### 78751 Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Rules and Regulations

to section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA) (15 U.S.C. 272
note).

Since tolerances and exemptions that are established on the basis of a petition
under FFDCA section 408(d), such as
the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et

seq. ), do not apply.

This final rule directly regulates growers, food processors, food handlers,
and food retailers, not States or tribes,

nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions
of FFDCA section 408(n)(4). As such, the Agency has determined that this

action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between

the Federal Government and Indian tribes, or otherwise have any unique impacts on local governments. Thus, the Agency has determined that Executive
Order 13132, entitled ‘‘Federalism’’ (64 FR 43255, August 10, 1999) and
Executive Order 13175, entitled

‘‘Consultation and Coordination with
Indian Tribal Governments’’ (65 FR 67249, November 9, 2000) do not apply
to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate

as described under Title II of the

Unfunded Mandates Reform Act of 1995
(UMRA) (2 U.S.C. 1501 et seq. ).

Although this action does not require any special considerations under
Executive Order 12898, entitled

‘‘Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations’’ (59 FR 7629, February 16,
1994), EPA seeks to achieve environmental justice, the fair treatment and meaningful involvement of anygroup, including minority and/or lowincome populations, in the development, implementation, and
enforcement of environmental laws, regulations, and policies. As such, to the extent that information is publicly

available or was submitted in comments to EPA, the Agency considered whether groups or segments of the population, as
a result of their location, cultural practices, or other factors, may have atypical or disproportionately high and adverse human health impacts or environmental effects from exposure to the pesticide discussed in this document, compared to the general population.

XI. Congressional Review Act

Pursuant to the Congressional Review

Act (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule and other required information to the U.S.

Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal
Register . This action is not a ‘‘major rule’’ as defined by 5 U.S.C. 804(2).

List of Subjects in 40 CFR Part 180

Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping
requirements.

Dated: December 17, 2013.

Lois Rossi,

Director, Registration Division, Office of Pesticide Programs.

Therefore, 40 CFR chapter I is

amended as follows:

**PART 180—[AMENDED]**

■ 1. The authority citation for part 180

continues to read as follows:

Authority: 21 U.S.C. 321(q), 346a and 371.

■ 2. In § 180.960, in the table, alphabetically add the following polymer before the entry for ‘‘Hexadecyl acrylate-acrylic acid copolymer * * *’’

to read as follows:

**§ 180.960 Polymers; exemptions from the**
**requirement of a tolerance.**

* * * * *

Polymer CAS No.

* * * * *

2,5-Furandione, polymer with

ethenylbenzene, reactionproducts with polyethylenepolypropylene glycol 2- aminopropyl Me ether; minimum number average molecular weight (in amu),

14,000 ............................... 162568–32–3

* * * * *

[FR Doc. 2013–31108 Filed 12–26–13; 8:45 am]

**BILLING CODE 6560–50–P DEPARTMENT OF HEALTH AND** 

**HUMAN SERVICES**

**Centers for Medicare & Medicaid**

**Services**

**42 CFR Part 411**

**[CMS–1454–F]**

**RIN 0938–AR70**

**Medicare Program; Physicians’**

**Referrals to Health Care Entities With Which They Have Financial**  **Relationships: Exception for Certain**

**Electronic Health Records Arrangements** 

**AGENCY :**  Centers for Medicare &
Medicaid Services (CMS), HHS.

**ACTION :**  Final rule.

**SUMMARY :**  This final rule revises the exception to the physician self-referral law that permits certain arrangements involving the donation of electronic

health records items and services. Specifically, this final rule extends the expiration date of the exception to December 31, 2021, excludes laboratory companies from the types of entities that may donate electronic health records items and services, updates the provision under which electronic health

records software is deemed interoperable, removes the electronic prescribing capability requirement, and clarifies the requirement prohibiting any
action that limits or restricts the use, compatibility, or interoperability of

donated items or services.

**DATES :**  With the exception of the
amendment to § 411.357(w)(13), this regulation is effective on March 27,

2014. The amendment to
§ 411.357(w)(13) is effective on
December 31, 2013.

**FOR FURTHER INFORMATION CONTACT :**  Lisa Ohrin, (410) 786–8852.

**SUPPLEMENTARY INFORMATION :** 

I. Executive Summary

A. Purpose of the Regulatory Action

Section 1877 of the Social Security
Act (the Act), codified at 42 U.S.C. 1395nn, also known as the physician self-referral statute: (1) prohibits a physician from making referrals for certain designated health services (DHS) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership interest or compensation arrangement), unless the requirements of an exception are satisfied; and (2) prohibits the entity from submitting

claims to Medicare for those referred services, unless the requirements of an


### 78752 Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Rules and Regulations

1 42 CFR 1001.952(y). exception are satisfied. The statute establishes a number of exceptions and grants the Secretary the authority to create additional regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse. Since the original enactment of the statute in 1989, we have published a series of final rules interpreting the statute and promulgating numerous exceptions.

In accordance with our statutory authority, we published an exception to the physician self-referral law to protect certain arrangements involving the provision of interoperable electronic

health records software or information technology and training services. The final rule for this exception was published on August 8, 2006 (71 FR
45140) (hereinafter referred to as the August 2006 final rule) and is scheduled to expire on December 31, 2013 (see 42 CFR 411.357(w)(13)). In the April 10,

2013 Federal Register (78 FR 21308), we published a proposed rule that would update certain aspects of the electronic health records exception and extend the expiration date of the exception. The purpose of this final rule is to address the public comments received on the proposed rule and to finalize certain aspects of the proposed rule.

B. Summary of the Final Rule

This final rule amends the current exception in several ways. First, this final rule extends the expiration date of the exception to December 31, 2021. Second, it excludes laboratory companies from the types of entities that may donate electronic health
records items and services. Third, this rule updates the provision under which

electronic health records software is deemed interoperable. Fourth, this rule clarifies the requirement at § 411.357(w)(3) prohibiting any action
that limits or restricts the use, compatibility, or interoperability of donated items or services. Finally, it removes from the exception the requirement related to electronic prescribing capability.

C. Costs and Benefits

This final rule modifies an existing exception to the physician self-referral law. The exception permits certain entities to provide to physicians certain software and information technology and training and services necessary and used predominantly to create, maintain,
transmit, or receive electronic health

records. The modifications to the exception do not impose new requirements on any party. This is not a major rule, as defined at 5 U.S.C. 804(2). It is also not economically significant, because it will not have a significant effect on program expenditures and there are no

additional substantive costs to implement the resulting provisions. We expect the exception, as modified by
this final rule, to continue to facilitate the adoption of electronic health records technology.

II. Background

A. Physician Self-Referral Statute and
Exceptions

Section 1877 of the Act, codified at 42
U.S.C. 1395nn, also known as the physician self-referral statute: (1) prohibits a physician from making referrals for certain DHS payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership interest or compensation arrangement), unless the requirements of an exception are satisfied; and (2) prohibits the entity from submitting claims to Medicare for
those referred services, unless the requirements of an exception are

satisfied. The statute at 42 U.S.C.
1395nn(b)(4) establishes a number of exceptions and grants the Secretary the authority to create additional regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse. Since the original
enactment of the statute in 1989, we have published a series of final rules interpreting the statute and promulgating numerous exceptions.

B. The Electronic Health Records Items and Services Exception

On August 8, 2006 (71 FR 45140), we published a final rule that, among other things, finalized at § 411.357(w) an exception to the physician self-referral law for protecting certain arrangements involving interoperable electronic

health records software or information technology and training services (the ‘‘electronic health records exception’’). Also in the August 8, 2006 Federal Register (71 FR 45110), the Department
of Health and Human Services’ (HHS) Office of Inspector General (OIG) published similar final regulations at § 1001.952 that, among other things, adopted a safe harbor under the Federal
anti-kickback statute (section 1128B(b)
of the Act, codified at 42 U.S.C. 1320a– 7b(b)) for certain arrangements involving interoperable electronic

health records software or information technology and training services. As set
forth at § 411.357(w)(13) and§ 1001.952(y)(13), the physician selfreferral law electronic health records exception and the Federal anti-kickback
electronic health records safe harbor, respectively, are scheduled to expire on
December 31, 2013.

On April 10, 2013 (78 FR 21308), we published a proposed rule that would set forth certain proposed changes to the electronic health records exception. First, we proposed to update the provision under which electronic health

records software is deemed interoperable. Second, we proposed to remove from the exception the requirement related to electronic prescribing capability. Third, we proposed to extend the expiration date of the exception. In addition to these proposals, we solicited public comment on other possible amendments to the exception, including our proposal to limit the types of entities that may

donate electronic health records items and services under the exception and to add or modify conditions to limit the

risk of data and referral lock-in.

Elsewhere in the same issue of the Federal Register (78 FR 21314), OIG proposed almost identical changes to

the Federal anti-kickback statute safe harbor. Within the limitations imposed by the differences in the respective underlying statutes, we attempted to ensure as much consistency as possible between our proposed modifications to the exception at § 411.357(w) and OIG’s proposed modifications to the safe harbor. We noted in the proposed rule
that, due to the close nexus between our proposed rule and the OIG’s proposed rule, we might consider comments submitted in response to OIG’s proposal in finalizing this rule.

This final rule adopts some of the proposed changes to the electronic health records exception to the physician self-referral law. First, this final rule extends the expiration date of the exception to December 31, 2021. Second, it excludes laboratory companies from the types of entities that may donate electronic health

records items and services under the exception. Third, this rule updates the provision under which electronic health

records software is deemed interoperable. Fourth, this rule clarifies the requirement at § 411.357(w)(3) prohibiting any action that limits or restricts the use, compatibility, or interoperability of donated items or services. Finally, it removes from the exception the requirement related to electronic prescribing capability.

Elsewhere in this issue of the Federal Register , the OIG is finalizing almost identical changes to the electronic

health records safe harbor 1 under the

Federal anti-kickback statute. We attempted to ensure as much


### 78753 Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Rules and Regulations

consistency as possible between our changes to the physician self-referral law exception and OIG’s safe harbor changes. We have considered and responded to the timely comments we received as well as those received by OIG. Similarly, OIG considered comments submitted in response to our proposed rule in crafting its final rule. For purposes of this final rule, we treat comments that were made with respect

to the Federal anti-kickback statute as if they had been made with respect to the physician self-referral law, except where they relate to differences in the underlying statutes.

III. Provisions of the Proposed Regulations and Analysis of and Responses to Public Comments

We received approximately 110 timely items of correspondence for the proposed rule. We summarize and respond to comments later in this

section of the final rule. For ease of
reference, we divided the comments and responses into the following categories: the deeming provision; the electronic prescribing provision; the ‘‘sunset’’ provision; and additional proposals and

considerations.

A. The Deeming Provision

Our current electronic health records exception requires at § 411.357(w)(2)

that the donated software must be ‘‘interoperable’’ (as defined at § 411.351) at the time it is provided to the physician. This provision further provides that software is deemed to be interoperable if a certifying body recognized by the Secretary has certified

the software no more than 12 months prior to the date it is provided to the physician. We proposed two
modifications to § 411.357(w)(2), which is known as the ‘‘deeming provision.’’ Both modifications to the deeming provision were proposed to reflect recent developments in the Office of the

National Coordinator for Health Information Technology’s (ONC) certification program.

The first proposed modification would reflect ONC’s responsibility for authorizing certifying bodies. The second would modify the timeframe during which donated software must be certified. Currently, to comply with the deeming provision, the exception requires donated software to be certified no more than 12 months prior to the

date of donation.

After the issuance of the August 2006 final rule, ONC developed a regulatory process for adopting certification

criteria and standards which is anticipated to result in a cyclical rulemaking process. (For more information, see ONC’s September 4,

2012 final rule entitled ‘‘Health Information Technology: Standards, Implementation Specifications, and

Certification Criteria for Electronic Health Record Technology, 2014
Edition; Revisions to the Permanent Certification Program for Health Information Technology’’ (77 FR 54163).) Our proposal would have modified the deeming provision to track ONC’s anticipated regulatory cycle. As a result, software would be eligible for deeming if, on the date it is provided to the physician, it has been certified to any edition of the electronic health

record certification criteria that is identified in the then-applicable definition of Certified EHR Technology in 45 CFR part 170. By way of example, for 2013, the applicable definition of Certified EHR Technology includes both

the 2011 and the 2014 editions of the

electronic health record certification
criteria. Therefore, in 2013, software

certified to meet either the 2011 edition

or the 2014 edition would have satisfied the requirement of the exception as we proposed to modify it. Additionally, we

solicited comments on whether removing the current 12-month certification requirement would impact

donations and whether we should retain the 12-month certification period as an additional means of determining eligibility under the deeming provision.

