21308 Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Proposed Rules 

B. What federal implementation plan 

provisions apply if a state fails to submit 

an approvable plan? 

In addition to sanctions, if EPA finds 

that a state failed to submit the required 

SIP revision or if EPA disapproves the 

required SIP revision, or a portion 

thereof, EPA must promulgate a FIP no 

later than 2 years from the date of the 

finding if the deficiency has not been 

corrected. 

IX. Statutory and Executive Order 

Reviews 

Under the Act, the Administrator is 

required to approve a SIP submission 

that complies with the provisions of the 

Act and applicable federal regulations. 

42 U.S.C. 7410(k); 40 CFR 52.02(a). 

Thus, in reviewing SIP submissions, 

EPA’s role is to approve state choices, 

provided that they meet the criteria of 

the Act. Accordingly, this proposed 

action merely approves state law as 

meeting federal requirements and does 

not impose additional requirements 

beyond those imposed by state law. For 

that reason, this proposed action: 

• Is not a ‘‘significant regulatory 

action’’ subject to review by the Office 

of Management and Budget under 

Executive Order 12866 (58 FR 51735, 

October 4, 1993); 

• Does not impose an information 

collection burden under the provisions 

of the Paperwork Reduction Act (44 

U.S.C. 3501 et seq.); 

• Is certified as not having a 

significant economic impact on a 

substantial number of small entities 

under the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.); 

• Does not contain any unfunded 

mandate or significantly or uniquely 

affect small governments, as described 

in the Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104–4); 

• does not have Federalism 

implications as specified in Executive 

Order 13132 (64 FR 43255, August 10, 

1999); 

• is not an economically significant 

regulatory action based on health or 

safety risks subject to Executive Order 

13045 (62 FR 19885, April 23, 1997); 

• is not a significant regulatory action 

subject to Executive Order 13211 (66 FR 

28355, May 22, 2001); 

• is not subject to requirements of 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (15 U.S.C. 272) because 

application of those requirements would 

be inconsistent with the Act; and 

• does not provide EPA with the 

discretionary authority to address, as 

appropriate, disproportionate human 

health or environmental effects, using 

practicable and legally permissible 

methods, under Executive Order 12898 

(59 FR 7629, February 16, 1994). 

In addition, this proposed action does 

not have tribal implications as specified 

by Executive Order 13175 (65 FR 67249, 

November 9, 2000), because the SIP is 

not approved to apply in Indian country 

located in the state, and EPA notes that 

it will not impose substantial direct 

costs on tribal governments or preempt 

tribal law. 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Hydrocarbons, 

Incorporation by reference, 

Intergovernmental relations, Oxides of 

Nitrogen, Ozone, Reporting and 

recordkeeping requirements, Volatile 

organic compounds. 

Dated: April 1, 2013. 

Judith A. Enck, 

Regional Administrator, Region 2. 

[FR Doc. 2013–08398 Filed 4–9–13; 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–P] 

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: Proposed rule. 

SUMMARY: This proposed rule would 

revise the exception to the physician 

self-referral prohibition for certain 

arrangements involving the donation of 

electronic health records items and 

services. Specifically, it would extend 

the sunset date of the exception, remove 

the electronic prescribing capability 

requirement, and update the provision 

under which electronic health records 

technology is deemed interoperable. In 

addition, we are requesting public 

comment on other changes we are 

considering. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on June 10, 2013. 

ADDRESSES: In commenting, please refer 

to file code CMS–1454–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1454–P, P.O. Box 8013, Baltimore, 

MD 21244–8013. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1454–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments ONLY to the 

following addresses prior to the close of 

the comment period: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, call 

telephone number (410) 786–9994 in 

advance to schedule your arrival with 

one of our staff members. 

Comments erroneously mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Proposed Rules 21309 

1For the reasons discussed in more detail in the 

preamble on August 8, 2006 final rule (71 FR 

45140), we abandoned the proposal to have separate 

pre- and post-interoperability exceptions for 

electronic health records arrangements. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Michael Zleit, (410) 786–2050. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Comments received by CMS will be 

shared with the HHS Office of Inspector 

General. 

