It’s a safe harbor many in the laboratory and pathology sectors contend actually brims with mines.
This potentially explosive area with the seemingly benign name is the electronic health record (EHR) safe harbor exception to the Stark anti-kickback statute for physicians. It was put into effect in 2006, with the intent of allowing hospitals and other large providers to “donate” funds to physician practices in order for them to acquire EHR systems. So long as the practices put up 15 percent of the funding on their own, donations from other providers would, in many circumstances, avoid violating federal statutes prohibiting kickbacks.
The safe harbor provision had been set to expire at the end of this year, but earlier this month the Centers for Medicare and Medicaid Services and the Office of Inspector General of the Department of Health and Human Services proposed extending the protection through 2016. That’s the last year the feds will be shelling out incentive payments to providers to achieve meaningful use for EHRs.
Clinical and anatomic pathology labs have been shelling out themselves—they are among those allowable donors under the provision. However, most labs are nowhere as deep-pocketed as the typical hospital. As a result, many say they have grown weary of making donations—particularly as some practices have unwittingly switched their referrals to more philanthropic competitors.
The College of American Pathologists has been critical of the safe harbor provision, claiming it leads to abuse, while the American Clinical Laboratory Association has maintained federal incentive payments to physicians to purchase EHR systems work better than the donations.
And such donations aren’t just plinks into the passing plate: Ramping up an EHR system can cost a donor as much as $85,000, industry observers say. Donors can also be hit up for annual maintenance costs, which can run another $20,000.
“I’m trying to pay as little for it as humanly possible,” said Krista Crews, the executive director at ProPath, a Dallas-area pathology and molecular lab. Crews estimated the 35-pathologist operation has been spending about $200,000 a year on donations. It’s given to about 20 different practices over the past several years, Crews estimated.
And while the safe harbor provision seems likely to survive 2013, ProPath’s donations are not. The recent 52 percent cut in the technical component of code 88305 has hit ProPath so hard that it has no budget for donations in 2014, according to Crews.
Smaller labs or pathology practices have never budgeted for it at all. Donations have been a nonstarter for Suncoast Pathology, a three-member practice and lab in Venice, Fla.
“It leaves us terribly stuck,” said Richard E. Whisnant, M.D., one of the practice’s members. Whisnant estimates that in 2010, Suncoast lost as much as 20 percent of its business to practices able to make donations. “We had been planning to survive until the end of 2013, and now it looks like this could continue.”
Whisnant said that Suncoast will submit comments to CMS urging the end of the safe harbor provision. He also intends to talk to anyone in the media “who is willing to listen.” “If the government wants to extend the safe harbor . . . they should police what to us appear to be illegal donations, so that it is a level playing field,” Whisnant said.
However, not every physician practice is being wowed by new EHR systems—some have recently begun looking at their gifts in the mouth and found them wanting. Both ProPath and Suncoast say they have gotten back business from physicians who were less than thrilled with the EHR systems they received from donating labs. However, Whisnant observed that even after regaining the lost business, Suncoast is still more than 15 percent below where it was prior to the safe harbor provision being instituted.
As a result, ProPath has not endorsed any specific EHR systems, leaving the selection up to the practice. Crews noted that ProPath receives the invoices directly from the vendor, and pays them as well. “They seem much happier that way,” Crews said.