After consideration of the public comments received, we are finalizing the proposed revisions to
§ 411.357(w)(2) with one clarification to our proposed regulatory text to ensure that the deeming provision closely tracks ONC’s certification program. We are revising § 411.357(w)(2) to state that software is deemed to be interoperable if, on the date that it is provided to the physician, it has been certified by a certifying body authorized by the

National Coordinator for Health Information Technology to an edition of

the electronic health record certification criteria identified in the then-applicable 45 CFR part 170. As we stated in the August 2006 final rule (71 FR 45156), we understand ‘‘that the ability of software to be interoperable is evolving as technology develops. In assessing whether software is interoperable, we believe the appropriate inquiry is whether the software is as interoperable as feasible given the prevailing state of technology at the time the items or services are provided to the physician recipient.’’ We believe that our final rule with respect to this requirement is consistent with that understanding and our objective of ensuring that software is certified to the current required standard of interoperability when it is

donated.

Comment: All of the commenters that

addressed this issue in their comments supported the proposed modification that would amend the exception to recognize ONC as the agency responsible for authorizing certifying bodies on behalf of the Secretary, with one commenter requesting that we clarify that software need not be

certified to ONC’s standards to be eligible for donation.

Response: We appreciate the commenters’ support for this modification. With respect to the request for clarification, the commenter
is correct that § 411.357(w)(2) does not require software to be certified to ONC’s standards in order to be eligible for

donation. As we discussed in the August 2006 final rule (71 FR 45156), the deeming provision offers one way for parties to be certain that the interoperability requirement of
§ 411.357(w)(2) is met at the time of

donation. Even if donated software is not deemed to be interoperable, the arrangement would satisfy the interoperability requirement of the exception if the software meets the definition of ‘‘interoperable’’ at

§ 411.351.

Comment: One commenter expressed concerns about linking the interoperability requirement of the exception to ONC’s certification criteria and standards because they do not, in
the commenter’s assessment, reflect contemporary views of interoperability. The commenter suggested that we instead implement a broad definition of interoperability adopted by the International Organization for Standardization or, alternatively, that we adopt interoperability functional definitions developed by the American

National Standards Institute.

Response: Although we are mindful that other non-governmental organizations may be developing their own standards to encourage the adoption of interoperable electronic health records technology, ONC’s

certification criteria and standards are the core policies the Department is utilizing to accelerate and advance interoperability and health information exchange. On March 7, 2013, ONC and CMS jointly published a Request for
Information (78 FR 14793) to solicit public feedback on a set of possible policies ‘‘that would encourage providers to routinely exchange health information through interoperable systems in support of care coordination across health care settings.’’ The process by which ONC considers the implementation of new certification


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2 ONC has recently begun characterizing sets of adopted certification criteria as ‘‘editions.’’ criteria and standards is a public, transparent effort that allows the Department’s electronic health records technology experts to consider appropriately the comments submitted in light of the goal ‘‘to accelerate the existing progress and enhance a market
environment that will accelerate [health information exchange] across providers.
. . .’’ (78 FR 14795).

We believe that it is reasonable and appropriate to link the deeming provision to ONC’s certification criteria

and standards because of ONC’s expertise and its public process for considering and implementing its

criteria and standards. ONC is the agency within the Department with expertise in determining the relevant

criteria and standards to ensure that software is as interoperable as feasible given the prevailing state of technology. ONC expects to revise and expand such criteria and standards incrementally over time to support greater interoperability of electronic health records technology. (See the September
4, 2012 final rule (77 FR 54269).) Additionally, we believe that utilizing

ONC’s certification criteria and standards, which are implemented through a public process, affords the best opportunity for interested parties to
comment on, understand, and ultimately implement those criteria and
standards. Therefore, we are not adopting the commenter’s suggestion.

Comment: One commenter stated that many electronic health records systems lack the capabilities to function within a patient-centered medical home. The commenter suggested that we finalize policies that further strengthen the use

of core electronic health records

features.

Response: We are not adopting the commenter’s suggestion. As discussed, ONC is the agency within the Department with expertise in determining the relevant criteria and

standards for electronic health records technology, including those related to the use of core features. The public process through which ONC’s

certification criteria and standards are implemented affords the best opportunity for interested parties to
comment on, understand, and ultimately implement those criteria and

standards.

Comment: Of the commenters that addressed the deeming provision, most supported our proposal to modify the

timeframe within which donated

software must have been certified to track more closely the current ONC certification program. Commenters asserted that aligning the exception’s

certification timeframe with ONC’s certification program will provide donors and physician recipients more certainty about the deemed status of

donated software because the software must be certified to meet only one set

of standards on the same certification cycle to comply with both ONC’s certification criteria and the deeming provision of the exception. One commenter supported the modification, but suggested that the 12-month

certification timeframe also be retained or, alternatively, that we allow software to be deemed to be interoperable if it

has been certified to any edition of

ONC’s electronic health record

certification criteria.

Response: We agree that aligning the exception’s certification timeframe with ONC’s certification program provides more certainty to donors and physician recipients. We believe that the modification we are making to the requirement at § 411.357(w)(2) will support the dual goals of the deeming provision: (1) to ensure that donated software is as interoperable as feasible given the prevailing state of technology at the time it is provided to the physician recipient; and (2) to provide donors and physician recipients a means to have certainty that donated software satisfies the interoperability requirement of the exception.

We are not persuaded to adopt the commenter’s suggestion to retain the 12-
month certification timeframe, as this

would not ensure that software is certified to the current required standard of interoperability. In the course of evaluating the commenter’s suggestion, however, we realized that our proposed regulatory text may be too narrow to satisfy the dual goals of the deeming provision. Under our proposed regulatory text, software would be deemed interoperable if it was certified

to an edition 2 of certification criteria referenced in the then-applicable

definition of ‘‘Certified EHR Technology’’ at 45 CFR 170.102. That definition applies only to the Medicare

and Medicaid Electronic Health Record Incentive Programs (the EHR Incentive Programs). See generally, 42 CFR part
495. However, ONC also has the authority to adopt into its regulations in 45 CFR part 170 certification criteria for health information technology, including electronic health records, that may not be referenced in the definition of ‘‘Certified EHR Technology’’ because they are not related to the EHR Incentive Programs. If we finalize the proposed regulatory text, software certified to

criteria in editions not included in the definition ‘‘Certified EHR Technology’’ would not be eligible for deeming under the exception. Further, we have recently

learned that ONC intends to retire

outdated editions of certification criteria by removing them from the regulatory text in 45 CFR part 170. Accordingly,

software certified to an edition identified in the regulations in effect on

the date of the donation would be certified to a then-applicable edition, regardless of whether the particular

edition was also referenced in the thenapplicable definition of Certified EHR Technology. Thus, we are finalizing
revisions to § 411.357(w)(2) to track more closely ONC’s certification program in the deeming provision. We are finalizing a modification to our regulatory text to provide that software is deemed to be interoperable if, on the date it is provided to the physician recipient, it has been certified by a certifying body authorized by the

National Coordinator for Health Information Technology to an edition of

the electronic health record certification criteria identified in the then-applicable version of 45 CFR part 170. We believe
that this is consistent with our intent, as articulated in the proposed rule, to modify the deeming provision by removing the 12-month timeframe and substituting a provision that more closely tracks ONC’s certification program. Further, we believe that the regulatory text, as modified, will support the goals of the deeming provision described previously.

Comment: One commenter suggested that, for deeming purposes, we should require that software be certified to the

latest edition of electronic health record certification criteria rather than any edition then applicable. This commenter also suggested that the electronic directory of service (e-DOS)

standard should be a certification requirement for donated software, and

asserted that both recommendations would help ensure electronic health records software is interoperable.

Response: We decline to adopt the commenter’s suggested requirements for the exception at § 411.357(w). We believe that requiring donated software

to be certified to editions that are adopted and not yet retired by ONC through its certification program

ensures that the software is certified to interoperability standards updated regularly by the agency of the Department with the relevant expertise. Further, adding requirements to the

ONC certification criteria and standards is outside the scope of this rulemaking. Therefore, we are not implementing the commenter’s suggestions.


### 78755 Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Rules and Regulations

B. The Electronic Prescribing Provision

At § 411.357(w)(11), our current electronic health records exception specifies that the donated software must ‘‘contain [] electronic prescribing capability, either through an electronic prescribing component or the ability to interface with the physician’s existing electronic prescribing system that meets the applicable standards under

Medicare Part D at the time the items and services are provided.’’ In the preamble to the August 2006 final rule
(71 FR 45153), we stated that we included ‘‘this requirement, in part, because of the critical importance of electronic prescribing in producing the

overall benefits of health information technology, as evidenced by section 101 of the [Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA), Pub. L. 108–173].’’ We

also noted that it was ‘‘our understanding that most electronic health records systems already include an electronic prescribing component’’
(71 FR 45153).

We continue to believe in the critical importance of electronic prescribing. However, in light of developments since the August 2006 final rule, we proposed to delete from the exception the requirement at § 411.357(w)(11). Based on our review of the public comments

and for the reasons stated in the proposed rule, we are finalizing our proposal to eliminate the requirement

that electronic health records software contain electronic prescribing capability in order to qualify for protection under the exception at § 411.357(w).

Comment: Two commenters disagreed that it is no longer necessary to require the inclusion of electronic prescribing capability in donated electronic health

records software. One of the

commenters stated that it was encouraged by the growth in the number of physicians using electronic prescribing between 2008 and 2012, but believed that the requirement should remain for patient safety reasons because electronic prescribing is critical to lowering the incidences of preventable medication errors.

Response: Like the commenters, and as we stated in the proposed rule (78 FR 21311), we believe in the importance of electronic prescribing. However, we are persuaded that other existing policy drivers, many of which did not exist in August 2006 when the exception was promulgated, sufficiently support the adoption of electronic prescribing capabilities. We do not want to undermine important public policy goals by requiring redundant and sometimes expensive software capabilities that may not contribute to the interoperability of a given system. As we discussed in the proposed rule, electronic prescribing technology will remain eligible for donation under the electronic health records exception or under the electronic prescribing exception at § 411.357(v). We do not believe that removing this requirement

would increase the risk of fraud or abuse posed by donations made pursuant to the exception.

Comment: Many commenters supported our proposal to eliminate the requirement that donated software must include electronic prescribing capability at the time it is provided to the physician recipient, agreeing that developments since the promulgation of the exception make it unnecessary to retain this requirement. One of the commenters asserted that the goal of the requirement for the inclusion of electronic prescribing technology in

donated electronic health records software—that is, increasing the use of electronic prescribing—had been achieved through the electronic prescribing incentive program authorized by the Medicare Improvements for Patients and

Providers Act of 2008.

Response: We appreciate the commenters’ support and, for the reasons explained in more detail previously in this final rule, we are eliminating the requirement at
§ 411.357(w)(11) that donated electronic

health records software must contain electronic prescribing capability, either through an electronic prescribing component or the ability to interface with the physician’s existing electronic prescribing system that meets the applicable standards under Medicare

Part D at the time the items and services are provided.

C. The ‘‘Sunset’’ Provision

Protected donations under the current electronic health records exception must be made on or prior to December 31, 2013. In adopting this requirement

of the electronic health records exception, we acknowledged in the August 2006 final rule (71 FR 45162),

‘‘that the need for donations of electronic health records technology should diminish substantially over time as the use of such technology becomes a standard and expected part of medical practice.’’

As we discussed in the proposed rule, although the industry has made great progress in the adoption and meaningful

use of electronic health records technology, the use of such technology has not yet been adopted nationwide. Continued use and further adoption of electronic health records technology remains an important goal of the Department. We continue to believe that, as progress on this goal is achieved, the need for an exception for

donations of electronic health records

items and services should continue to diminish over time. Accordingly, we proposed to extend the expiration date of the exception to December 31, 2016, selecting this date for the reasons described in the proposed rule (78 FR 21311). We also specifically sought
comment on whether we should, as an alternative, select a later expiration date

and what that date should be. For example, we stated that we were considering an expiration date of
December 31, 2021 (78 FR 21311). In response to comments, we are extending the expiration date of the exception to
December 31, 2021.