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 an exception 

applies; and (2) prohibits the entity from 

submitting claims to Medicare for those 

referred services, unless an exception 

applies. 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 this authority, we 

published an exception 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 sunset on December 31, 2013 (See 42 

CFR 411.357(w)(13)). The purpose of 

this proposed rule is to update certain 

aspects of the electronic health records 

exception and to extend the sunset date. 

B. Summary of the Major Provisions 

This proposed rule would amend the 

current exception in at least three ways. 

First, the proposed rule would update 

the provision under which electronic 

health records software is deemed 

interoperable. Second, we propose to 

remove the requirement related to 

electronic prescribing capability from 

the exception. Third, we propose to 

extend the sunset date of the exception. 

In addition to these proposals, we are 

soliciting public comment on other 

possible amendments to the exception, 

including limiting the scope of 

protected donors, and adding or 

modifying conditions to limit the risk of 

data and referral lock-in. 

C. Costs and Benefits 

The proposed rule would modify an 

already-existing exception to the 

physician self-referral statute. This 

exception permits certain entities to 

provide technology-related items and 

services to certain parties to be used to 

create, maintain, transmit, or receive 

electronic health records. The proposed 

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 

would not have a significant effect on 

program expenditures, and there are no 

additional substantive costs to 

implement the resulting provisions. The 

proposed rule would update the 

provision under which electronic health 

records software is deemed 

interoperable, and remove the 

requirement related to electronic 

prescribing capability, and extend the 

exception’s expiration date (currently 

set at December 31, 2013). We expect 

these proposed changes to continue to 

facilitate the adoption of electronic 

health records technology. 

II. Background 

A. Physician Self-Referral Statute and 

Exceptions 

Section 1877 of the Social Security 

Act (the Act), 42 U.S.C. 1395nn, also 

known as the physician self-referral law: 

(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 an exception applies; and (2) 

prohibits the entity from submitting 

claims to Medicare for those referred 

services, unless an exception applies. 

The statute at 42 U.SC. 1395nn(b)(4), 

establishes a number of exceptions and 

grants the Secretary of the Department 

of Health and Human Services (the 

Secretary) (HHS) 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 

In the October 11, 2005 Federal 

Register (70 FR 59182), we published a 

proposed rule (the 2005 proposed rule) 

that would promulgate two exceptions 

to the physician self-referral law to 

address donations of certain electronic 

health records software and directly 

related training services, using our 

authority at section 1877(b)(4) of the 

Act. One proposed exception would 

have protected certain arrangements 

involving donations of electronic health 

records technology made before the 

adoption of certification criteria. The 

other proposed exception would have 

protected certain arrangements 

involving nonmonetary remuneration in 

the form of interoperable electronic 

health records software certified in 

accordance with criteria adopted by the 

Secretary and directly related training 

services. In the same issue of the 

Federal Register (70 FR 59015), the 

HHS Office of Inspector General (OIG) 

proposed similar language to establish a 

‘‘safe harbor’’ under the Federal antikickback statute. 

On August 8, 2006 (71 FR 45140), we 

published a final rule that, among other 

things, finalized an exception at 42 CFR 

411.357(w) 1 (the ‘‘electronic health 

records exception’’) to the physician 

self-referral prohibition for protecting 

certain arrangements involving 

interoperable electronic health records 

software or information technology and 

training services. Also, in the August 8, 

2006 Federal Register (71 FR 45110), 

the OIG simultaneously published 

similar final regulations at 42 CFR 

1001.952 that, among other things, 

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21310 Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Proposed Rules 

2 42 CFR 1001.952(y). 

3See (70 FR 59186) and (71 FR 45155). 

4See 42 U.S.C. 300jj–11(c)(5). 

adopted a single safe harbor under the 

Federal anti-kickback statute for certain 

arrangements involving interoperable 

electronic health records software or 

information technology and training 

services. As set forth at 42 CFR 

411.357(w)(13), the physician selfreferral electronic health records 

exception is scheduled to sunset on 

December 31, 2013. 

