Kusserow on Compliance: OIG warns blocking EHR may be a kickback

As part of the National Health IT Week 2015, the HHS Office of Inspector General (OIG) issued a new Alert entitled “OIG Policy Reminder: Information Blocking and the Federal Anti-Kickback Statute.” In this Alert, the agency notes its long support of the adoption of electronic health record (EHR) technology.

Health information technology (IT) has been characterized as a critical part of the health care system and offers opportunities to improve patient care, make practice management more efficient, and improve public health. The OIG created the EHR safe harbor to the federal Anti-Kickback Statute (AKS) for certain arrangements involving donations of EHR items and services to potential referral sources. This safe harbor is intended “to protect beneficial arrangements that would eliminate perceived barriers to the adoption of EHR without creating undue risk that the arrangements might be used to induce or reward the generation of [federal health care program] business” (Final rule, 71 FR 45110, August 8, 2006). Donations that fit squarely within all of the EHR safe harbor’s conditions are not subject to sanctions under the AKS. However, the OIG has made clear that they are committed to investigating potentially abusive donation arrangements that purport to meet the safe harbor conditions, but, in fact, do not.

In the Alert, the OIG explains that “information blocking” places entities outside the EHR safe harbor, may implicate the AKS, and result in OIG investigation and prosecution. Such blocking impedes the appropriate flow of information across the care continuum and can undermine the benefits offered by health IT. If a donor, or someone on the donor’s behalf, takes any action to limit or restrict the use, compatibility, or interoperability of the donated items or services with other electronic prescribing or EHR systems, the donation arrangement would not receive safe harbor protection and would be suspect under the AKS.

The new OIG Alert includes examples of this type of concerning conduct, including cases where a provider, such as a hospital, may seek to furnish software or information technology to an existing or potential referral source, such as a physician practice. This kind of arrangement potentially implicates the AKS statute because the software or information technology is potential remuneration to the referral source. Arrangements involving the provision of software or information technology to a referral source should be scrutinized for compliance with the AKS. The safe harbor protects certain arrangements involving the provision of interoperable EHR software or information technology and training services.

The OIG noted that arrangements in which a donor takes an action to limit the use, communication, or interoperability of donated items or services by entering into an agreement with a recipient to preclude or inhibit any competitor from interfacing with the donated system would not satisfy the safe harbor requirements. Furthermore, arrangements in which EHR technology vendors agree with donors to charge high interface fees to non-recipient providers or suppliers or to competitors may also fail to satisfy the conditions of the safe harbor. These examples could be viewed as implicating the AKS and result in an investigation.

The Alert underscores the continued belief by the OIG that “any action taken by a donor (or any person on behalf of the donor, including the [EHR] vendor or the recipient) to limit the use of the donated items or services by charging fees to deter non-recipient providers and suppliers 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 qualify for safe harbor protection.” The Alert ends with a call for anyone having information about arrangements that potentially violate the AKS to contact the OIG.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.

FDA establishes farming standards to prevent contamination of produce

The FDA has established standards related to produce in an effort to reduce the impact of foodborne illnesses among consumers. These standards to not apply to produce that is usually not consumed raw, grown for personal consumption, or not a raw agricultural product. Additionally, produce that goes through commercial processing techniques that adequately reduce contamination is eligible for exemption. The Final rule will publish in the Federal Register on November 27, 2015. The FDA has also issued a final environmental impact statement that will publish along with the rule.


These standards, implemented under the Food Safety Modernization Act (FSMA) (P.L. 111-353), are intended to address the situations in which produce can be contaminated with microorganisms of public health significance during growing, harvesting, packing, or holding. The FDA has made changes after considering public comments following the Proposed rule in January 2013 and the supplemental notice of proposed rulemaking issues in September 2014.