Comment: Numerous commenters urged us to make permanent the exception at § 411.357(w). According to these commenters, a permanent exception could: (1) provide certainty with respect to the cost of electronic health records technology for physicians; (2) encourage adoption by physicians who are new entrants into medical practice or have postponed adoption based on financial concerns regarding the ongoing costs of maintaining and supporting an electronic health records system; (3) encourage adoption by providers and suppliers that are not eligible for incentive payments through the Medicare and Medicaid programs; and (4) preserve the gains already made in the adoption of interoperable electronic health records technology, especially where hospitals have invested in health information technology infrastructure through protected donations of such technology. According to some commenters, although the exception was implemented to encourage the adoption of health information technology, it is now a necessity for the creation of new health care delivery and payment models. Some commenters also stated their support for a permanent exception because the adoption of electronic health records technology has been slower than expected, and allowing the exception to expire in 2016 would adversely affect the rate of adoption. Some of these commenters requested that, if CMS is not inclined to make the exception permanent, we extend the availability of the exception through the latest date noted in the proposed rule—December 31, 2021.

Response: We agree with the

commenters that the continued availability of the exception at § 411.357(w) plays a part in achieving


### 78756 Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Rules and Regulations

the Department’s goal of promoting electronic health records technology adoption. However, we do not believe that making the exception permanent is required or appropriate at this time. The permanent availability of the exception

could serve as a disincentive to adopting interoperable electronic health records technology in the near-term. Moreover, as described in the proposed
rule (78 FR 21312) and elsewhere in this
final rule, we are concerned about inappropriate donations of electronic

health records items and services that

lock in data and referrals between a donor and physician recipient, among other risks. A permanent exception might exacerbate these risks over the longer term without significantly improving adoption rates. However, in light of other modifications we are making in this final rule to mitigate such ongoing risks, including removing laboratory companies as protected

donors of electronic health records items and services, we are persuaded to permit use of the exception for more than the additional 3-year period that we proposed.

The adoption of interoperable electronic health records technology still remains a challenge for some providers and suppliers despite progress in its implementation and meaningful use since the August 2006 promulgation of the exception at § 411.357(w). ( See ONC’s Report to Congress on Health IT Adoption (June 2013) at http:// www.healthit.gov/sites/default/files/rtc

_ adoption

_ of

_healthit

_ and

_ relatedefforts.pdf and the U.S. Department of Health and Human Services Assistant Secretary for Planning and Evaluation’s EHR Payment Incentives for Providers Ineligible for Payment Incentives and Other Funding Study (June 2013) at http:// aspe.hhs.gov/daltcp/reports/2013/ ehrpi.shtml. ) Although we believe that the protection afforded by the exception encourages the adoption of such technology, its permanence is not

essential to the achievement of widespread adoption. It is only one of a number of ways that physicians are incented to adopt electronic health records technology, including the incentives offered by the EHR Incentive Programs and the movement in the health care industry toward the electronic exchange of patient health information as a means to improve patient care quality and outcomes.

Balancing our desire to encourage further adoption of interoperable electronic health records technology against our concerns about potential disincentives to adoption and the misuse of the exception to lock in referral streams, we are establishing a December 31, 2021 expiration date for the exception. We believe that this expiration date will support earlier adoption of electronic health records technology, provide a timeframe that aligns with the financial incentives for electronic health records adoption currently offered by the Federal government, and safeguard against
foreseeable future fraud risks, while still providing adequate time for donors and physician recipients to maximize the financial incentives currently offered by the Federal government.

Comment: Two commenters agreed that the availability of the exception at
§ 411.357(w) should be extended, but not beyond December 31, 2016. One of

these commenters asserted that a relatively short extension of the sunset date for the exception would allow a wider range of people to obtain access to health information technology services while not diminishing the incentive for providers to acquire, implement and standardize the necessary electronic health records systems. Another commenter supported our proposal to extend the availability of the exception through December 31, 2016, and encouraged us to consider an

additional extension as that date approaches. One commenter suggested that we extend the availability of the exception for at least 6 years, although a shorter or longer time period could be established after review of adoption rates across the range of providers that may or may not be eligible for meaningful use incentives under the EHR Incentive Programs. Other commenters supported our alternative proposal to extend the availability of the exception through December 31, 2021, which corresponds to the statutory end of the Medicaid incentive program.

These commenters noted that more remains to be done to promote electronic health records technology adoption, and suggested that maintaining the exception through this date will help maximize the incentives for eligible physicians to adopt electronic health records technology and thereby increase use of electronic

health records. Two other commenters suggested tying the expiration of the exception to the corresponding date for assessing ‘‘penalties’’ under the Medicare EHR Incentive Program in order to align appropriately Federal regulation of electronic health records technology adoption and use.

Response: We share the commenter’s concerns regarding diminishing incentives for providers to acquire, implement and standardize the necessary electronic health records systems. However, after consideration of
all of the comments on this issue, we

believe that an extension of the exception would advance the Department’s goals regarding the adoption of interoperable electronic health records technology and improvements in patient care, while providing an incentive for providers to adopt electronic health records technology in the near-term. Therefore, we are extending the availability of the exception at § 411.357(w) through December 31, 2021, which corresponds to the end of incentive payments under the Medicaid EHR Incentive Program.

We note that the two commenters that suggested tying the expiration of the exception to the corresponding date for assessing penalties under the Medicare EHR Incentive Program appear to

misunderstand the duration of the downward payment adjustments under this program, which will continue until an eligible participant adopts and meaningfully uses appropriate electronic health records technology. (For additional information, see the July
28, 2010 (75 FR 44448) final rule

entitled ‘‘Medicare and Medicaid Programs; Electronic Health Record Incentive Program.’’) The practical effect of the commenters’ suggestion would be to extend permanently the exception at
§ 411.357(w). For the reasons stated
elsewhere in this final rule, we do not believe that making the exception permanent is required or appropriate at this time, and we are not adopting the commenters’ suggestion.

Comment: A few commenters expressed general support for extending the availability of the exception, but did not specify whether the extension should be for 3 years, 8 years, or some other length of time. Commenters noted that failure to extend the availability of the exception would negatively impact the adoption of electronic health records technology, as well as its continued use.

Response: As described previously, we are finalizing our alternative proposal to extend the exception through December 31, 2021.

Comment: A number of commenters urged us to let the exception at § 411.357(w) expire on December 31,

2013. Some of the commenters asserted that the exception permits the exact behavior the law was intended to stop, namely, referrals tied to financial relationships between physicians and entities furnishing DHS, in this case,

entities that donate electronic health

records items and services. Other commenters asserted that the exception permits ‘‘legalized extortion’’ or provides ‘‘legal sanction to trample the competition.’’ Another commenter


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asserted that the inclusion of ‘‘nonmarket factors’’ (that is, the influence of
donors, rather than end users) in the decision to adopt electronic health records technology may result in lower quality products or services and/or higher costs, often with an adverse impact on technology adoption and
innovation. Still others asserted that, given the financial incentives that the government itself has provided, it is no longer necessary to spur the adoption of electronic health records technology through the underwriting of the cost of electronic health records technology by

outside entities.

Response: Although we appreciate the

commenters’ concerns, we continue to believe that the exception serves to advance the adoption and use of interoperable electronic health records.
However, we caution that a compensation arrangement involving

the donation of electronic health records technology runs afoul of the physician

self-referral law unless it satisfies each requirement of the exception at § 411.357(w). Arrangements that disguise the ‘‘purchase’’ or lock-in of

referrals and donations that are solicited by the physician recipient in exchange for referrals would fail to satisfy the requirements of the exception. We disagree with the commenters that asserted that encouragement for the ‘‘underwriting’’ of electronic health records technology by organizations other than the government is no longer necessary, particularly in light of the developments in integrated patient care delivery and payment models.

Comment: Numerous commenters suggested that the exception at
§ 411.357(w) should sunset as
scheduled on December 31, 2013, but only with respect to laboratories and pathology practices, ‘‘ancillary service providers,’’ entities not listed in section 101 of the MMA (authorizing an exception for certain donations of electronic prescribing items and services), or entities that are not part of an accountable care organization or not integrated in a meaningful manner.

Response: We consider these comments to be related to ‘‘protected

donors’’ and address them in section

III.D.1. of this final rule.

D. Additional Proposals and

Considerations

1. Protected Donors

As we discussed in the proposed rule, despite our goal of expediting the adoption of electronic health records technology, we have concerns about the potential for abuse of the exception by certain types of providers and suppliers (including suppliers of ancillary

services that do not have a direct and primary patient care relationship and a central role in the health care delivery
infrastructure). The OIG indicated that it has concerns related to the potential for laboratories and other ancillary service providers to abuse its safe harbor, as it has received comments suggesting that abusive donations are being made under

the electronic health records safe

harbor. In order to address these concerns, we proposed to limit the scope of protected donors under the electronic health records exception.

In the proposed rule, we stated that we were considering revising theexception to cover only the MMAmandated donors we originally proposed when the exception was first established: hospitals, group practices, prescription drug plan sponsors, and Medicare Advantage (MA) organizations. We stated that we were also considering whether other

individuals or entities with front-line patient care responsibilities across health care settings, such as safety net providers, should be included, and, if so, which ones. Alternatively, we stated that we were considering retaining the current broad scope of protected donors, but excluding specific types of donors— suppliers of ancillary services associated with a high risk of fraud and abuse—because donations by such suppliers may be more likely to be motivated by a purpose of securing future business than by a purpose of better coordinating care for beneficiaries across health care settings. In particular, we discussed excluding laboratory companies from the scope of permissible donors, as their donations have been the subject of complaints. We also discussed excluding other high-risk categories of potential donors, such as durable medical equipment (DME) suppliers and independent home health agencies. We sought comment on the
alternatives under consideration, including comments (with supporting reasons) regarding particular types of providers or suppliers that should or should not be permitted to utilize the exception given its goals.

Many commenters raised concerns

about donations of electronic health records items and services by laboratory companies and strongly urged us to adopt our proposal to eliminate protection for such donations, either by excluding laboratory companies from the scope of protected donors (if we extend the availability of the exception), or by letting the exception sunset altogether. (For more detailed discussion of comments concerning the sunset provision, see section III.C. of this final rule.) Other commenters raised similar concerns, but did not suggest a particular approach to address them.

We carefully considered the

comments that we received on this proposal and, based on the 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), we are finalizing our proposal to exclude laboratory companies from the types of entities that may donate electronic health

records items and services under the exception. We believe this decision is

consistent with and furthers our continued goal of promoting the adoption of interoperable electronic health records technology that benefits patient care while reducing the likelihood that the exception will be misused by donors to secure referrals.

We also believe that our decision will address situations identified by some of the commenters involving physician recipients conditioning referrals for laboratory services on the receipt of, or redirecting referrals for laboratory services following, donations from laboratory companies.

Comment: Many commenters raised concerns that, notwithstanding a clear prohibition in the exception, laboratory companies are, explicitly or implicitly, conditioning donations of electronic

health records items and services on the receipt of referrals from the physician recipients of those donations or establishing referral quotas and threatening to require the physician recipient to repay the cost of the donated items or services if the quotas

are not reached. Some commenters suggested that such quid pro quo donations, and donations by laboratory companies generally, are having a negative effect on competition within the laboratory services industry (including increased prices for laboratory services) and impacting patient care, as referral decisions are being made based on whether a laboratory company donated electronic
health records items or services, not whether that company offers the best quality services or turnaround time. A

few commenters also raised concerns that laboratory companies are targeting potential physician recipients based on the volume or value of their anticipated

referrals.

Response: The current requirement at § 411.357(w)(6) prohibits determining the eligibility of a physician recipient or

the amount or nature of the items or


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services to be donated in a manner that directly takes into account the volume

or value of referrals or other business generated between the parties. Accordingly, the quid pro quo arrangements and targeted donations described by the commenters would not satisfy this requirement of the exception. Such arrangements are not consistent with the purpose of the exception and can result in the precise types of harm the physician self-referral law is designed to prevent, such as financial self-interest that may affect a physician’s medical decision making. We urge those with information about such arrangements to contact the OIG’s

fraud hotline at 1–800–HHS–TIPS or

visit https://forms.oig.hhs.gov/ hotlineoperations/ to learn of other ways to report fraud.

We appreciate the commenters’ support for our proposal to remove donations by laboratory companies from the protection of the exception. We

believe that our decision to exclude laboratory companies from the scope of protected donors is the best way to encourage and facilitate the adoption of interoperable electronic health records technology without risk of program or patient abuse.