This proposed rule sets forth certain 

proposed changes to the electronic 

health records exception to the 

physician self-referral law. The OIG is 

proposing almost identical changes to 

the anti-kickback statute electronic 

health records safe harbor 2 elsewhere in 

this issue of the Federal Register. We 

attempted to ensure as much 

consistency as possible between our 

proposed changes to the physician selfreferral exception and OIG’s safe harbor 

changes, despite the differences in the 

respective underlying statutes. We 

intend the final rules to be similarly 

consistent. Also, because of the close 

nexus between this proposed rule and 

OIG’s proposed rule, we may consider 

comments submitted in response to 

OIG’s proposed rule when crafting our 

final rule. Similarly, OIG may consider 

comments submitted in response to this 

proposed rule in crafting its final rule. 

II. Provisions of the Proposed Rule 

A. The Deeming Provision 

Our current electronic health records 

exception to the physician self-referral 

law specifies at § 411.357(w)(2) that the 

donated software must be interoperable 

at the time it is provided to the 

physician. As discussed in the March 7, 

2013 (78 FR 14795) request for 

information (RFI), ‘‘HHS envisions an 

information rich, person-centered, high 

performance health care system where 

every health care provider has access to 

longitudinal data on patients they treat 

to make evidence-based decisions, 

coordinate care and improve health 

outcomes.’’ Additionally, as emphasized 

in this RFI, interoperability will play a 

critical role in supporting this vision. 

Interoperability is also an important 

concept in the context of the electronic 

health records exception. Although we 

have long been concerned that parties 

could use the donation of technology to 

capture referrals, we have viewed 

interoperability as a potential mitigating 

factor, or safeguard, to justify other 

exception conditions that are less 

stringent than might otherwise be 

appropriate in the absence of 

interoperability. This is because if the 

donated technology is interoperable, the 

recipient will be able to use it to 

transmit electronic health records not 

only to the donor, but to others, 

including competitors of the donor, and 

will not be ‘‘locked in’’ to 

communications with the donor only.3

For purposes of this exception, 

‘‘interoperable’’ (as defined at § 411.351) 

means ‘‘able to communicate and 

exchange data accurately, effectively, 

securely, and consistently with different 

information technology systems, 

software applications, and networks, in 

various settings; and exchange data such 

that the clinical or operational purpose 

and meaning of the data are preserved 

and unaltered.’’ The current provisions 

of the electronic health records 

exception state that for purposes of 

meeting the condition set forth in 

§ 411.357(w)(2), ‘‘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 propose to update two 

aspects of this deeming provision to 

reflect the current Office of the National 

Coordinator for Health Information 

Technology (ONC) certification program 

for electronic health record technology. 

First, we propose to modify 

§ 411.357(w)(2) to reflect that ONC is 

responsible for ‘‘recognizing’’ certifying 

bodies, as referenced in this provision.4

To become a certifying body 

‘‘recognized’’ by the Secretary, an entity 

must successfully complete an 

authorization process established by 

ONC. This authorization process 

constitutes Secretary’s recognition as a 

certifying body. Accordingly, we 

propose to revise the phrase 

‘‘recognized by the Secretary’’ in the 

second sentence of paragraph (w)(2) to 

read ‘‘authorized by the National 

Coordinator for Health Information 

Technology.’’ 

Second, we propose to modify the 

portion of this provision concerning the 

time period within which the software 

must have been certified. Currently, the 

electronic health records exception 

deeming provision requires that 

software must have been certified 

within no more than 12 months prior to 

the date of donation in order to ensure 

that products have an up-to-date 

certification. Subsequent to issuing the 

final electronic health records 

exception, ONC developed a regulatory 

process for adopting certification 

criteria and standards. That process is 

anticipated to occur on a 2-year 

regulatory interval. (For more 

information, see ONC’s September 4, 

2012 final rule titled ‘‘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).) 

Further, some certification criteria could 

remain unchanged from one edition of 

electronic health record certification 

criteria to the next. Thus, the current 12- 

month timeframe is not in line with the 

anticipated 2-year regulatory interval 

and does not account for the fact that 

some certification criteria may not 

change from one edition to the next. 

