The Centers for Medicare & Medicaid Services (“CMS”) and the U.S. Department of Health & Human Services Office of the Inspector General (“OIG”) recently announced that the regulation allowing certain health care entities to donate electronic health records (with the entity subsiding up to 85% of the donor’s costs) to physicians has been extended to December 31, 2021. The regulation, which provided a safe harbor from the Stark Law and Anti-kickback statute, was set to expire on December 31, 2013.

Equipping an office with EHR systems and technology is a difficult and expensive task for physicians; the extension is no doubt a welcome relief as physicians continue to integrate EHR systems into their practices. The rule also:

• Excludes lab companies from the scope of protected donors. CMS made this change due to “concerns articulated by commenters and the wide-ranging support from the entire spectrum of the laboratory industry (from small, pathologist-owned laboratory companies to a national laboratory trade association that represents the industry’s largest laboratory companies).” This change will become effective on March 27, 2014.

• Provides revisions to what type of software is considered “interoperable” for the purposes of donation and what is included in “covered technology.”

• Removes from the exception the requirement related to e-prescribing capabilities.

Many healthcare and IT groups advocated for a permanent removal of the sunset date, but CMS and OIG believe that a permanent safe harbor would be a disincentive to EHR adoption and may lead to inappropriate “lock in” of data and referrals between recipients and donors. Under the final rule, any donor limitations or restrictions on the use, compatibility, or interoperability of donated EHR items and services with other e-prescribing or EHR systems remains prohibited.

With the sunset date now extended, physicians and qualifying donors should review and amend donation agreements. Likewise, labs and those receiving donations from labs must terminate or restructure arrangements by the March 27 deadline.