Comment: Several commenters raised concerns about laboratory company arrangements with electronic health records technology vendors. The commenters described agreements involving laboratory companies and

vendors that result in the vendors charging other laboratory companies high fees to interface with the donated technology or prohibiting other laboratory companies from purchasing the technology for donation to their own

clients. One of the commenters also

raised a concern that volume discount arrangements between laboratory companies and vendors of electronic health records technology are resulting

in donations of electronic health records items and services that may not best suit the needs of the physician recipient.

The commenter asserted that donor laboratory companies are pushing a particular vendor’s specific electronic health records system onto physician recipients because of the donor’s close relationship with the vendor.

Response: Excluding potential competitors of the donor from interfacing with donated items or services, as described by the
commenters, can result in data and

referral lock-in. We discuss the issue of

lock-in elsewhere in this final rule in

more detail. We believe that our determination to exclude laboratory companies from the scope of protected donors will help address the data and referral lock-in risks posed by arrangements such as those described by

the commenters. We also believe that the changes to § 411.357(w)(1) that we are finalizing regarding the types of entities that may donate electronic

health records items and services will help address the commenter’s concern about the negative impact of relationships between laboratory companies and vendors on the selection of electronic health records technology by physicians. We stated in the August 2006 final rule that, although physician recipients remain free to choose any electronic health records technology that suits their needs, we do not require

donors to facilitate that choice for purposes of the exception. However, as we also stated in the August 2006 final rule (71 FR 45157), our regulations require donors to offer interoperable products and donors must not impede the interoperability of any electronic health records software they decide to offer. Any agreement between a donor and a vendor that precludes or limits the ability of competitors to interface

with the donated electronic health records software would raise significant questions regarding whether the donation meets the requirement at
§ 411.357(w)(3).

Comment: Many commenters noted that several states—including Missouri, New Jersey, New York, Pennsylvania, Tennessee, Washington, and West Virginia—have prohibited or restricted

donations of electronic health records technology by laboratory companies to

address fraud and abuse concerns. Some of the commenters urged us to effectuate a similar prohibition or restriction by removing laboratory companies as potential donors under the exception.

One of these commenters asserted that laboratory companies licensed in states that strictly prohibit them from donating to referring physicians all or part of the

costs of electronic health records technology are put at a considerable disadvantage in the marketplace
because of ‘‘the need for [electronic health records technology] subsidies to compete for business.’’

Response: We believe that our determination to exclude laboratory companies from the types of entities that may donate electronic health

records items and services under the exception will address the fraud and abuse concerns referenced by the commenters. With respect to the commenter’s concern about being disadvantaged, we note that our decision to prohibit laboratory companies from utilizing the exception applies equally to all laboratory companies, regardless of their location. Comment: Several commenters, including a national laboratory trade association that represents the industry’s largest laboratory companies, took exception to what they perceived as an allegation that laboratory companies are solely responsible for problematic donations of electronic

health records items and services. Some

of these commenters asserted that electronic health records technology vendors are encouraging physicians to

seek or demand donations from laboratory companies, and that physicians are threatening to withhold referrals or send laboratory business

elsewhere if donations are not made. According to one commenter, because physicians are not paying for a significant portion of the cost of these
items and services, electronic health records technology vendors are able to charge high prices and the size of
donations (in dollars) has increased exponentially in recent years. The commenter also suggested that vendors may be manipulating pricing to maximize the amount a laboratory company pays for donated items and services while minimizing or eliminating any physician responsibility. Another commenter

raised a related concern that electronic health records technology vendors have increased the costs of their products because they know that laboratories are paying for them. Generally, commenters raising concerns about the conduct of electronic health records technology vendors and physicians recommended that we remove laboratory companies from the universe of permissible donors under the exception.

One commenter asserted that physicians are no longer choosing electronic health records technology based on which system is most appropriate, but rather based on which will produce the largest donation of

items and services. Another commenter asserted that many physicians will change laboratory companies and seek a new donation once an existing donor laboratory company ceases to subsidize the physicians’ electronic health records technology costs. This commenter stated

that such conversions to different electronic health records technology are not only inefficient, but undermine the spirit of the regulatory requirement that physicians do not possess the same or equivalent items or services as those being donated.

Response: Our proposed modification

related to the universe of donors potentially covered under the exception;
thus, the focus of our discussion in the proposed rule was on donor conduct.

Some of the comments we describe in


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this final rule also raise concerns about the conduct of physician recipients. In response, we are clarifying that we do not believe that problematic donations involving laboratory companies are solely the result of questionable conduct by laboratory companies. We believe that our decision to exclude laboratory companies from the universe of protected donors is the best way to

reduce the risk of misuse of the exception at this time and addresses the concerns identified by the commenters.

We note that § 411.357(w)(5) prohibits the physician recipient and the physician recipient’s practice from making the receipt, amount or nature of

the donated items or services a condition of doing business with the donor. This provision recognizes the program integrity risk posed by a potential physician recipient who demands a donation in exchange for referrals. This type of quid pro quo arrangement is no less troubling than quid pro quo arrangements that originate with the donor and would not satisfy the requirements of the exception. Whether a quid pro quo

donation is for an initial installation of

a donated item or service or a

conversion to a different donated item or service would not change our analysis. Additionally, we caution those engaging in conversion arrangements to

be mindful of the limitations in the exception at § 411.357(w)(8) concerning the donation of equivalent items or

services.

Comment: Several commenters suggested that laboratory companies should be prohibited from donating

electronic health records items and services to physicians or that physicians should pay for their own electronic health records technology. Other commenters asserted that laboratory companies do not share an essential interest in their referring clients having electronic health records technology. Still other commenters stated simply that laboratory companies represent a high risk of fraud and abuse.

Response: Based on the complaints previously received by OIG, which are described in more detail in the proposed rule, and the information provided by the commenters regarding some of the arrangements between laboratory companies and physician recipients of

donated electronic health records items and services, we agree that donations of

electronic health records items and services by laboratory companies present a high risk of fraud and abuse. Exceptions promulgated using our authority under section 1877(b)(4) of the Act may provide protection from the physician self-referral law’s prohibitions only for those financial relationships that pose no risk of program or patient

abuse. We do not believe that continuing to permit laboratory companies to make protected donations under the exception at § 411.357(w)
would meet this standard. Therefore, we are modifying the requirements of the exception to eliminate laboratory companies from the types of entities that may provide donations under the exception. We do not agree with the commenters that laboratory companies necessarily do not have an essential interest in their referring clients having electronic health records technology. It is the behavior of laboratory companies and physician recipients of donations from laboratory companies of which we

are aware that drives our determination to finalize our proposal to eliminate laboratory companies from the types of entities that may provide donations under the exception.

Comment: A few commenters noted
that, rather than electronic health records, laboratory companies typically use a laboratory information system (LIS), anatomic pathologist information system, and/or blood banking system to store and share patients’ laboratory results, and that these systems should

not be confused with an electronic health record that includes a patient’s full medical record comprised of information from many medical specialties, including pathology. One of

these commenters asserted that laboratories already bear the cost of establishing LIS interfaces that they provide to physicians in order to exchange laboratory services data electronically, and that clinical and

anatomic laboratories could continue to do so legally even if they were no longer protected donors under the exception.

One commenter lamented the costs
associated with interfaces, other commenters requested that CMS clarify its position on the donation of interfaces by laboratory companies, and one

commenter asserted that interfaces were not analogous to facsimile machines, which we have stated in the past may be provided to physicians under certain

circumstances.

Response: We appreciate the general information provided by the commenters regarding the various types of technology that laboratory companies generally use or do not use. The more relevant technology in the laboratory setting is the interface that exchanges data electronically between the laboratory and its referral sources. These comments provide us an opportunity to discuss more fully our position on the donation of interfaces by laboratory companies. Our decision to exclude laboratory companies from the universe of protected donors under the exception does not affect our interpretation of the physician self-referral law as it relates to whether the provision of an item or service qualifies as ‘‘remuneration’’ that establishes a compensation arrangement that implicates the law’s referral and billing prohibitions. In section 1877(h)(1)(A) of the Act, ‘‘compensation arrangement’’ is defined as ‘‘any arrangement involving any remuneration’’ between a physician (or an immediate family member of such physician) and an entity furnishing
DHS. Section 1877(h)(1)(B) of the Act defines ‘‘remuneration’’ to include ‘‘any remuneration, directly or indirectly, in
cash or in kind.’’ However, under
section 1877(h)(1)(C) of the Act,

‘‘remuneration’’ does not include ‘‘the provision of items, devices, or supplies that are used solely to: (i) collect, transport, process, or store specimens for the entity providing the item, device, or supply; or (ii) order or communicate the results of tests or procedures for such entity.’’ Therefore, the provision of such items, devices or supplies does not result in a compensation arrangementthat implicates the physician selfreferral law’s referral and billing prohibitions. We discussed this further in CMS Advisory Opinion 2008–01,

which can be found at http://www.cms.gov/Medicare/Fraud-andAbuse/PhysicianSelfReferral/ Downloads/CMS-AO-2008-01.pdf. Accordingly, the provision of certain interfaces, such as those described by the commenters, need not satisfy the requirements of § 411.357(w).

We disagree with the commenter that

asserted that interfaces are not sufficiently analogous to facsimile

machines. We believe that a limited-use interface (as described previously) is the contemporary analog to the limited-use computer or facsimile described in the example from the 1998 proposed rule preamble (63 FR 1693 and 1694 (January
9, 1998)). Moreover, the mode of technology is not restricted by the language of section 1877(h)(1)(c) of the Act nor is its cost, which is, in any event, outside the scope of this rulemaking.

Comment: Several commenters inquired whether our proposal to prohibit use of the exception for

donations of electronic health records items and services by laboratory companies would apply to suppliers of both anatomic and clinical pathology services, and suggested that our proposal should apply to both. Commenters also inquired about the application of this proposal to hospitals


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that operate laboratory companies for non-hospital affiliated customers. Raising concerns about an uneven playing field, some of these commenters urged us to exclude such hospitals from the universe of protected donors if we determined to exclude laboratory companies. One commenter suggested that we effectuate this limitation by restricting protected hospital donations to those made to the hospital’s employed physicians and the hospital’s wholly-owned physician practices.

Response: Our proposal applied to ‘‘laboratory companies’’ and did not distinguish between those that provide anatomic pathology services and those that provide clinical pathology services. We intend that references to ‘‘laboratory company’’ or ‘‘laboratory companies’’ include entities that furnish both types

of DHS.

With respect to the commenters’ suggestion to limit or prohibit hospital

donations of electronic health records items and services, we appreciate the concerns articulated by the commenters, but are not adopting their suggestion at

this time. We continue to believe that hospitals have a substantial and central stake in patients’ electronic health records. Further, the types and prevalence of the concerns that have been brought to the OIG’s attention and

discussed elsewhere in this final rule about donations by laboratory companies have not arisen, to our knowledge, in the hospital-donation

context.

We are also clarifying that, if a hospital furnishes clinical laboratory services through a laboratory that is a department of the hospital for Medicare purposes (including cost reporting), and the hospital bills for the services through the hospital’s provider number, then the hospital would not be a ‘‘laboratory company’’ and would continue to qualify as a protected donor under the modified exception. However, if a hospital-affiliated or hospital-owned company with its own supplier number furnishes clinical laboratory services that are billed using a billing number assigned to the company and not to the hospital, the company would be a ‘‘laboratory company’’ and would no longer qualify as a protected donor. The ability of the affiliated hospital to avail itself of the exception would be

unaffected. We remind readers that it is
the substance, not the form, of an arrangement that governs under the physician self-referral law.

Comment: One commenter requested that, if we finalize our proposal to exclude laboratory companies from the universe of protected donors, we specifically clarify that ‘‘[laboratory companies] are prohibited from providing [ ] software to physicians unless they comply with another one of the existing exceptions.’’ The commenter went on to cite examples of

software leases and sales at fair market value that could potentially qualify for protection under an exception other
than the one at § 411.357(w).

Response: We decline the

commenter’s invitation to make this clarification. Exceptions set forth specific requirements that, if satisfied, assure the parties involved that physician referrals to the entity for DHS are not prohibited and that the entity may bill Medicare for the services furnished pursuant to those physician referrals. As we have stated in prior rulemakings, an arrangement need not satisfy the requirements of a particular exception. Rather, the parties to an arrangement may avail themselves of any applicable exception to protect the physician’s referrals to the DHS entity
with which he or she (or an immediate family member) has a financial relationship.

