Legal Update

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Inside the Software Safe Harbor


Scott Becker, Esq., CPA Doctors can accept free computers from hospitals, so long as they use the donated hardware and software to receive and transmit electronic prescription drug information, says the government. Should you take advantage of this? Here's what you need to know.

Proposed Safe Harbor at a Glance

Who may donate
• hospitals (to members of their medical staffs)
• group practices (to physician members)
• prescription drug plan sponsors
• Medicare Advantage organization

What may be donated
• certified health records software that includes an electronic prescribing component
• directly related training services
• billing and scheduling software, if its core function is electronic health records

How much it may cost
• no specific dollar amount proposed
• may be greater than the existing cap on pre-interoperability donations

Staying within the safe harbor
The Centers for Medicare and Medicaid Services and the Health and Human Services Office of Inspector General published a safe harbor to the Anti-kickback Statue involving electronic prescribing technology and electronic medical records in October. It's aimed at helping hospitals, group practices and pharmacies meet the Medicare Modernization Act's goals for taking healthcare digital - and at doctors who've been slow to join the digital revolution. The intended result would be easier data transfer, reduction of prescription or medical record errors, and increased overall connectivity in healthcare.

The OIG has recognized that gifts of equipment to referral sources - which is essentially what this safe harbor will provide a channel for - are highly suspect under the Anti-kickback Statute. Therefore, the rules about who can give what to whom would be very specific (see "Proposed Safe Harbor at a Glance").

To help ensure that software isn't used to simply lock up business or drive business to a facility, hospitals must meet these eight conditions contained in the safe harbor.

  • The hospital provides items and services to physicians who are members of its medical staff.
  • The items and services are donated as part of, or are used to access, an electronic prescription drug program that meets the applicable standards under Medicare Part D.
  • The donor (or any person on the donor's behalf) must not take any actions to limit or restrict unnecessarily the use or compatibility of the items or services with other electronic prescription information items or services or electronic health information systems.
  • The donor may not restrict, or take any action to limit, the recipient's right or ability to use the items or services for any patient.
  • The prescribing healthcare professional, pharmacy or pharmacist (or any affiliated group, employee or staff member) can't make receipt of items or services a condition of doing business with the donor.
  • The volume or value of referrals or other business between the parties shouldn't determine the items or services the donor gives.
  • A written agreement, signed by the parties, should specify the items or services being provided and their values. It should cover all the electronic prescribing items and services to be furnished, and certify that they're not technically or functionally equivalent to items and services the recipient already possesses.
  • The donor makes the donation knowing that the recipient doesn't already possess such items and services - and doesn't make the donation if they're already in place.

Taking healthcare digital
This safe harbor may well be a boon for surgeons who work with hospitals, not to mention a big step toward automating more areas of healthcare.

State Legislative Update

  • Under changes proposed by Delaware's insurance department, state regulations would require all claims to be paid within 30 days of the insurer's receipt of a clean claim. Insurers would have 15 days to submit a written request for more data to healthcare providers.
  • Maine's healthcare providers can now simultaneously submit a claim to each insurer who has potential responsibility for its payment. According to the state, the responsible insurer then has 30 days to pay or deny the claim.
  • The Nebraska legislature has mandated insurers to pay, deny or settle complete claims within 30 days for electronic filing and within 45 days for paper filing, or else pay the provider a 12 percent interest penalty on the claim from the date the payment was due. Insurers who can produce records showing that more than 90 percent of their payments were on time, however, will be exempt from the penalty.
  • Michigan facilities won't see insurers deny claims submitted on the CMS 1500 forms anymore. The state's workers' compensation agency has reminded insurers that recent changes require the use of the forms, along with the modifier ?SG and the site-of-service code 24.
  • Pennsylvania's insurance department has announced that it plans to issue a proposed rule updating the state's workers' compensation process involving medical care and costs. The announcement did not disclose whether ASCs' rates would be changed as a result.
  • South Carolina is expected to update its Hospital and Ambulatory Surgical Center Payment Manual for the first time since 1997. Revisions to the state's payment system should be issued for public review before the end of the year, although state law does not require the workers' compensation commission to seek public comment on the revisions.
  • The Texas Workers' Compensation Commission has been phased out and oversight of the program has been handed to the state's insurance department under recently enacted reforms. In addition, the reforms seek to create state-certified insurance networks through which ASCs could negotiate rates, a program that collected public comment over the summer.

- David Bernard

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