Lack of guidance from the IRS held back donations after the Department of Health and Human Services last August issued rules making exceptions to the Stark Act and anti-kickback statutes, believes Stanley Nachimson, a former HHS official and principal at Nachimson Advisors LLC, a Baltimore consulting firm. "Now that the IRS ruling is here, we will get a good idea of the true interest in donations," he adds. "I believe it's a real shot in the arm for expanding electronic health records."
Still, he acknowledges that major barriers, primarily money and acceptance by physicians of new ways of doing business, remain. "We still have to make the case in the industry for the return on investment in doing this."
Hospitals considering donation programs should involve their legal counsel "early and often" in interpreting the IRS guidance in conjunction with the HHS ruling, advises Laura Jantos, principal at ECG Management Consultants Inc. in Seattle. The IRS ruling, for instance, enables a sponsoring hospital "to the extent permitted by law" to access all of the electronic medical records created by a physician using the I.T. and services subsidized by the hospital.
Jantos interprets "extent permitted by law" to mean use of the records must be in accordance with the HHS exemptions and the HIPAA privacy and security rules. She further believes the IRS language means having an enterprisewide EMR is legal under tax laws. Consequently, hospitals can receive a benefit from the donation-such as physicians in the hospital having access to pertinent ambulatory data-without penalty from the IRS, she says.
Another issue that remains murky is the level of subsidies. The HHS ruling stipulates that physicians must pay for 15% of the value of donated I.T. and services. But the IRS ruling says hospitals can vary the level of subsidies by applying criteria related to "meeting the health care needs of the community," Jantos notes.
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