April Deadline for Laboratories to Comply with N.Y. Prohibition on EHR Donations

The New York State Department of Health (DOH) announced that clinical laboratories operating in the state have until April 15, 2011 to comply with the state’s ban on donating electronic health record (EHR) systems to referring sources.  The formal statement that the state’s rules do not allow cost-sharing or donation of EHR systems came back on September 27, 2010, in response to pressure from the laboratory community for DOH to take a definitive position.  Federal law allows a donation of an EHR system to a referring physician under set criteria (42 C.F.R. §1001.952(x)), but the commentary to the federal regulation, published in the Federal Register on August 8, 2006 (71 FR 45140), indicates that the federal provision does not provide authority to preempt State physician self-referral laws.

The DOH guidance identifies three options for laboratories to ensure compliance with the state’s ban, which the laboratory must document and make available for DOH upon request:

  • Retrieve all computer equipment and supplies not restricted to laboratory-related functions and discontinue prohibited services and connectivity;
  • Arrange for the one-time sale at fair market value of donated EHR software and components to the referral source and discontinue payment for the prohibited services and connectivity (DOH would not set fair market value thresholds because of the wide variety of EHR systems and arrangements between the laboratories and referral sources); or
  • Leave donated software of EHR components in place, continue to pay for connectivity for the components that are not laboratory-related, and discontinue accepting specimens for testing from the referral source.

Failure to comply with the state’s ban and employ corrective action could result in civil and criminal penalties and administrative action involving the laboratory’s permit.

In accordance with New York State’s rules (10 N.Y.C.R.R. §34-2.9), a laboratory is still permitted to provide software and hardware to referral sources to:

  1. Interface their Laboratory Information System (LIS) to the client’s existing EHR to enable seamless laboratory test ordering and laboratory test reporting, and facilitate other laboratory-related functions ((II) below), and may assume, as a cost of doing business, the cost of such a limited interface;
  2. Provide to a practitioner computer hardware, software, and information technology training and supplies that are restricted to laboratory-related functions that enable the practitioner to: (i) order tests from the laboratory, including access to a directory of services (i.e., specimen type, collection container and test information); (ii) receive, access, print and store test results received from the laboratory, including store cumulative results for individual patients; (iii) transmit data necessary for the laboratory to prepare requisitions and generate bills, invoices or claims for reimbursement; and (iv) transfer laboratory data received from the laboratory to any computer system maintained by the practitioner;
  3. Provide computer hardware and software as noted above that also contains functionality that permits a practitioner to make referrals to other laboratories and/or provides access to other laboratories’ Internet portals; and
  4. Provide to a RHIO or HIE computer equipment and supplies, information technology, and software in accordance with the requirements in (II) above. Laboratories may not contribute to the RHIO’s or HIE’s acquisition costs for EHR components, including software interfaces, or a practitioner’s costs of participation unless in accordance with the requirements in (II) above. Nothing in this bullet requires a laboratory to provide such EHR components to a RHIO or HIE for its participants.

To view the DOH’s Announcement on September 27, 2010: http://www.cap.org/apps/docs/statline/pdf/block_letter.pdf

This post was contributed by Charles Dunham.