MEDICARE FACT SHEET MEDICARE FACT SHEET

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1 MEDICARE FACT SHEET MEDICARE FACT SHEET Fr Immediate release CMS Office f Media Affairs August 1, 2006 Physician Self-Referral Exceptins fr Electrnic Prescribing and Electrnic Health Recrds Technlgy BACKGROUND: Sectin 1877 f the Scial Security Act (the Act), cmmnly referred t as the Stark law, prhibits a physician frm making referrals fr certain designated health services (DHS) payable by Medicare t an entity with which the physician (r an immediate family member f the physician) has a financial relatinship, unless an exceptin applies. Sectin 1877 f the Act als prhibits the entity frm submitting claims t Medicare r anyne else fr Medicare DHS that are furnished as a result f a prhibited referral. Vilatins f the statute are punishable by denial f payment fr all DHS claims, refund f amunts cllected fr DHS claims, and civil mney penalties fr knwing vilatins f the prhibitin. The Medicare Prescriptin Drug, Imprvement, and Mdernizatin Act f 2003 (MMA) amended the Act t establish a prescriptin drug benefit in the Medicare prgram. As part f the new benefit, the Cngress directed the Secretary t establish standards fr electrnic prescribing with the bjective f imprving patient safety, quality f care, and efficiency in the delivery f care. Because the dnatin f electrnic prescribing technlgy may create a financial relatinship that is subject t the physician self-referral prhibitin, the MMA directed the Secretary, in cnsultatin with the Attrney General, t create an exceptin t the physician self-referral prhibitin t permit certain entities t prvide nn-mnetary assistance t physicians t encurage their use f electrnic prescribing technlgy. This final rule (CMS-1303-F) sets frth the terms and cnditins f the MMA-mandated physician self-referral electrnic prescribing exceptin and als sets frth the cnditins fr a new regulatry exceptin fr arrangements invlving the dnatin f electrnic health recrds sftware r infrmatin technlgy and training services. The MMA mandated a similar safe harbr under the anti-kickback statute fr dnatins f electrnic prescribing technlgy made t physicians and certain ther entities. The HHS Office f Inspectr General (OIG) is simultaneusly issuing a final rule regarding the MMA-mandated anti-kickback statute safe harbr fr certain electrnic prescribing arrangements, as well as a safe harbr fr the dnatin f electrnic health recrds sftware r infrmatin technlgy and training services. Infrmatin abut the OIG regulatins can be fund n the OIG website at

2 Exceptin fr Electrnic Prescribing Arrangements T qualify fr the physician self-referral exceptin regarding dnatins f electrnic prescribing technlgy and training services, the fllwing criteria must be satisfied, as fully set frth at 42 CFR (v): The items and services must cnsist f hardware, sftware, r infrmatin technlgy and training services that are necessary and used slely t receive and transmit electrnic prescriptin infrmatin; The items and services must be prvided by a hspital t a physician wh is a member f its medical staff; by a grup practice t a physician wh is a member f the grup; r by a prescriptin drug plan spnsr r Medicare Advantage rganizatin t a prescribing physician; and The items and services are prvided as part f, r are used t access, an electrnic prescriptin drug prgram that meets applicable standards under Medicare Part D at the time the items and services are prvided. The dnr (r any persn n the dnr s behalf) des nt take any actin t limit r restrict the use r cmpatibility f the items r services with ther electrnic prescribing r electrnic health recrds systems; Fr items r services that are f the type that can be used fr any patient withut regard t payr status, the dnr des nt restrict, r take any actin t limit, the physician s right r ability t use the items r services fr any patient; Neither the physician nr the physician s practice (including emplyees and staff members) makes the receipt f items r services, r the amunt r nature f the items r services, a cnditin f ding business with the dnr. Neither the eligibility f a physician fr the items and services, nr the amunt r nature f the items r services, is determined in a manner that takes int accunt the vlume r value f referrals r ther business generated between the parties; The arrangement is in writing, is signed by the parties, specifies the items and services being prvided, identifies the cst t the dnr f the items and services, and cvers all f the electrnic prescribing items and services t be prvided by the dnr. This requirement will be met if all separate agreements between the dnr and the physician (and the dnr and any family members f the physician) incrprate each ther by reference r if they crss-reference a master list f agreements that is maintained and updated centrally and is available fr review by the Secretary upn request. The master list shuld be maintained in a manner that preserves the histrical recrd f agreements. The dnr des nt have actual knwledge f, and des nt act in reckless disregard r deliberate ignrance f, the fact that the physician pssesses r has btained items r services equivalent t thse prvided by the dnr.

