E-Prescribing Safe Harbor and Exception Released
10/7/2005
By way of background, the Medicare Modernization Act amended the Social Security Act (the "Act") to establish the Voluntary Prescription Drug Benefit Program, which is commonly referred to as Part D of the Medicare program. Consistent with the Bush Administration's push towards widespread adoption of electronic prescribing and electronic medical records, the Act's requires that electronically transmitted prescription information relating to covered Part D drugs comply with final uniform standards adopted by the CMS under an electronic prescription drug program. Medicare Advantage ("MA") Organizations offering Medicare Advantage-Prescription Drug ("MA-PD") plans and prescription drug plan sponsors ("PDP") are required to support and comply with electronic prescribing standards, once finalized (the Proposed Rule was published on February 4, 2005).
Significantly, however, there is no requirement in the Act that providers write prescriptions electronically. Recognizing the potential difficulty involved in getting physician practices and other providers to purchase needed hardware and software to electronically transmit standardized prescription information, Congress directed the Secretary of Health and Human Services to create a safe harbor under the federal anti-kickback statute and an exception to the Stark Law for the donation of necessary equipment and services. The proposed "e-Prescribing" exception and safe harbor contain similar language and content, as both protect certain arrangements involving the provision of nonmonetary remuneration (hardware, software, or information technology or training services) that is necessary and used solely to receive and transmit electronic prescription information. The proposed safe harbor and the exception set forth conditions under which certain hospitals, group practices, PDP sponsors, and MA organizations ("donors") may provide certain remuneration to prescribing health care professionals, pharmacies, and pharmacists ("recipients") without violating the anti-kickback statute or the Stark Law.
The safe harbor and the Stark Law exception specify that prohibited "remuneration" will not include hardware, software, or information technology and training services necessary and used solely to receive and transmit electronic prescription information if certain enumerated standards are met. Generally, the items and services must be provided: (i) in the case of a hospital, by the hospital to medical staff members; (ii) in the case of a group practice, by the practice to certain prescribing members of the practice; and (iii) in the case of a PDP sponsor or MA organization, by the sponsor or organization to participating network pharmacies or pharmacists and to prescribing health care professionals (or, under the Stark Law exception, to prescribing physicians).
The proposed regulations also require that the items or services be used as a part of (or to access) an electronic prescription drug program that meets Medicare Part D standards. In order to fit within the safe harbor or Stark law exceptions, donors may not restrict the use or compatibility of the electronic prescription items or services. In addition, the recipient cannot make the receipt of such items or services a condition of doing business with the donor. Similarly, neither the eligibility of the recipient nor the amount or nature of the items or services can take into account the volume or value of referrals or other business generated between the parties.
In addition, the arrangement must comply with certain administrative requirements, such as: the agreement must be in writing, signed by the parties, and contain a certification by the recipient that the items or services received are not "technically or functionally equivalent" to items or services already possessed. Finally, the donor must not have known that the recipient had items or services that were technically or functionally equivalent to those donated.
In addition to proposing an exception to the Stark Law that addresses donation of electronic prescribing technology, CMS proposed two exceptions for electronic health records software and directly related training services that are not covered by the MMA-mandated exception. These two exceptions would protect certain arrangements involving the provision of software and directly related training services that are used to receive, transmit, and maintain the electronic health records of an entity's or physician's patients.
We will be addressing the topics discussed above in Client Advisories in the coming weeks, and, in the meantime, we encourage you to contact one of our Health Section lawyers if you have questions regarding these or any other issues.
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