Therefore, we propose to modify this 

portion of the exception by removing 

the 12-month timeframe and 

substituting a provision that more 

closely tracks the current ONC 

certification program. Accordingly, we 

propose that software would be eligible 

for deeming if, on the date it is provided 

to the recipient, 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. For example, for 

2013, the applicable definition of 

Certified EHR Technology identifies 

both the 2011 and 2014 editions of the 

electronic health record certification 

criteria and the 2014 edition. Therefore, 

in 2013, software certified to meet either 

the 2011 edition or the 2014 edition 

could satisfy the exception provision as 

we propose to modify it. The current 

definition of Certified EHR Technology 

applicable for 2014, however, identifies 

only the 2014 edition. Thus, based on 

that definition, in 2014, only software 

certified to the 2014 edition could 

satisfy our proposed, modified 

provision. Future modifications to the 

definition of Certified EHR Technology 

could result in the identification of 

other editions to which software could 

be certified and satisfy our proposed, 

modified provision. As we stated in the 

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 our proposed 

change is consistent with that 

understanding and our objective of 

ensuring that products are certified to 

the current standard of interoperability 

when they are donated. We seek 

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Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Proposed Rules 21311 

5State Variation in E-Prescribing Trends in the 

United States—available at: http:// 

www.healthit.gov/sites/default/files/us_eprescribingtrends_onc_brief_4_nov2012.pdf. 

comment on our proposal, including if 

removing the 12-month period would 

impact donations and whether we 

should consider retaining it as an 

additional means of determining 

eligibility under the deeming provision. 

B. The Electronic Prescribing Provision 

Our current electronic health records 

exception at § 411.357(w)(11) 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), Public Law 108–173].’’ We 

also noted at (71 FR 45153), it was ‘‘our 

understanding that most electronic 

health records systems already include 

an electronic prescribing component.’’ 

We continue to believe in the critical 

importance of electronic prescribing. 

However, in light of developments since 

the August 2006 final rule, we do not 

believe that it is necessary to retain a 

requirement related to electronic 

prescribing capability in the electronic 

health records exception. First, Congress 

subsequently enacted legislation 

addressing electronic prescribing. In 

2008, Congress passed the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA), Pub. L. 

110–275. Section 132 of MIPPA 

authorized an electronic prescribing 

incentive program (starting in 2009) for 

certain types of eligible professionals. 

Further, in 2009, Congress passed 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. The HITECH Act at 42 

U.S.C. 1395w–4(o), 1395ww(n), 

1395f(l)(3), and 1396b(t) authorizes us to 

establish Medicare and Medicaid 

electronic health record incentive 

programs for certain eligible 

professionals, eligible hospitals, and 

critical access hospitals. The HITECH 

Act requires that eligible professionals 

under the Medicare and Medicaid 

electronic health record incentive 

programs demonstrate meaningful use 

of certified electronic health record 

technology, including the use of 

electronic prescribing. Second, the 

industry has made great progress related 

to electronic prescribing. Recent 

analysis by ONC notes an increase in 

the percentage of physicians electronic 

prescribing via electronic health record 

technology from 7 percent in 2008 to 48 

percent in 2012, reflecting rapid 

increases over the past few years in the 

rate of electronic health record-based 

electronic prescribing capabilities.5

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. 

In light of these developments, we 

propose to delete the electronic 

prescribing condition at 

§ 411.357(w)(11). 

We believe that there are sufficient 

alternative policy drivers supporting the 

adoption of electronic prescribing 

capabilities. We also note that electronic 

prescribing technology would remain 

eligible for donation under the 

electronic health records exception or 

under the electronic prescribing 

exception at 42 CFR 411.357(v). We note 

that, unlike other provisions in the 

exception, the electronic prescribing 

condition was not imposed to satisfy the 

statutory requirement that regulatory 

exceptions promulgated under section 

1877(b)(4) of the Act pose no risk of 

program or patient abuse. Rather, the 

condition was imposed to further the 

policy of encouraging donations that 

would produce the overall benefits of 

health information technology. 