3 Exceptin fr Electrnic Health Recrds Arrangements T qualify fr the physician self-referral exceptin regarding dnatins f electrnic health recrds sftware r infrmatin technlgy and training services, the arrangement is required t satisfy the fllwing criteria, as fully set frth at 42 CFR (w): The sftware and training services must be necessary and used predminantly t create, maintain, transmit, r receive electrnic health recrds; The items and services are prvided t a physician by a hspital r ther entity that furnishes designated health care services; The sftware is interperable (as defined at ) at the time it is prvided t the physician. Fr purpses f the exceptin, interperable means that the sftware is able t (i) cmmunicate and exchange data accurately, effectively, securely, and cnsistently with different infrmatin technlgy systems, sftware applicatins, and netwrks, in varius settings, and (ii) exchange data such that the clinical r peratinal purpse and meaning f the data are preserved and unaltered. Sftware is deemed t be interperable if a certifying bdy recgnized by the Secretary has certified the sftware n mre than 12 mnths prir t the date it is prvided t the physician. The dnr (r any persn n the dnr s behalf) des nt take any actin t limit r restrict the use, cmpatibility, r interperability f the items r services with ther electrnic prescribing r electrnic health recrds systems; Befre receipt f the items and services, the physician pays 15 percent f the dnr s cst fr the items and services. The dnr (r any party related t the dnr) des nt finance the physician s payment r lan funds t be used by the physician t pay fr the items and services. Neither the physician nr the physician s practice (including emplyees and staff members) makes the receipt f items r services, r the amunt r nature f the items r services, a cnditin f ding business with the dnr. Neither the eligibility f a physician fr the items and services, nr the amunt r nature f the items and services, is determined in a manner that directly takes int accunt the vlume r value f referrals r ther business generated between the parties. Fr purpses f this requirement, the determinatin is deemed nt t directly take int accunt the vlume r value f referrals r ther business generated between the parties if any ne f the fllwing cnditins is met: (i) The determinatin is based n the ttal number f prescriptins written by the physician (but nt the vlume r value f prescriptins dispensed r paid by the dnr r billed t the prgram);

4 (ii) The determinatin is based n the size f the physician s medical practice (fr example, ttal patients, ttal patient encunters, r ttal relative value units); (iii) The determinatin is based n the ttal number f hurs that the physician practices medicine; (iv) The determinatin is based n the physician s verall use f autmated technlgy in his r her medical practice (withut specific reference t the use f technlgy in cnnectin with referrals made t the dnr); (v) The determinatin is based n whether the physician is a member f the dnr s medical staff, if the dnr has a frmal medical staff; (vi) The determinatin is based n the level f uncmpensated care prvided by the physician; r (vii) The determinatin is made in any reasnable and verifiable manner that des nt directly take int accunt the vlume r value f referrals r ther business generated between the parties. The arrangement is in writing; is signed by the parties; specifies the items and services being prvided, the cst t the dnr f the items and services, and the amunt f the physician s cntributin; and cvers all f the electrnic health recrds items and services t be prvided by the dnr. This requirement will be met if all separate agreements between the dnr and the physician (and the dnr and any family members f the physician) incrprate each ther by reference r if they crss-reference a master list f agreements that is maintained and updated centrally and is available fr review by the Secretary upn request. The master list shuld be maintained in a manner that preserves the histrical recrd f agreements. The dnr des nt have actual knwledge f, and des nt act in reckless disregard r deliberate ignrance f, the fact that the physician pssesses r has btained items r services equivalent t thse prvided by the dnr; Fr items r services that are f a type that can be used fr any patient withut regard t payr status, the dnr des nt restrict, r take any actin t limit, the physician s right r ability t use the items r services fr any patient; The items and services d nt include staffing f physician ffices and are nt used primarily t cnduct persnal business r business unrelated t the physician s medical practice; The electrnic health recrds sftware cntains electrnic prescribing capability, either thrugh an electrnic prescribing cmpnent r the ability t interface with the physician s existing electrnic prescribing system, that meets the applicable standards under Medicare Part D at the time the items and services are prvided;

5 The arrangement des nt vilate the anti-kickback statute r any Federal r State law r regulatin gverning billing r claims submissin; and The transfer f the items r services ccurs n r befre December 31, 2013.