Comment: One commenter shared its concerns about a practice that itdescribed as ‘‘post-donation insourcing.’’ The commenter stated that it

is aware of situations in which laboratory companies are donating electronic health records technology to referring physicians only to have those physicians in-source their laboratory services shortly after the donation. The commenter suggested that the donations enable referring physicians to avoid bearing the full cost of electronic health records technology without continued referrals to the donating laboratory

company.

Response: We are not modifying the exception to address the commenter’s

concern. We remind stakeholders that the exception does not require the physician recipient to make referrals to the donor. To the contrary, § 411.357(w)(5) prohibits the physician recipient and his or her practice from making the receipt, amount, or nature of

the donated items or services a condition of doing business with the
donor. Moreover, § 411.357(w)(6) prohibits determining the eligibility of a physician recipient or the amount or

nature of the items or services to be donated in a manner that directly takes

into account the volume or value of referrals or other business generated between the parties. Whether protection is afforded under the exception to the types of arrangements described by the commenter will depend on whether all of the requirements of the exception are

satisfied. Comment: Two commenters raised issues regarding the type of remuneration permissible under the exception at § 411.357(w). One commenter characterized the exception as allowing laboratory companies to donate funds to physician recipients to help them implement electronic health records technology. Another commenter

noted that some donations from laboratory companies have included

hardware.

Response: We remind stakeholders that the exception at § 411.357(w) applies only to the donation of

nonmonetary remuneration (in the form of software or information technology and training services) necessary and used predominantly to create, maintain,
transmit, or receive electronic health records. As stated in the preamble to the August 2006 final rule (71 FR 45161), reimbursement for previously incurred expenses is not protected, as it poses a substantial risk of program and patient

abuse. We also remind stakeholders that the exception does not protect the

donation of hardware.

Comment: Although the majority of commenters supported excluding laboratory companies from the types of entities that may donate electronic

health records items and services under the exception, some commenters made

other recommendations related to protected donors. A number of

commenters recommended that we maintain our current scope of protected donors; that is, allow any entity (as defined at § 411.351) to provide

electronic health records items and services to a physician. Some of these commenters stated that limiting the scope of protected donors could have an impact on specialists, who, according to the commenters, still have relatively

low rates of electronic health records adoption. Along the same lines, one commenter stated that limiting the categories of donors that may seek protection under the exception will negatively impact physician recipients by preventing certain entities from helping to move the entire healthcare system toward more interoperable electronic health record systems. Others cautioned that restricting the universe of permissible donors will stymie innovation and restrict learning from the technology. Finally, some commenters contended that laboratory companies and other ancillary service providers have a legitimate clinical interest in donating electronic health records technology and that many physician practices depend on it.

Some commenters, while acknowledging our concerns regarding abusive donation practices, suggested


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alternative means to address the concerns we articulated in the proposed rule. These commenters variously recommended that we strengthen interoperation requirements, provide physician education materials, or adopt enforcement policies to prevent abuses rather than limiting the universe of potential donors of electronic health

records items and services.

Response: We agree with many of the reasons articulated by the commenters supporting a fully expansive universe of protected donors under the exception. We recognize that limiting the universe of potential donors could constrain the ability of many physicians to adopt electronic health records technology. However, we are persuaded by the commenters that cited examples or patterns of program abuse by laboratory companies and are amending the exception to limit permissible donors under § 411.357(w) by excluding laboratory companies. Other than with respect to laboratory companies, the universe of protected donors will

remain the same. We will continue to monitor and may, prior to the end of 2021, reconsider in a future rulemaking the risk of program or patient abuse relating to the use of the exception by other donors or categories of donors.

We appreciate the suggestions from commenters regarding alternative means of addressing abusive donation practices. However, our authority under section 1877(b)(4) of the Act permits us to establish exceptions to the physician self-referral law only where protected financial relationships would pose no risk of program or patient abuse. We do not believe that adopting the commenters’ alternative suggestions for addressing our concerns would meet

this standard.

Comment: We received a number of comments requesting that we retain certain categories of providers and suppliers within the universe of permissible donors of electronic health

records items and services under the exception at § 411.357(w). For example, commenters that provide dialysis services specifically requested that they remain protected donors. One of the dialysis-provider commenters noted that excluding this specialty would have a chilling effect on the development and availability of the specialized electronic health records systems used by nephrologists. A few commenters requested that we continue to include hospitals and health systems as protected donors in order for them to retain the ability to assist physicians in adopting electronic health records technology. Other commenters requested that we explicitly retain home health agencies as permissible donors. In support of retaining home health agencies, one commenter stated that the depth, breadth, and frequency of

communications between home health agencies and other direct care providers makes the use of interoperable electronic health records technology essential to improving clinical outcomes

and financial efficiencies. We also received comments in support of retaining safety net providers and pharmacies as protected donors.

Response: We agree generally with the thrust of these comments. We recognize the value of permitting entities that participate directly in the provision of health care to patients and that have a need to coordinate with care providers

to donate electronic health records

items and services to facilitate those

interactions. We take no action in this final rule to prohibit entities other than laboratory companies from utilizing the exception.

Comment: Some commenters agreed with the option we presented in the proposed rule to retain the ability of any DHS entity to donate electronic health records items and services, except suppliers of ancillary services associated with a high risk of fraud and

abuse. A few of these commenters suggested that a targeted approach

would minimize the risk of unintended consequences. One of these commenters

asserted that we should exclude the particular individuals or entities that have been the subject of complaints.

Another of these commenters specifically recommended that we target categories of suppliers with a history or pattern of abusive behavior.

Other commenters variously recommended excluding laboratories, DME suppliers, home health agencies, or safety net providers from the types of entities that may donate electronic

health records items and services under the exception. One commenter asserted that entities like laboratory companies and DME suppliers do not have an overarching and essential interest in having physicians use electronic health records, nor do they coordinate the patient’s care. In contrast, one commenter objected to singling out a provider or supplier type to exclude from the scope of protected donors. This

commenter stated that such an action unjustly: (1) penalizes a whole category of providers or suppliers when most, in
the commenter’s assessment, are lawabiding; and (2) supports other providers or suppliers that may have

similar motivations.

Response: We respond elsewhere in

this final rule to the commenters who expressly recommended removing only laboratory companies from the universe of permissible donors. With respect to
the other commenters, we note that, in the proposed rule (78 FR 21312), we specifically requested comments, ‘‘with supporting reasons,’’ regarding whether particular provider or supplier types should be prohibited from utilizing the exception at § 411.357(w). Some commenters suggested that we prohibit other types of entities from donating

electronic health records items and services under the exception, but the comments did not provide specific examples of abusive practices with respect to donations of electronic health records items and services by such
donors, nor did the comments indicate problems with other types of entities comparable to those that are arising in the context of laboratory companies. Finally, we do not agree with the commenters that laboratory companies, DME suppliers, home health agencies, safety net providers, or, for that matter, any other ‘‘ancillary’’ service providers necessarily do not have an overarching and essential interest in having physicians use electronic health records, or that they do not coordinate the patient’s care. It is the behavior of laboratory companies and physician recipients of donations from laboratory companies of which we are aware that

drives our determination to finalize our proposal to exclude laboratory companies from the types of entities that may provide donations under the exception. We have not heard the same concerns about other categories of donors or types of donation arrangements and, therefore, believe it is premature to exclude potential donors (other than laboratory companies). We also decline to identify particular individuals or organizations in the regulation.

Comment: A few commenters recommended restricting the entities that may donate electronic health

records items and services under the exception to those types listed in the MMA. These commenters also suggested imposing additional restrictions on

donations from this limited universe of donors. For example, one commenter recommended limiting the application of the exception to hospitals and providers operating in an integrated setting and to MA plans and providers

under contract with them. Another commenter suggested limiting the application of the exception to a similar integration model, and to hospitals that

donate electronic health records items and services to their employed physicians and the physician groups that they own. In contrast, one


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commenter suggested that limiting the protected donor types to the original

MMA list would be too restrictive. The commenter believed that some provider types not listed in the MMA should have the opportunity to make donations (for example, ambulatory surgical centers that now perform many procedures previously only performed in hospitals).

Response: We agree that providers and suppliers operating in an integrated environment need interoperable
electronic health records. However, we

do not believe that the need for this technology is limited to those individuals and entities in an integrated care setting. Patients may receive care from providers and suppliers that are not in the same integrated system, and the patient’s medical records need to be shared with those providers and suppliers that also care for the patient. The Department’s goal continues to be fostering broad adoption of interoperable electronic health records technology. In furtherance of that goal, we seek to limit the applicability of the exception vis-a ` -vis permissible donors only to the extent necessary to prevent program and patient abuse. At this time, we believe that excluding laboratory companies from the types of entities that may utilize the electronic health records exception, rather than limiting the universe of permissible donors to
the MMA list of donors (or some other subset of permissible donors) strikes the right balance between furthering the Department’s goal and preventing program and patient abuse.

2. Data Lock-In and Exchange

We solicited comments on what new requirements could be added to, or how we could modify existing requirements of, the exception at § 411.357(w) in order to achieve our goals of: (1) preventing misuse of the exception that
results in data and referral lock-in; and (2) encouraging the free exchange of data (in accordance with protections for privacy). Additionally, we requested

comments on whether such requirements, if any, should be in addition to, or in lieu of, our proposal

to limit the entities whose donations of

electronic health records items and services may qualify for protection under the exceptions. Finally, we solicited comments on possible
modifications to § 411.357(w)(3), which requires that, in order to qualify for the protection of the exception, ‘‘[t]he donor (or any person on the donor’s behalf) does not take any action to limit or restrict the use, compatibility, or interoperability of the items or services with other electronic prescribing or electronic health records systems.’’ We solicited these comments to explore whether this requirement could be modified to reduce the possibility of

data and referral lock-in.

Comment: Many commenters asserted that the current requirements of the exception provide adequate safeguards to prevent donations of electronic health

records items and services that result in

data or referral lock-in between the donor and physician recipient. These commenters expressed general support for the investigation of arrangements that may not satisfy the requirements of the exception. Several of these

commenters were also concerned that adding or modifying requirements may increase the burden of compliance and, therefore, lead to fewer entities willing to make appropriate donations of

electronic health records items and

services.

Response: In general, we agree with

these commenters. We are not persuaded to adopt significant new requirements or modifications to the exception to address the issue of data or
referral lock-in. In addition, we do not wish to take any action that inadvertently discourages donors and physician recipients from entering into appropriate donation arrangements. However, we are making limited
clarifications to § 411.357(w)(3) to reflect our intended meaning of this requirement and our interpretation of existing requirements for interoperability as it pertains to potential data or referral lock-in. We also remain committed to assisting our law enforcement partners in the investigation of potentially abusive arrangements that purport to satisfy the requirements of the exception but, in
fact, do not.

Comment: Several commenters expressed concerns about donations of

electronic health records items and

services that lead to data lock-in. As
described elsewhere in this final rule, some commenters suggested that, although some donated electronic health records software has the ability to be interoperable, vendors may charge providers who do not use the same donated software high fees to interface

with it. The commenters contended that these business practices result in

electronic health records software that is not practically interoperable because non-donor providers cannot afford to

connect to the donated electronic health

records items and services. Other commenters expressed general concerns

that donated electronic health records items or services are capable of interoperation, but that physician recipients implicitly agree to send referrals using the technology only to

the donor. These commenters did not provide specific recommendations to modify the data lock-in requirements of the exception, but generally supported our efforts to prevent data lock-in.

Two commenters representing laboratory companies expressed specific

concerns about a feature of donated software that may lead to data lock-in. These commenters explained that some software is designed to limit the accessibility of data that is received from an electronic health records system

that is different than the donated
software. Most often, data sent from the

non-donated electronic health records system cannot populate automatically in a patient’s electronic health record or other limits are placed on the portability

of data sent from the non-donated electronic health records system. According to these commenters, the limited accessibility of the data makes it harder for the physician recipient to access and use it for clinical purposes. As a result, a physician recipient is more likely to utilize only the donor’s services to make sure that necessary data is easily accessible. These

commenters asserted that there are no technical solutions to reducing the possibility of data lock-in; rather, the only solution is to remove laboratory companies from the types of entities whose donations may be protected
under § 411.357(w).