Accordingly, we do not believe that 

removing the electronic prescribing 

condition would pose a risk of program 

or patient abuse for donations made 

under this exception. 

C. The Sunset Provision 

The electronic health records 

exception is scheduled to sunset on 

December 31, 2013. In adopting this 

condition of the electronic health 

records exception, we acknowledged 

‘‘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.’’ Some have suggested that we 

extend the sunset date or even remove 

the sunset provision entirely. 

In recent years, electronic health 

record technology adoption has risen 

dramatically, largely as a result of the 

HITECH Act in 2009. For example, see, 

Farzad Mostashari, M.D., ScM., National 

Coordinator, ONC, U.S. Department of 

Health and Human Services, Testimony 

before the Subcommittee on Technology 

and Innovation Committee on Science 

and Technology, available at http:// 

science.house.gov/sites/republicans.

science.house.gov/files/documents/

HHRG-112-SY19-WState-FMostashari20121114.pdf, and HHS News Release, 

‘‘More than 100,000 health care 

providers paid for using electronic 

health records,’’ June 19, 2012, available 

at http://www.hhs.gov/news/press/

2012pres/06/20120619a.html; see also 

OIG, OEI Report OEI–04–10–00184, 

‘‘Memorandum Report: Use of 

Electronic Health Record Systems in 

2011 Among Medicare Physicians 

Providing Evaluation and Management 

Services,’’ June 2012, available at 

https://oig.hhs.gov/oei/reports/oei-04- 

10-00184.pdf. However, while the 

industry has made great progress, use of 

such technology has not yet been 

universally adopted nationwide, and 

continued electronic health record 

technology adoption remains an 

important Departmental goal. We 

continue to believe that, as this goal is 

achieved, the need for an exception for 

donations of such technology should 

continue to diminish over time. 

Accordingly, we propose to extend the 

sunset date to December 31, 2016. We 

selected this date because it corresponds 

to the last year in which one may 

receive a Medicare electronic health 

record incentive payment and the last 

year in which one may initiate 

participation in the Medicaid electronic 

health record incentive program. For 

more information, see ‘‘CMS Medicare 

and Medicaid EHR Incentive Payment 

Milestone Timeline,’’ available at 

Guidance/Legislation/ 

EHRIncentivePrograms/downloads/ 

EHRIncentProgtimeline508V1.pdf. As 

an alternative to this proposed, 

extended sunset date of December 31, 

2016, we are also considering 

establishing a later sunset date. For 

example, we are considering extending 

the sunset date to December 31, 2021, 

which corresponds to the end of the 

electronic health records Medicaid 

incentives. While these sunset dates are 

associated with specific Medicare and 

Medicaid electronic health record 

incentive programs, we recognize that 

not all health care providers to whom 

donations can be made are eligible for 

such incentives. These health care 

providers include, for example, many in 

the mental health and behavioral health 

communities as well as long-term and 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

21312 Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Proposed Rules 

6For more information on interoperability in 

health IT, see ‘‘EHR Interoperability’’ on the 

HealthIT.gov Web site at http://www.healthit.gov/ 

providers-professionals/ehr-interoperability. For 

further discussion of interoperability and other 

health IT issues, see Arthur L. Kellerman and 

Spencer S. Jones, ANALYSIS & COMMENTARY: 

What It Will Take to Achieve The As-YetUnfulfilled Promises Of Health Information 

Technology, Health Affairs. January 2013 32:163– 

68. 

post-acute care facilities. We 

specifically solicit comment on our 

proposed extension of the sunset date to 

December 31, 2016. We also seek 

comment on whether we should, as an 

alternative, select a later sunset date and 

what that date should be. 

D. Additional Proposals and 

Considerations 

1. Protected Donors 

As we stated in the preamble to the 

August 2006 final rule (71 FR 45156) for 

the electronic health records exception, 

‘‘[w]e [originally] proposed to limit the 

scope of protected donors under the 

electronic health records exception to 

hospitals, group practices, [prescription 

drug plan (PDP)] sponsors, and 

[Medicare Advantage (MA)] 

organizations, consistent with the 

MMA-mandated donors for the 

electronic prescribing exception.’’ In the 

August 2006 final rule (71 FR 45156), 

we indicated that we selected these 

donors because they have a ‘‘direct and 

primary patient care relationship and a 

central role in the health care delivery 

infrastructure that would justify 

protection under the exception for the 

provision of electronic health records 

technology that would not be 

appropriate for other types of providers 

and suppliers, including providers and 

suppliers of ancillary services.’’ 

