We hear lots of chatter around ARRA ‘dollars and definitions’    (e.g., Medicare & Medicaid reimbursement incentives, other HITECH funding, Meaningful Use, certified EHRs). Lots of great commentary has been written on these subjects, including some terrific pieces published on this very blog by my colleague, Dale Will. But today, I want to remind our community that ARRA was     not the first time our federal government and the private sector put financial clout behind initiatives to nudge the adoption of electronic health records by healthcare providers. Many new strategies have been rolling out over the past few years. For example, we’ve seen the definition of CMS “never events” (e.g., falls, medication errors) and attendant regulation so that Medicare & Medicaid no longer reimburse providers for the cost of care associated with “reasonably preventable” errors. That’s a financial motivator for improved electronic data capture and EHRs. Pay for Performance (P4P) programs are now  more widespread, designed to align reimbursement for service with outcomes rather than with utilization. Electronic records help providers to monitor progress-to-goals in an outcome driven environment.

However, I’d like to focus on a significant event that occurred in 2006 that, when combined with ARRA incentives, provides a truly unique opportunity for physicians to embrace the acquisition of EHRs. As announced by Mike Leavitt, then the     Secretary of Health and Human Services, the Stark Safe Harbor regulations established rules by which hospitals could donate to community or affiliated physicians “…items and services necessary and used predominantly to create, maintain, transmit, or receive EMRs.” The goal was to accelerate physician adoption of electronic prescribing and electronic health records by providing Safe Harbor rules that defined what and how hospitals could provide to non-staff physicians and not be bound by anti-kickback laws. Stark and other anti-kick back laws were created to punish the practice of hospitals or other entities to incent physicians with improper payments or rewards to refer patients to their hospital. This new government enacted “safe harbor” policy, provided the terms under which hospitals could donate EHR related hardware, software, internet connectivity, implementation and training and other support services to physicians. Key aspects of the safe harbor policy are:

• Hospitals cannot be influenced by volume or value of referrals it might get

• EHR services must include ePrescribing

• Cannot replace an existing EHR

• Cannot include donated office equipment

• Receiving providers must contribute a minimum of 15% of the donor’s cost for items and services

Therefore, with ARRA incentives AND Stark Safe Harbor in place, a recipient physician could implement an EHR for a 15% contribution of the costs incurred by the donor organization and then receive up to $44,000 in incentive payments under ARRA. This has LOTS of upside for everyone.

• ARRA incentives when combined with Stark’s Safe Harbor could provide the “tipping point” for EHR adoption by community and unaffiliated physicians.

• This confluence provides a window of opportunity to provide some stickiness that glues community physicians to regional hospitals or health systems.

• This new stickiness can improve a hospital’s or health system’s market position and its ability to coordinate care.

• A hospital sponsored strategy for its regional physicians’ market can help avoid a jumble of too many (and potentially poorly implemented) EHR products in one community.

There is flexibility in the application of Stark and ARRA that allows for a number of different approaches. There are severe penalties if you don’t evaluate risk along with opportunity, and if you make bad decisions about how to roll-out a community or non-affiliated physician EHR strategy. This is definitely an area where good legal counsel and strong project management is recommended. However, this is also a great opportunity to actually achieve a socially valuable objective through the leveraging of federal and private dollars. There’s a big window of opportunity here. BUT, that window closes on December 31, 2013 when Stark Safe Harbor rules expire. Click HERE for a good overview of ARRA, Stark and this window of opportunity from a presentation given by NextGen.