Several other commenters generally endorsed our efforts to prevent data and

referral lock-in. These commenters evidenced strong support for the free exchange of health information across different provider types to better coordinate care for patients. However, apart from supporting our efforts to

ensure that electronic health records systems are interoperable, the commenters made no specific recommendations regarding modifications to the exception.

Response: We share the commenters’ concerns about the interoperability of

donated electronic health records software. Arrangements involving the

donation of electronic health records

software that has limited or restricted interoperability due to action taken by the donor or by any person on the
donor’s behalf (which could include the physician recipient acting on the donor’s behalf) would fail to satisfy the requirement at § 411.357(w)(3) and

would be inconsistent with an important purpose of the exception, which is to promote the use of technology that is able to communicate with products from other vendors. For example, arrangements in which the
donor takes an action to limit the use,


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communication, or interoperability of

the electronic health records items or services by entering into an agreement with the physician recipient to preclude or inhibit any competitor from interfacing with the donated items or services would not satisfy the requirement of § 411.357(w)(3). Other donation arrangements described by the

commenters in which electronic health records technology vendors charge high interface fees to non-recipient providers or competitors may also fail to satisfy the requirements of § 411.357(w)(3). We believe that any action taken by a donor (or any person on behalf of the donor, including the electronic health records technology vendor or the physician recipient) to limit the use of the donated

electronic health records items orservices by charging fees to prevent nonrecipient providers and the donor’s competitors from interfacing with the donated items or services would pose legitimate concerns that parties were improperly locking in data and referrals, and that the arrangement in question would not satisfy the requirements of the exception. However, whether a donation actually satisfies the requirements of the exception depends on the specific facts of the donation

arrangement.

Comment: One commenter expressed concern regarding data lock-in and supported ensuring that donations of

electronic health records items and services are transparent and free of any attempts to steer future business. Although it denied knowledge of any specific abuse of the exception, the commenter requested that we allow individuals or entities to remedynoncompliance with the physician selfreferral law due to a donation that may not be protected by the exception. The commenter suggested that the remedyfor violation of the physician selfreferral law due to an arrangement’s failure to satisfy the requirements of the exception at § 411.357(w) should be to make physician recipients pay the fair market value of any costs for ongoing support of the donated electronic health

records items or services. The commenter suggested allowing 3 years for the physician recipient to either pay

full value for the donated electronic

health records items and services or transition to a new system.

Response: We appreciate the

commenter’s concern and
recommendation; however, we decline to make the suggested modification. Implementing the commenter’s suggestions would be outside the scope of our statutory authority under section 1877(b)(4) of the Act to promulgate exceptions to the physician self-referral law that pose no risk of program or patient abuse.

Comment: A few commenters urged us to amend the exception to require the physician recipient or the donor to participate in health information exchange with an electronic health records system that is different from the

one donated. One commenter specifically suggested that the physician recipient should have to demonstrate exchange with at least one other electronic health records system within a certain timeframe after receipt of the donation. Another commenter suggested that the donor should have to—upon request—enable the physician recipientof the donation to engage in bidirectional exchange of data with competitors not using the same electronic health records system.

Response: We appreciate the
commenters’ recommendations; however, we are not modifying the exception to require the parties to an arrangement for the donation of

electronic health records items and services to demonstrate interoperation. We question whether adequate demonstration of interoperation could occur only after the donation has been made, which would create uncertainty

about whether the donation satisfies the requirements of the exception. This uncertainty would undermine the Department’s broad goal for the exception—that is, to support widespread adoption of interoperable electronic health records technology.
However, it is our intent and expectation that interoperation of
donated items and services will, in fact, occur, and we believe the requirements of the exception, in their entirety, promote such interoperation. Moreover, routine interoperation with systems other than those of the donor may be evidence that neither the donor nor any person on the donor’s behalf has taken any action to limit or restrict the use, compatibility, or interoperability of the

items or services with other electronic prescribing or electronic health records systems, as required under
§ 411.357(w)(3).

Further, we note that the Department is considering a number of policies to accelerate and advance interoperability and health information exchange. As part of this process, ONC and CMS issued a notice requesting input from the public on possible policies and programmatic changes to accelerate electronic health information exchange among individuals and entities that
furnish health care items and services,

as well as new ideas that would be both effective and feasible to implement (78 FR 14793). We believe that the process through which ONC and CMS will jointly act is better-suited than this exception to consider and respond to evolving functionality related to the interoperability of electronic health records technology. The paper that addresses the public comments we received and outlines the Department’s strategy for accelerating health information exchange is available at:http://www.healthit.gov/policyresearchers-implementers/acceleratinghealth-information-exchange-hie.

Comment: In response to our solicitation of comments, some commenters provided suggestions as to

how we could broaden the current requirements related to data lock-in. Two commenters suggested amending § 411.357(w)(3), which prohibits the donor (or any person on the donor’s behalf) from taking any action to limit or restrict the use, compatibility, or interoperability of the items or services with other ‘‘electronic prescribing or electronic health records systems.’’ Specifically, the commenters suggested that we replace the reference to ‘‘electronic prescribing or electronic health records systems’’ with ‘‘health information technology platforms or other health care providers.’’ The commenters asserted that this proposed change reflects the development of health information technology that may

not be classified as an electronic health records system, but supports the free exchange of health information. These two commenters also suggested that we modify § 411.357(w)(3) to state that

neither the donor nor the physician recipient may take any action to limit the interoperability of donated

electronic health records items or services and that we require that the modified condition be included as part of the written agreement required under
§ 411.357(w)(7).

Another commenter suggested amending § 411.357(w)(3) by providing

a non-exhaustive list of actions that would cause a donation not to satisfy this requirement and by establishing a process for entities to provide the Department with information about potential abuses of the exception. A representative of several health plans suggested modifying the exception to
ensure that, in the context of health information exchange, the interoperability requirement of the exception requires that all key stakeholders, including health insurance plans, have access to the health information exchange. The commenter suggested that we modify the interoperability condition at 42 CFR 411.357(w)(2) to prohibit restrictions on the communication and exchange of


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data with any covered entity as defined

at 45 CFR 160.103.

Response: The language in the existing regulatory text prohibits donors (or persons on the donor’s behalf) from taking any action to limit or restrict the use, compatibility, or interoperability of

donated items or services with other ‘‘electronic prescribing or electronic health records systems.’’ The term ‘‘electronic prescribing or electronic health records systems’’ was intended to

be broad in order to account for developments in the health information technology industry. Based on the commenters’ suggestions it appears, however, that stakeholders may have read this term more narrowly. This narrow reading is inconsistent with our intended meaning. We have always

believed and continue to believe that an action taken by a donor (or on behalf of
the donor) that limits the use, compatibility, or interoperability of

donated items or services with any other health information technology may impede the free exchange of data and limit the ability of providers and suppliers to coordinate care, which is inconsistent with the goals of the exception. Therefore, we are clarifying 42 CFR 411.357(w)(3) by adding, by way of example and without limitation, a

non-exhaustive list of some of the forms of technologies that we believe are included within the meaning of the existing regulatory language. We are not adopting the commenters’ suggested
edit, as we do not believe that it is necessary in light of our clarification. We also decline to modify 42 CFR 411.357(w)(2) to prohibit restrictions on the communication and exchange of data with any covered entity as defined

at 45 CFR 160.103. We believe that existing 42 CFR 411.357(w)(3), which

we have clarified in this final rule as including health information technology applications, products, or services, promotes interoperability with a variety of providers and suppliers, as well as other health care entities that may play
a role in the coordination of care, including health plans that operate health information technology applications, products, or services.

We are also not adopting the commenters’ suggestion to modify the exception to state that neither the donor nor the physician recipient may take any action to limit the interoperability

of donated electronic health records items or services. The requirement at § 411.357(w)(3) prohibits the donor (or any person on behalf of the donor) from taking any action that limits or restricts the use, compatibility, or interoperability of the donated

electronic health records items or services. To the extent that a physician recipient takes an action on the donor’s behalf to limit the use, compatibility, or interoperability of donated items or
services, that donation would fail to qualify for protection under the exception. Because we see no obvious
reason, other than at the behest of the
donor or as a condition of the donation, why a physician recipient would take action to limit the use, compatibility, or interoperability of donated items or services, we believe that any action of this type by a physician recipient would be suspect. We are not making the suggested modification because we believe the concern articulated by the commenters is already addressed by the existing regulatory language and the policies we are adopting in this final rule. Accordingly, we are not making any corresponding revisions to require that the recommended provision be incorporated into the written agreement required under § 411.357(w)(7).

Finally, we are not revising the exception to provide in regulation text examples of actions that may cause a donation not to satisfy the requirements
of § 411.357(w)(3). Whether a donation satisfies the requirements of the exception requires a case-by-case analysis and depends on the specific

facts of the donation.

Comment: One commenter objected to the use of the exception to address the

issue of data lock-in. The commenter contended that data lock-in may arise in response to legitimate concerns, such as the Health Insurance Portability and Accountability Act (HIPAA) privacy and security rules, liability issues, licensing requirements, and antitrust issues. Further, according to the commenter, data lock-in conditions may cause uncertainty for donors because parties may not be able to determine whether a donation satisfies the requirements of the exception until after donation.

Response: Nothing in this final rule is intended to prohibit legitimate actions

taken to ensure that electronic health records items and services appropriately protect data, including measures to ensure the privacy and security of health information data. We recognize that there may be appropriate security, privacy and other business reasons to protect data. This final rule addresses only actions that inappropriately lock in data, for example, locking in data to

secure future referrals.

Comment: One commenter expressed support for preventing electronic health

records data lock-in and the free exchange of data. However, the commenter did not agree that additional requirements designed to promote these goals would be effective. Instead, the commenter suggested that we adopt payment models that continue to foster

care coordination activities.

Response: We appreciate the commenter’s suggestion; however, changes to our payment models are outside the scope of the proposed rule. We note that, in our joint Request for
Information, we and ONC solicited input on options for improving several different CMS payment models to support better the adoption of interoperable electronic health records technology (78 FR 14797). As noted earlier, the paper that addresses the public comments we received and outlines the Department’s strategy for accelerating health information exchange is available at: http://www.healthit.gov/policy-researchersimplementers/accelerating-healthinformation-exchange-hie.

Comment: Two commenters suggested data lock-in could be limited by requiring electronic health records software to be open or ‘‘open source.’’ Both commenters asserted that open

source software would limit data lockin due to the transparent nature of open
source software. In addition, it would lead to greater interoperability of electronic health records systems. One commenter also suggested that we require mandatory advance disclosure of the operational and business policies and practices associated with the electronic health records technologies. One commenter suggested that we adopt

the e-DOS standard as certification

criteria for electronic health records.

Response: Although we share the commenters’ support for the free exchange of health information where appropriate protections for privacy and security exist, we are not adopting their

recommendations because software

certification criteria and standards are determined by ONC and are, therefore, outside the scope of this rulemaking.

3. Covered Technology

In the proposed rule, we noted that we received questions concerning

whether certain items or services fall within the scope of the technology potentially covered under the exception
at § 411.357(w). There, we stated that the answer to such questions depends on the exact items or services being

donated. We referenced our discussion in the August 2006 final rule regarding our interpretation of the term ‘‘software, information technology and training services necessary and used predominantly.’’ We stated that we believe that the current regulatory text, when read in light of the preamble discussion, is sufficiently clear concerning the scope of covered


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technology. Nonetheless, because we received suggestions from stakeholders to modify § 411.357(w) to reflect explicitly this interpretation, in the proposed rule (78 FR 21313), we sought comments from the public regarding this issue. After considering the public comments with respect to this issue, we determined not to make any changes to the regulation text to address the scope of covered technology.

Comment: Several commenters stated that the regulatory text describing the scope of technology covered by the exception, when read in light of the August 2006 final rule preamble, is sufficiently clear. One of these commenters urged us not to revise the regulation in any way that might limit the scope of covered technology, limit the ability of donors and physician recipients in the design and selection of
items and services, or create barriers to achieving interoperability. Other commenters agreed that the current definition of covered technology is appropriate, with two of these commenters suggesting that we revisit

the definition in the future as health information technology evolves. Still

other commenters asserted that the existing regulatory language can be interpreted to include ‘‘services that enable the interoperable exchange of
electronic health records data;’’ thus, no revisions to the regulatory text are required. In contrast, one commenter suggested that we incorporate into the regulatory text the preamble language from the August 2006 final rule where we discussed examples of items and services that would qualify for coverage under the exception. Another commenter suggested that we revise the regulatory text to include as many examples of covered ‘‘software, information technology and training services’’ as possible while emphasizing

that the list is not exhaustive.