However, in the August 2006 final rule 

(71 FR 45157), we expanded the 

exception to permit donations by any 

DHS entity, stating that such an 

expansion ‘‘will expedite adoption of 

electronic records,’’ which was an 

important public policy goal. We also 

stated (71 FR 45157) that, ‘‘the 

requirements that donated software be 

interoperable and that physicians 

contribute 15 percent to the cost of the 

donated technology, and the limited 

duration of the exception * * *, if met, 

[would] provide adequate protection 

against program and patient abuse.’’ 

Notwithstanding this conclusion, we 

have concerns about the potential for 

abuse of the exception by other types of 

providers and suppliers (including 

providers and suppliers of ancillary 

services who do not have a direct and 

primary patient care relationship and a 

central role in the health care delivery 

infrastructure). The OIG also indicated 

that it has concerns related to the 

potential for laboratories and other 

ancillary service providers to abuse its 

safe harbor. The OIG has received 

comments suggesting that abusive 

donations are being made under the 

electronic health records safe harbor. 

For example, some of the responses OIG 

received to its annual solicitation of safe 

harbors and special fraud alerts (see the 

December 28, 2012 Federal Register (77 

FR 76434)) allege that donors are using 

the safe harbor to provide referral 

sources with items and services that 

appear to support the interoperable 

exchange of information on their face, 

but, in practice, lead to data and referral 

lock-in. Because of the close nexus of 

our regulations, we believe it is also 

prudent for us to explore the possibility 

of such providers and suppliers abusing 

the exception. 

Therefore, we propose to limit the 

scope of protected donors under the 

electronic health records exception, 

with the continued goal of promoting 

adoption of interoperable electronic 

health record technology that benefits 

patient care while reducing the 

likelihood that donors would misuse 

electronic health record technology 

donations to secure referrals. In this 

regard, we are considering revising the 

exception to cover only the original 

MMA-mandated donors: hospitals, 

group practices, PDP sponsors, and MA 

organizations. We are considering, and 

seek comments regarding, 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 are 

considering retaining the current 

definition of protected donors, but 

excluding specific types of donors. We 

are considering excluding suppliers of 

ancillary services associated with a high 

risk of fraud and abuse, because the 

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 are 

considering excluding laboratory 

companies from the scope of 

permissible donors as their donations 

have been the subject of complaints. We 

are also considering excluding other 

high risk categories as well, such as 

durable medical equipment (DME) 

suppliers and independent home health 

agencies. We seek comment on the 

alternatives under consideration, 

including comments, with supporting 

reasons, regarding particular types of 

providers and suppliers that should or 

should not be protected donors given 

the goals of the exception. 

2. Data Lock-In and Exchange 

In the preceding section, we propose 

to limit the scope of permissible donors 

as a means to prevent donations that 

subvert the intent of the exception— 

because they are used to lock in 

referrals—from receiving protection 

under the exception. We are also 

considering inclusion of new or 

modified conditions in the exception as 

an alternative or additional means of 

achieving that result. We are 

particularly interested in new or 

modified conditions that would help 

achieve two related goals. The first goal 

is to prevent the misuse of the exception 

in a way that results in data and referral 

lock-in. The second, related goal is to 

encourage the free exchange of data (in 

accordance with protections for 

privacy). These goals reflect our interest, 

which we discussed previously, in 

promoting the adoption of interoperable 

electronic health record technology that 

benefits patient care while reducing the 

likelihood that donors would misuse 

electronic health record technology 

donations to secure referrals. The 

August 2006 final rule requires donated 

software to be interoperable at the time 

it is donated to the physician. The 

software is deemed interoperable if it is 

certified as described previously. 

