS") and the Office of Inspector General ("OIG") of the Department of Health and Human Services released Proposed Rules extending protections related to the donation of electronic health records ("EHRs"). In particular, the Proposed Rules extend the existing Anti-Kickback Safe Harbor (the "Safe Harbor") and the existing Stark Law Exception (the "Exception"). The Proposed Rules, if finalized, will amend the current exceptions in the following ways:
  • First, the interoperability requirement for the Exception and Safe Harbor must be "authorized by the National Coordinator for Health Information Technology" and interoperable as of the date of donation.  Previously, it only needed to be "recognized by the Secretary," whereas with this proposed amendment, the interoperability of donated EHRs must be recognized by a certifying body.
  • Second, under the Exception and Safe Harbor, proposed is the elimination of the electronic prescribing capability.  Currently, the donated software must include electronic prescribing capability.
  • Third, the Exception and Safe Harbor is scheduled to sunset on December 31, 2013; however, the Proposed Rule is soliciting comments for an extended sunset date of December 31, 2016.
  • Finally, the Proposed Rule is soliciting comments regarding the scope of protected donors.  In particular, the Proposed Rules are considering excluding specific donors from the protected donors list, such as durable medical equipment suppliers, independent home health agencies, and other "suppliers of ancillary services associated with a high risk of fraud and abuse."

If you have any questions or concerns related to these fraud and abuse exceptions, or would like to submit your comments, please contact Robert A. Wade at or 574.485.2002.The officials for the Proposed Rules will be accepting comments on the proposed rules for sixty (60) days.

Post-Acute Providers to be Part of Mandated Bundled Payments

According to the U.S. Department of Health and Human Services (HHS) 2014 Budget Proposal report, bundled payment for post-acute care providers, including long term care hospitals (LTCHs), IRFs, SNFs, and home health providers will begin in 2018. Payments would be bundled for at least half of the total payments for post-acute care providers. Rates based on patient characteristics and other factors will be set to produce a permanent and total cumulative adjustment of -2.85% by 2020. Beneficiary coinsurance would equal levels under current law. According to HHS, savings are estimated at $8.2 billion over 10 years.
A copy of the budget proposal is available here.
If you would like more information, please contact Lori McLaughlin at or 219.227.6075.

OIG Advisory Opinion No. 13-01

In Advisory Opinion 13-01, the U.S. Department of Health and Human Services, Office of Inspector General ("OIG") issued a favorable opinion regarding an arrangement in which insurers (the "Requestors") would indirectly contract with a hospital network. Under the arrangement, the Requestors would contract with one or more preferred provider organizations ("PPOs") that also contract with hospitals throughout the area (the "Proposed Arrangement").
This Proposed Arrangement would allow the network hospitals to provide discounts or waivers on inpatient deductibles for Medicare patients whose deductible is covered by Medigap. The Requestors' enrollees would be provided with discounts. In some cases, the discounts could be up to 100 percent of the Medicare inpatient deductibles incurred by the hospitals in the PPO network. This discount would otherwise be covered by the Requestors.
The OIG analyzed whether this Proposed Arrangement would constitute grounds for imposition of civil monetary penalties ("CMPs"). The OIG found that the Requestor would not be subject to CMPs under the Anti-Kickback Statute ("AKS") for the following reasons:

  • The waivers would not increase Medicare payments because payments to hospitals are fixed under Part A for inpatient services.
  • The discounts were unlikely to increase utilization.  The discounts would be invisible to patients because they would only apply to the portion of the beneficiary's cost-sharing obligations that would already be covered.
  • It would not affect competition among hospitals because membership in the network is open to any accredited hospital.
  • Because the patient's physician or surgeon would receive no remuneration and the patient could visit any hospital with no additional costs, the Proposed Arrangement would not affect professional medical judgement.
  • The Requestors certified that they would allow the policyholders the freedom to choose any hospital without resulting in additional liability or penalty.
  • Overall the Proposed Arrangement may lower costs because savings would be reported to insurance rate-setting regulators.
If your organization is indirectly or directly contracting with hospitals in which discounts are being applied for Medicare beneficiaries that would otherwise be paid by your organization, you should be mindful of the factors the OIG has discussed in this Advisory Opinion and the safeguards proposed by the Requestors.In conclusion, the OIG decided not to impose administrative sanctions because the proposed safeguards would result in a low level of risk for fraud and abuse that may result from the Proposed Arrangement.
If you would like additional information or have any questions regarding this Advisory Opinion, please contact Robert A. Wade at or 574.485.2002.

SNF's Soon to be Penalized for Readmissions

Skilled nursing facilities could soon share responsibility-and accompanying penalties-with hospitals for avoidable readmissions, according to the U.S. Department of Health and Human Services' (HHS) 2014 Budget Proposal.
The Affordable Care Act requires payment reductions starting in 2013 for hospitals with high rates of readmissions. MedPAC analysis indicates that nearly 14 percent of Medicare patients discharged from a hospital to a Skilled Nursing Facility (SNF) are readmitted to the hospital for conditions that could potentially have been avoided. To promote similar high-quality care in SNFs, the 2014 budget proposal reduces payments by up to three percent for SNFs with high rates of care-sensitive, preventable hospital readmissions, beginning in 2017. According to HHS, savings are estimated at $2.2 billion over 10 years.
A copy of the budget proposal is available here.
If you would like more information, please contact Lori McLaughlin at or 219.227.6075.