Response: We agree that maintaining flexibility is important, particularly as health information technology evolves.

We endeavor to avoid revisions to the regulation text that could inadvertently narrow the exception, which is intended to promote the adoption of interoperable electronic health records technology. Moreover, our interpretation of what is covered by the exception has not changed. As we stated in the proposed rule (78 FR 21313), whether specific items or services fall within the scope of covered technology under the exception depends on the exact items or services that are being donated. If the ‘‘services that enable the interoperable exchange of electronic health records data’’ are of the type that do not meet the requirements for covered technology (for example, because they include hardware, storage devices, or have core functionality other than electronic health records), they would not be eligible for protection under the exception at § 411.357(w).

For these reasons, we are not revising the regulation text at § 411.357(w) to identify any specific types of items or services that may be donated if the other requirements of the exception are satisfied. We are also not modifying the examples identified in the preamble discussion in the August 2006 final rule (71 FR 45151). The exception continues to protect nonmonetary remuneration in the form of software, information technology and training services necessary and used predominantly to

create, maintain, transmit, or receive

electronic health records.

Comment: A few commenters requested clarification regarding whether third-party fees related to the exchange of health information, such as health information exchange service charges for interconnectivity, are ‘‘covered technologies’’ under the exception.

Response: The exception protects only nonmonetary remuneration, in the

form of software and information technology and training services, that is necessary and used predominantly to

create, maintain, transmit, or receive

electronic health records. Whether particular items or services, such as interconnectivity services, may be donated under the exception depends on the exact items or services being

donated.

Comment: One commenter suggested that, in addition to maintaining as much flexibility as possible, we broaden the scope of the technology covered by the exception to include software and
services used for care coordination, quality measurement, improving population health, or improving the quality or efficiency of health care delivery among parties. The commenter noted that some of these items may be covered by the waivers issued in

connection with the Medicare Shared Savings Program (MSSP); however, because those waivers extend only to parties participating in that program, protection for the donation of items or services that advance the Department’s goal of encouraging the adoption of health information technology that supports public policy objectives is not available to other health care industry stakeholders. To advance these goals in a broader way, the commenter suggested that the exception be expanded to include items potentially covered by the MSSP pre-participation waiver, such as electronic health information exchanges that allow for electronic data exchange across multiple platforms, data reporting systems (including all-payer claims data reporting systems), and data analytics (including staff and systems, such as software tools, to perform analytic functions). Another commenter suggested that we broaden the scope of technology covered by the exception to include software separate from the

certified electronic health records software as long as it is interoperable

with the electronic health records software. The commenter gave as examples of such electronic health records-associated components ‘‘patient portals that support patient engagement, direct and other standards-compliant means for secure patient information exchange between providers, solutions to support transition care, and tools that may assist in inter- and intra-patient matching.’’ A third commenter urged us to consider a broader array of covered technologies, provided that they support policy goals such as reducing hospital

readmissions and coordinated care across settings outside of traditional office settings, including telemonitoring

and telemedicine. Another commenter suggested that we expand the protection of the exception to cover ‘‘any

additional items or services that will be required or helpful in meeting Stage 2 or Stage 3 requirements for [the EHR Incentive Programs].’’

Response: As stated previously, whether specific items or services fall within the scope of covered technology under the exception at § 411.357(w) depends on the exact items or services that are being donated. Some of the particular items and services that may be included within the broad categories identified by the commenters may be eligible for donation. For example, if a particular software product related to transitions of care was necessary and used predominantly to create, maintain,
transmit, or receive electronic health records, then it would be eligible for donation, provided that the donation satisfied all of the other requirements of the exception. As noted previously in this final rule, software is not required

to be certified to ONC certification

criteria in order to be donated under the exception at § 411.357(w). Thus, software that is separate from certified software may still be eligible for

donation if it satisfies the definition of ‘‘interoperable’’ at § 411.351.

To the extent that the commenters suggested that we expand the scope of the exception to protect items and services that are not already eligible for
donation, we note that revision of the exception to include such items or services would be outside the scope of


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this rulemaking. In the proposed rule (78 FR 21313), with respect to the scope of technology potentially covered by the exception, we sought input from the public regarding the singular issue of ‘‘whether the current regulatory text, when read in light of the preamble discussion, is sufficiently clear concerning the scope of covered technology.’’ With regard to whether the scope of the technology covered under the exception should be broadened—as opposed to clarified—we are mindful of the important issues raised by the commenters and may consider them in
the future. Further, we note that other exceptions to the physician self-referral law exist to protect financial relationships between physicians and entities furnishing DHS. Depending on
the circumstances, some of the arrangements described by the commenters may satisfy the requirements of another exception ormay not implicate the physician selfreferral law.

Comment: One commenter suggested that we define ‘‘equivalent technology’’ for purposes of the requirement in the exception that the donor of electronic health records items or services may not have actual knowledge of, or act in reckless disregard or deliberate ignorance of, the fact that the physician recipient possesses or has obtained items or services equivalent to those being donated. This commenter also suggested that we prohibit a physician from seeking or accepting a donation of electronic health records technology before a certain period of time has elapsed since the receipt of a previous donation. Another commenter urged us

to eliminate maintenance and service agreements from the scope of potentially protected donations under the exception. In the alternative, the commenter suggested that we impose a restriction on the time period that

donations of such services would be permitted. The commenter noted concerns that donors may use ongoing

donations of maintenance and service agreements to lock in referrals from physician recipients. A commenter that urged us not to extend the availability of the exception suggested that we prohibit the donation of all technology except interfaces for reporting of laboratory results.

Response: Although we appreciate the commenters’ suggestions, we are not making the requested changes. We

believe that the modifications to and clarifications of § 411.357(w) adopted in

this final rule and the clarifications offered in this preamble address the concerns raised by these commenters. Comment: One commenter asserted that the prohibition on donating equivalent items or services currently included in the exception locks physician practices into a vendor, even if they are dissatisfied with the technology, because the physician recipient must choose between paying the full amount for a new system and continuing to pay 15 percent of the cost of the substandard system. The

commenter asserted that the cost differential between these two options is too high and effectively locks physician practices into electronic health records technology vendors.

Response: Although we appreciate the

commenter’s concern, we continue to

believe that items and services are not ‘‘necessary’’ if the physician recipient already possesses equivalent items or services. As we stated in the August
2006 final rule (71 FR 45154), ‘‘the provision of equivalent items and services poses a heightened risk of abuse, [because] such arrangements potentially confer independent value on the physician recipient (that is, the value of the existing items and services that might be put to other uses)

unrelated to the need for electronic health records technology.’’ Therefore, we are retaining the regulatory preclusion of protection for donation arrangements where the donor has actual knowledge of, or acts in reckless disregard or deliberate ignorance of, the fact that the physician recipient possesses or has obtained equivalent items or services. We expect that physicians would not select or continue to use a substandard system if it posed a threat to patient safety.

Comment: One commenter referenced the proposed rule’s statement that ‘‘software or information technology and training services necessary and used predominantly for electronic health records purposes’’ included ‘‘information services related to patient care (but not separate research or marketing support services)’’ (78 FR 21313). The commenter requested that we retract that statement and clarify that it is appropriate for health researchers to

use data in electronic health records for research that is related to, for example, evidence-based medicine, population management, or other research, provided that the use complies with applicable Federal, state, and institutional requirements.

Response: We decline to retract our statement in the proposed rule. To promote adoption of electronic health records without risk of abuse, the scope of items and services permitted to be donated under the exception is limited

to electronic health records items and services in the form of software and information technology and training services that are ‘‘necessary and used predominantly to create, maintain,
transmit, or receive electronic health

records.’’ Donations of software used for research that is separate from clinical support and information services related to patient care are not consistent with the primary goals of the exception.

The exception at § 411.357(w) addresses only the donation of

electronic health records items and
services, and not the use of data. Thus, the portion of the comment related to data use is outside the scope of this rulemaking. We note, however, that nothing in the exception prohibits the

use of data in electronic health records systems for research purposes (assuming the parties comply with all other applicable laws, including HIPAA privacy protections).

Comment: One commenter requested that CMS confirm that patient portals are within the scope of the technology potentially protected by the exception.

Response: We are not certain what the commenter precisely means by ‘‘patient portals.’’ Patient portals come in a variety of forms; the key to the analysis is whether the specific item or service
donated is: (1) In the form of software, information technology and training services and; (2) necessary and used predominantly to create, maintain,

transmit or receive electronic health records. As we stated in the August 2006 final rule in response to a

commenter’s recommendation that the exception specifically protect the provision of patient portal software that enables patients to maintain on-line personal medical records, including scheduling functions (71 FR 45152), nothing in the exception precludes protection for patient portal software if it satisfies all of the requirements of the exception.

E. Comments Outside the Scope of This Rulemaking

In addition to the comments described and to which we responded previously, we received several comments from stakeholders, including suggestions on policy changes, that are outside the scope of this rulemaking. For example, one commenter raised concerns about a private insurer’s proposed fee schedule for laboratory services. Another commenter expressed concern about ‘‘outrageous bills’’ the commenter received from a laboratory company. Although we appreciate the commenters taking the time to present
these concerns, we do not address them here, as they are outside the scope of this rulemaking.


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IV. Provisions of the Final Regulations

For the most part, this final rule incorporates the proposed revisions stated in the proposed rule. Specifically, we are revising the exception to exclude laboratory companies from the types of entities that may donate electronic

health records items and services under the exception, and are modifying the regulation text at § 411.357(w)(1) to effectuate this change. We are also amending § 411.357(w)(2) by deleting the phrase ‘‘recognized by the Secretary’’ and by replacing it with the phrase ‘‘authorized by the National

Coordinator for Health Information Technology’’ and replacing the 12-

month timeframe for certification of

electronic health records software with a requirement that the software be

certified to an edition of the electronic

health record certification criteria identified in the then-applicable version of 45 CFR part 170 (ONC’s certification program). We are clarifying the requirement at § 411.357(w)(3) prohibiting any action that limits or restricts the use, compatibility, or interoperability of donated items or services. In addition, we are eliminating the requirement at § 411.357(w)(11) that

donated electronic health records software include electronic prescribing capability. Finally, we are modifying
§ 411.357(w)(13) to extend the expiration of the exception from
December 31, 2013 to December 31,

2021.

V. Waiver of the Delay in the Effective

Date

Ordinarily, we provide a delay of at least 30 days in the effective date of a

final rule after the date that the rule is issued. However, the 30-day delay in

effective date can be waived if the rule grants or recognizes an exemption or

relieves a restriction. We believe that it is appropriate to waive the 30-day delay
in effective date for § 411.357(w)(13),

which relieves a restriction on

donations of electronic health records items and services. Specifically, this
final rule amends § 411.357(w)(13) to extend the expiration of the existing exception from December 31, 2013 to
December 31, 2021. Without a waiver of the requirement for a delayed effective date, the entire exception will expire on
December 31, 2013 and will not be available to protect any ongoing donation arrangements or new

donations of electronic health records items and services made to physicians after December 31, 2013. By waiving the 30-day delay in effective date, the exception will not expire, thereby allowing parties to continue utilizing the exception to protect donations of

electronic health records items and
services. We stress, however, that

donations of electronic health records

items and services that occur between January 1, 2014 and the effective date of the remaining provisions of this final
rule (March 27, 2014) will need to satisfy all of the requirements of the existing exception. The waiver of the 30-day delay in effective date simply serves to maintain the status quo until

the rest of this final rule becomes

effective.

The 30-day delay in effective date can also be waived if the agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings

and reasons in the rule issued. We find that it is unnecessary to provide a 30- day delay in effective date for
§ 411.357(w)(13) because an earlier effective date simply allows parties to continue making donations under the existing electronic health records items and services exception; it does not impose any new requirements or restrictions on potentially affected parties. Moreover, we find that a 30-day delayed effective date for § 411.357(w)(13) is impracticable

because it would cause the entire exception to expire, thereby nullifying

this final rule.

VI. Collection of Information Requirements

The provisions in this final rule will not impose any new or revised information collection, recordkeeping, or disclosure requirements. Consequently, this rule does not need additional Office of Management and Budget review under the authority of the Paperwork Reduction Act of 1995.