However, it has been suggested that 

even when donated software meets the 

interoperability requirements of the 

rule, policies and practices sometimes 

affect the true ability of electronic 

health record technology items and 

services to be used to exchange 

information across organizational and 

vendor boundaries.6 We seek comments 

on what new or modified conditions 

could be added to the exception for 

electronic health records to achieve our 

two goals and whether those conditions, 

if any, should be in addition to, or in 

lieu of, our proposal to limit the scope 

of permissible donors. For example, 

§ 411.357(w)(3) requires, as a condition 

of the exception that ‘‘[t]he donor (or 

any person on the donor’s behalf) 

[* * *] 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 

solicit comment with regard to whether 

this condition could be modified to 

reduce the possibility of lock-in. 

3. Covered Technology 

We received questions concerning 

whether certain items or services, for 

example services that enable the 

interoperable exchange of electronic 

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Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Proposed Rules 21313 

7State Variation in E-Prescribing Trends in the 

United States—available at: http:// 

www.healthit.gov/sites/default/files/us_eprescribingtrends_onc_brief_4_nov2012.pdf. 

health records data, fall within the 

scope of covered technology under the 

exception for electronic health records. 

The answer to such questions depends 

on the exact items or services that are 

being donated. In the August 2006 final 

rule (71 FR 45151), we explained that 

we interpreted ‘‘software, information 

technology and training services 

necessary and used predominantly’’ for 

electronic health records purposes to 

include the following, by way of 

example: ‘‘interface and translation 

software; rights, licenses, and 

intellectual property related to 

electronic health records software; 

connectivity services, including 

broadband and wireless internet 

services; clinical support and 

information services related to patient 

care (but not separate research or 

marketing support services); 

maintenance services; secure messaging 

(for example, permitting physicians to 

communicate with patients through 

electronic messaging); and training and 

support services (such as access to help 

desk services).’’ It also has been 

suggested that we modify the regulatory 

text (that is, § 411.357(w)) of the 

electronic health record exception to 

explicitly reflect this interpretation. We 

believe that the current regulatory text, 

when read in light of the preamble 

discussion, is sufficiently clear 

concerning the scope of covered 

technology, but we seek input from the 

public regarding this issue. 

III. Collection of Information 

Requirements 

The provisions in this proposed rule 

would 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. 

IV. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the ‘‘DATES’’ section 

of this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Regulatory Impact Statement 

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 Social 

Security 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 this proposed rule does not 

reach the economic threshold for being 

considered economically significant, 

and thus, is not considered a major rule. 

We solicit comment on the assumptions 

and findings presented in this initial 

regulatory impact analysis. 

The proposed rule would extend the 

exception’s expiration date (currently 

set at December 31, 2013), update the 

provision under which electronic health 

records software is deemed 

interoperable, and remove the 

requirement related to electronic 

prescribing capability. Neither this 

proposed rule nor the regulations it 

amends requires any entity to donate 

electronic health record technology to 

physicians, but we expect these 

proposed changes to continue to 

facilitate the adoption of electronic 

health record technology by filling a gap 

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 

the August 2006 final rule (71 FR 45164) 

still pertains to this proposed 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: (1) in 2008, 

Congress passed the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA), Pub. L. 

110–275; (2) in 2009, Congress passed 

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; and (3) an increase over 

the past few years in the rate of 

electronic health record-based 

electronic prescribing capabilities. 

As discussed in more detail earlier in 

the preamble, section 132 of MIPPA 

authorized an electronic prescribing 

incentive program (starting in 2009) for 

certain types of eligible professionals. 

The HITECH Act authorizes us to 

establish Medicare and Medicaid 

electronic health record incentive 

programs for certain eligible 

professionals, eligible hospitals, and 

critical access hospitals. Also, the 

HITECH Act requires that eligible 

professionals under the Medicare and 

Medicaid electronic health record 

incentive programs demonstrate 

meaningful use of certified electronic 

health record technology, including the 

use of electronic prescribing. 

