Hospitals want clarification on E-health rules

In an effort to speed the adoption of electronic medical records (EMR) the U.S. federal government modified anti-kickback laws, but many hospitals still fear providing EMR technology to docs at cut-rate prices.

The U.S. Department of Health and Human Services in August granted hospitals partial exemptions from federal fraud laws that had prohibited them from providing discounted EMR or prescription-writing software to individual doctors or small groups of physicians. The laws are meant to prevent hospitals from influencing physicians’ decisions about where to hospitalize patients.

The exemption allows hospitals to sell EMR and electronic prescription software to physicians for 15 percent of the cost of the products.

Hospitals and physician groups had sought the exemptions for several years, contending that many physicians can’t afford the software without help from hospitals.

Officials at some nonprofit hospitals now say that allowing hospitals to pay for such software could lead to a loss of their tax-exempt status.

Take, for example, CareSpark, a Kingsport, Tenn.-based organization that is developing an electronic network to allow health care providers in 17 counties in Tennessee and Virginia to share patient data. Most of the hospitals affiliated with CareSpark are awaiting a ruling from the Internal Revenue Service before taking advantage of the HHS exemption.

According to John Morrissey, director of knowledge at the National Alliance for Health Information Technology in Chicago, the IRS has yet to respond to an American Hospital Association request for additional guidance on the issue. The Chicago-based AHA counts 5,000 hospitals, health care systems, networks, other providers of care and 37,000 individuals among its members.

Liesa Jenkins, executive director of CareSpark, said that most of the 18 hospitals affiliated with the organization are not-for-profits that believe IRS approval is needed before they can provide financial assistance to individual physicians and medical groups.

“Until the IRS solidly endorses the relaxed regulations for nonprofit hospitals and for-profit physician groups, our hospitals and physician groups are not yet ready to commit to that path,” Jenkins said.

Tom Smith, CIO at Evanston Northwestern Healthcare, a not-for-profit organization that operates three hospitals in Chicago’s suburbs, said Northwestern is waiting for the IRS ruling before it will provide software to its affiliated physicians.

He noted that the HHS took several years to approve an exemption to the federal fraud laws, so “we can wait a while longer to get it right.”

John Blair, president of Taconic IPA Inc., a physicians network in Fishkill, N.Y., said that the questions regarding the IRS’s stance “will probably make some hospitals that might have done this sit on the fence.”

In general, he said, “the negative is a lot of doctors know this is coming… so they are stepping back and waiting before buying now, because there may be some additional financial relief on the horizon.”

Several years ago, Taconic started a regional health information organization called the Taconic Health Information Network and Community (THINC) in New York’s Hudson Valley region, using seed money from a nonprofit organization and a US$1.5 million grant from the federal government.

THINC provides doctors with monthly subscription-based access to a database containing lab results, prescription information and other patient data.

In addition, THINC employer members and insurance companies pay doctors additional fees for using the electronic service.

The organization doesn’t have a direct stake in the IRS issue because of its early start in creating EMRs, Blair noted.

For some hospitals, the financial burden of providing EMR software to individual doctors and small groups of physicians is a more important hurdle than HHS or IRS regulations.

Pat Taffe, CIO at North Memorial Health Care, a hospital in Robbinsdale, Minn., said the HHS exemption “just shifts the burden from the small, independent providers to large hospitals and health systems. We may be larger. However, we aren’t financially any better off.”

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