VII. Regulatory Impact Analysis

We have examined the impact of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–
354), section 1102(b) of the Act, section

202 of the Unfunded Mandates Reform
Act of 1995 (March 22, 1995; Pub. L.
104–4), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). We

believe that this final rule does not reach the economic threshold for being considered economically significant and, thus, is not considered a major rule. It is not economically significant because it will not have a significant effect on program expenditures, and

there are no additional substantive costs to implement the resulting provisions. The rule modifies an existing exception to the physician self-referral law, and the modifications would not impose

additional substantive costs on those seeking to utilize the exception. Further,

the donation of electronic health records

items or services and the use of the exception to protect such donations is entirely voluntary. In section III. of this final rule, we provide a detailed discussion and analysis of the
alternatives considered in this final rule, including those considered for extending the expiration date of the electronic health records exception, limiting the types of entities that may

donate electronic health records items and services, and tying the timeframe for deeming electronic health records software to ONC’s certification program. Finally, we received no public comments specific to the RIA set forth in the proposed rule.

This final rule extends the exception’s expiration date to December 31, 2021; excludes laboratory companies from the types of entities that may donate

electronic health records items and services; updates the provision under

which electronic health records software is deemed interoperable; clarifies the requirement at § 411.357(w)(3) prohibiting any action
that limits or restricts the use, compatibility, or interoperability of
donated items or services; and removes the requirement related to electronic prescribing capability. Neither this final rule nor the regulations it amends requires any entity to donate electronic

health records items and services to physicians, but we expect these changes to continue to facilitate the adoption of electronic health records technology by eliminating perceived barriers rather than creating the primary means by which physicians would adopt this technology.

The summation of the economic impact analysis regarding the effects of

electronic health records in the ambulatory setting that is presented in


### 78768 Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Rules and Regulations

3 See, for example, State Variation in EPrescribing Trends in the United States, available

at http://www.healthit.gov/sites/default/files/us

_ eprescribingtrends

_ onc

_brief

_ 4

_nov2012.pdf. 4 See, for example, State Variation in EPrescribing Trends in the United States, available

at http://www.healthit.gov/sites/default/files/us

_ eprescribingtrends

_ onc

_brief

_ 4

_nov2012.pdf. the August 2006 final rule (71 FR 45164) still pertains to this final rule. However, since the August 2006 final rule, several developments have occurred to make us conclude that it is no longer necessary to retain a requirement related to electronic prescribing capability in the electronic health records exception. These developments include the passage of two laws encouraging adoption of electronic prescribing and
electronic health records: (1) the Medicare Improvements for Patients and
Providers Act of 2008 (MIPPA), Public
Law 110–275; and (2) the Health Information Technology for Economic
and Clinical Health (HITECH) Act, Title

XIII of Division A and Title IV of Division B of the American Recovery
and Reinvestment Act of 2009 (ARRA),
Pub. L. 111–5. In addition, there has been an increase over the past few years

in the rate of electronic health recordsbased electronic prescribing capabilities. 3

As discussed in more detail in the preamble to the proposed rule, section

132 of MIPPA authorized an electronic prescribing incentive program (starting in 2009) for certain types of eligible professionals. The HITECH Act

authorized us to establish the EHR Incentive Programs for certain eligible professionals, eligible hospitals, and critical access hospitals. Also, the HITECH Act required that eligible professionals under the EHR Incentive Programs demonstrate meaningful use

of certified electronic health records technology, including the use of electronic prescribing. Specifically, the final rule for Stage 2 EHR Incentive Programs (September 4, 2012; 77 FR 53968) includes more demanding requirements for electronic prescribing and identifies electronic prescribing as a required core measure. As a result, beginning in calendar year 2015, an eligible professional risks a reduction in the Medicare Physician Fee Schedule payment amount that will otherwise apply for covered professional services if he or she is not a meaningful electronic health records technology user for a reporting period during that year. Our intent remains to allow physicians not to receive products or services they already own, but rather to

receive electronic health records items and services that advance the adoption

and use of electronic health records. Lastly, according to ONC, electronic prescribing by physicians using electronic health records technology has increased from 7 percent in December 2008 to approximately 48 percent in

June 2012. 4 Furthermore, the rules recently published to implement Stage 2 of the EHR Incentive Programs (77 FR
54198 and 77 FR 53989), continue to encourage physicians’ use of electronic prescribing technology. However, due to
data limitations, we are unable to estimate accurately how much the electronic health records exception has

contributed to the increase in electronic prescribing. Nevertheless, we believe that, as a result of recent developments, physician adoption of electronic prescribing and electronic health records technology will continue to increase despite removal of the electronic prescribing capability requirement in the electronic health records exception.

The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact

on a substantial number of small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues

of less than $7.0 million to less than $35.5 million in any 1 year. Individuals

and States are not included in the definition of a small entity. This final

rule does not result in an economic effect on small entities of 3 to 5 percent

or more of their total revenues or costs. As a result, the Secretary has

determined that this final rule will not have a significant economic impact on

a substantial number of small entities.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of

a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. The Secretary has

determined that this final rule would not have a significant economic impact on the operations of a substantial number of small rural hospitals (that is, an effect of more than 3 to 5 percent of
their total revenues or costs).

Section 202 of the Unfunded Mandates Reform Act of 1995 requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2013, that threshold is approximately $141 million. This final rule imposes no
mandates and, as a result, will have no consequential effect on State, local, or tribal governments, or on the private
sector, of $141 million or more.

Executive Order 13132 establishes certain requirements that an agency

must meet when it issues a final rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications.
For the reasons stated earlier, this final

rule will not have a substantial effect on State or local governments, nor does it preempt State law or have Federalism implications.

In accordance with the provisions of
Executive Order 12866, this rule was reviewed by the Office of Management and Budget.

List of Subjects for 42 CFR Part 411

Kidney diseases, Medicare, Physician referral, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR part

411 as set forth below:

**PART 411—EXCLUSIONS FROM**

**MEDICARE AND LIMITATIONS ON**

**MEDICARE PAYMENT**

■ 1. The authority citation for part 411

continues to read as follows:

Authority **:** Secs. 1102, 1860D–1 through

1860D–42, 1871, and 1877 of the Social Security Act (42 U.S.C. 1302, 1395w–101 through 1395w–152, 1395hh, and 1395nn).

■ 2. Section 411.357 is amended as

follows:

■ A. Revising paragraphs (w)(1) through
(3).

■ B. Removing and reserving paragraph
(w)(11).

■ C. In paragraph (w)(13), removing the date ‘‘December 31, 2013’’ and adding
the date ‘‘December 31, 2021’’ in its place.

The revision reads as follows:

**§ 411.357 Exceptions to the referral**
**prohibition related to compensation**

**arrangements.**

* * * * *

(w) * * *
(1) The items and services are provided to a physician by an entity (as
defined at § 411.351) that is not a laboratory company.


### 78769 Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Rules and Regulations

(2) The software is interoperable (as
defined in § 411.351) at the time it is provided to the physician. For purposes of this paragraph, software is deemed to be interoperable if, on the date it is provided to the physician, it has been certified by a certifying body authorized by the National Coordinator for Health Information Technology to an edition of

the electronic health record certification criteria identified in the then-applicable version of 45 CFR part 170.

(3) The donor (or any person on the donor’s behalf) does not take any action to limit or restrict the use, compatibility, or interoperability of the items or

services with other electronic prescribing or electronic health records systems (including, but not limited to, health information technology applications, products, or services).

* * * * * (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program)

Dated: September 5, 2013.

Marilyn Tavenner,

Administrator, Centers for Medicare &

Medicaid Services.

Approved: December 12, 2013.

Kathleen Sebelius,

Secretary, Department of Health and Human

Services.

[FR Doc. 2013–30923 Filed 12–23–13; 4:15 pm]

**BILLING CODE 4120–01–P**

**FEDERAL COMMUNICATIONS**

**COMMISSION**

**47 CFR Part 95**

**[ET Docket No. 08–59; FCC 12–54]**

**Medical Body Area Networks**

**AGENCY :**  Federal Communications

Commission.

**ACTION :**  Final rule; announcement of

effective date.

**SUMMARY :**  In this document, the Federal

Communications Commission (‘‘Commission’’) announces that certain

rules revised in the ‘‘Amendment of the

Commission’s Rules to Provide Spectrum for the Operation of Medical Body Area Networks’’ adopted in a First Report and Order, ET Docket No. 08–59
(FCC 12–54), to the extent it contained information collection requirements that required approval by the Office of Management and Budget (OMB) was approved on October 26, 2013. This

document is consistent with the First Report and Order, which stated that the Commission would publish a document in the Federal Register announcing the

effective date of those rules.

**DATES :**  The amendments to 47 CFR
95.1215(c), 95.1217(a)(3), 95.1223 and 95.1225 published at 78 FR 55715, September 11, 2012 are effective
December 27, 2013. In addition the incorporation by reference listed in 47 CFR 95.1223 of the rules is approved by the Director of the Federal Register as of
December 27, 2013.

**FOR FURTHER INFORMATION CONTACT :**  Nancy Brooks, Policy and Rules Division, Office of Engineering and Technology, at (202) 418–7866, or

email: Nancy.Brooks@fcc.gov.

**SUPPLEMENTARY INFORMATION :**  This
document announces that, on November 26, 2013 OMB approved, for a period of three years, the revised information collection requirements relating to Spectrum for the Operation of Medical Body Area Networks rules contained in

the Commission’s First Report and
Order, FCC 12–54, published at 78 FR 55715, September 11, 2012. The OMB

Control Number is 3060–0936. The Commission publishes this document as

an announcement of the effective date of

the rules.

To request materials in accessible formats for people with disabilities (Braille, large print, electronic files,
audio format), send an email to fcc504@ fcc.gov or call the Consumer and
Governmental Affairs Bureau at (202)
418–0530 (voice), (202) 418–0432
(TTY).

Synopsis

As required by the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507), the Commission is notifying the public that it received final OMB approval on
November 26, 2013, for the information collection requirements contained in the

modifications to the Commission’s rules in 47 CFR part 95.

Under 5 CFR 1320, an agency may not conduct or sponsor a collection of information unless it displays a current,

valid OMB Control Number.

No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act that does not display a current, valid OMB Control

Number. The OMB Control Number is

3060–0936.

The foregoing document is required by the Paperwork Reduction Act of
1995, Public Law 104–13, October 1,
1995, and 44 U.S.C. 3507.

The total annual reporting burdens and costs for the respondents are as

follows:

OMB Control No.: 3060–0936. OMB Approval Date: November 26,

2013. OMB Expiration Date: November 30,

2016.

Title: Sections 95.1215, 95.1217,

95.1223 and 95.1225—Medical Device

Radiocommunications Service
(MedRadio).

Form No.: N/A. Type of Review: Revision of a currently approved collection.

Respondents: Business or other forprofit and not-for-profit institutions.

Number of Respondents: 3,120 respondents; 3,120 responses.

Estimated Time per Response: 1–3

hours.

Frequency of Response: On occasion reporting requirement, third party disclosure requirement and recordkeeping requirement.

Obligation to Respond: Required to obtain or retain benefits. Statutory authority for this information collection

is contained in 47 U.S.C. 151 and 303
of the Communications Act of 1934, as

amended.

Total Annual Burden: 9,120 hours.

Total Annual Cost: $462,600. Privacy Act Impact Assessment: N/A. Nature and Extent of Confidentiality: No information is requested that would require assurance of confidentiality.

Needs and Uses: The Commission received approval from the Office of Management and Budget (OMB) to

revise OMB 3060–0936 to reflect new

and/or modified information collections

as a result of a First Report and Order.

On May 24, 2012, the Commission released a Report and Order, ET Docket
No. 08–59, FCC 12–54, titled:

‘‘Amendment of the Commission’s rules to Provide Spectrum for the Operation of Medical Body Area Networks’’, these rules revised the requirements for

manufacturers of transmitters for the

‘‘Medical Device Radiocommunication

Service’’ to include with each transmitting device a statement regarding harmful interference and to label the device in a conspicuous

location on the device. The First Report

and Order also adopted rules for ‘‘Medical Body Area Network’’ (MBAN), which requires the Commission to establish a process by which MBAN users will register and coordinate the

use of certain medical devices. The frequency coordinator will make the database available to equipment manufacturers and the public. The coordinator will also notify users of potential frequency conflicts.

Federal Communications Commission.

Marlene H. Dortch,

Secretary, Office of the Secretary, Office of
Managing Director.

[FR Doc. 2013–30649 Filed 12–26–13; 8:45 am]

**BILLING CODE 6712–01–P**