Specifically, the final rule of the Stage 

2 meaningful use (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 (CY) 2015 an 

eligible professional risks a reduction in 

the Medicare Physician Fee schedule 

amount that will otherwise apply for 

covered professional services if they are 

not a meaningful EHR user for an EHR 

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 record technology that 

advances their adoption and meaningful 

use. Lastly, according to ONC, 

electronic prescribing by physicians 

using electronic health record 

technology has increased from 7 percent 

in December 2008 to approximately 48 

percent in June 2012.7 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. Due 

to data limitations; however, we are 

unable to accurately estimate the level 

of impact the electronic health records 

exception has contributed to the 

increase in electronic prescribing. 

Therefore, we believe as a result of these 

legislative and regulatory developments 

advancing in parallel, the increase in 

the adoption of electronic prescribing 

using electronic health record 

technology will continue without 

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21314 Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Proposed Rules 

making it necessary to retain 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 $7.0 million to $34.5 million in any 

1 year. Individuals and States are not 

included in the definition of a small 

entity. The Secretary has determined 

that this proposed rule would 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 603 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 proposed rule 

would not have a significant impact on 

the operations of a substantial number 

of small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

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 proposed rule would 

have no consequential effect on State, 

local, or tribal governments or on the 

private sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Since this regulation does not impose 

any costs on State or local governments, 

the requirements of Executive Order 

13132 are not applicable. 

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 proposes to amend 

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 by: 

■ A. Revising paragraph (w)(2). 

■ B. Removing and reserving paragraph 

(w)(11). 

■ C. In paragraph (w)(13), removing the 

date ‘‘December 31, 2013’’ and adding 

the date ‘‘December 31, 2016’’ in its 

place. 

The revision reads as follows: 

§ 411.357 Exceptions to the referral 

prohibition related to compensation 

arrangements. 

* * * * * 

(w) * * * 

(2) The software is interoperable (as 

defined in § 411.351) at the time it is 

provided to the physician. For purposes 

of this paragraph (w), software is 

deemed to be interoperable if a 

certifying body authorized by the 

National Coordinator for Health 

Information Technology has certified 

the software to any edition of electronic 

health record certification criteria 

identified in the then-applicable 

definition of Certified EHR Technology 

in 45 CFR part 170, on the date it is 

provided to the physician. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: January 24, 2013. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: March 7, 2013 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2013–08312 Filed 4–8–13; 4:15 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Office of Inspector General 

42 CFR Part 1001 

RIN 0936–AA03 

Medicare and State Health Care 

Programs: Fraud and Abuse; 

Electronic Health Records Safe Harbor 

Under the Anti-Kickback Statute 

AGENCY: Office of Inspector General 

(OIG), HHS. 

ACTION: Proposed rule. 

SUMMARY: In this proposed rule, the 

Office of Inspector General (OIG) 

proposes to amend the safe harbor 

regulation concerning electronic health 

records items and services, which 

defines certain conduct that is protected 

from liability under the Federal antikickback statute in the Social Security 

Act (the Act). The proposed 

amendments include an update to the 

provision under which electronic health 

records software is deemed 

interoperable; removal of the electronic 

prescribing capability requirement; and 

extension of the sunset provision. In 

addition, OIG is requesting public 

comment on other changes it is 

considering. 

DATES: To assure consideration, 

comments must be delivered to the 

address provided below by no later than 

5 p.m. Eastern Standard Time on June 

10, 2013. 

ADDRESSES: In commenting, please 

reference file code OIG–404–P. Because 

of staff and resource limitations, we 

cannot accept comments by facsimile 

(fax) transmission. However, you may 

submit comments using one of three 

ways (no duplicates, please): 

1. Electronically. You may submit 

electronically through the Federal 

eRulemaking Portal at http:// 

www.regulations.gov. (Attachments 

should be in Microsoft Word, if 

possible.) 

2. By regular, express, or overnight 

mail. You may mail your printed or 

written submissions to the following 

address: Patrice Drew, Office of 

Inspector General, Department of Health 

and Human Services, Attention: OIG– 

404–P, Room 5541C, Cohen Building, 

330 Independence Avenue SW., 

Washington, DC 20201. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By hand or courier. You may 

deliver, by hand or courier, before the 

close of the comment period, your 

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