The rule establishes criteria for microbial water quality. No detectable generic E. coli are allowed when it is reasonably likely that dangerous microbes would be transferred to the produce. This includes water used: for washing hands, for rinsing food-contact surfaces, in direct contact with produce (including water used to make ice), and for sprout irrigation. If generic E. coli is detected, the water use must be discontinued and corrective actions implemented. For water that is applied directly to growing produce, the FDA has established geometric mean (GM) and statistical threshold values (STV) for the permissible amount of E. coli. The rule also establishes standards for testing untreated water.

Soil amendments

At this time, the FDA considers adherence to the U.S. Department of Agriculture’s (USDA)’s National Organic Program standards for the application of raw manure as a soil amendment to be appropriate in minimizing the likelihood of contamination. The standards call for a 120-day interval between the application of this amendment and harvesting for crops in contact with soil, with a 90-day interval for crops not in contact. The agency is conducting extensive research on the risk of contamination and the number of days needed between application and harvesting.


Sprouts are particularly vulnerable to microbes and have been associated with outbreaks of bacteria. The rule contains standards specific to sprouts, such as preventing the transfer of microbes onto seeds used for sprouting and testing spent irrigation water for pathogens. The time frame for enforcing the standards for sprout operations will be shorter than for the other provisions of the rule.

Other provisions

Workers who are ill or infected must inform their supervisors of any health condition that may result in contamination. Visitors and workers must take measures to prevent contamination of produce and food-contact surfaces. Farm workers must be trained on health and hygiene. The rule includes standards related to sanitation of equipment, tools, and buildings. Farms that rely on grazing or working animals are required to identify and refrain from harvesting produce that is likely to be contaminated by these animals, similar to standards in place for intrusion by wild animals.

Environmental impact

The FDA identified four standards in the rule that could potentially significantly impact the human environment. The FDA considered implementing different GM and STV for water applied to growing produce. It also considered a range of standards for the application intervals for untreated and treated biological soil amendments as well as how farms would respond to domesticated and wild animals and alternatives to the general provision establishing which farms would be covered under the rule.

CMS clarifies user fee adjustment mechanism for contraception accommodation

Third-party administrators (TPAs) must submit the Notice of Intent Disclosure Form to CMS stating their intention to seek a user fee adjustment even though the original deadline has passed. CMS has issued answers to frequently asked questions for TPAs, pharmacy benefit managers (PBMs), and federally-facilitated marketplace (FFM) issuers who are seeking reimbursement for contraceptive services. The information that these parties must submit will allow CMS to determine the discount to be applied to the user fee paid for participation on the FFM (CMS FAQ, November 9, 2015).

User fee discount

The government has provided an accommodation for self-insured nonprofit religious organizations that object to the contraceptive coverage mandate found in sections 1001 and 1004 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Under the accommodation, the nonprofit or their TPA notifies HHS of the objection. The TPA will cover the contraceptive services and will contract with an FFM issuer. The FFM reduces the issuer’s marketplace user fee to account for the payment made to the TPA to cover the services. In order to receive this discount, FFM issuers and TPAs must submit certain information to CMS.


TPAs and PBMs must submit the notice of intent form by November 13, 2015, via email. FFM issuers seeking the 2014 benefit year adjustment should submit their spreadsheets by December 11, 2015. CMS will provide webinar training on completing the forms. The document contains instructions regarding recipient email address, subject lines, and attachments.

CMS clarifies that PBMs can enter in the same arrangements as TPAs to provide contraceptive services. PBMs must follow the requirements imposed on TPAs. However, if the TPA or PBM and the FFM issuer are part of the same entity or parent company, only the FFM should submit its spreadsheet. If the entities are separate, the TPA must submit its form indicating the total value of eligible paid claims.

The user fee discount is limited to the dollar amount of contraceptive claims. CMS intends to deduct the appropriate amount from the issuer’s monthly obligation at the end of the 2015 calendar year. The FFM issuer is also eligible for an additional 15 percent payment for administrative costs. Although CMS has not established reimbursement for TPA or PBM administrative costs, these groups may require that the FFM share part of its administrative payment.

Inpatient hospital and SNF deductible increases slightly for 2016

The annual inpatient deductible for calendar year (CY) 2016 will be $1,288, a $28 increase from the $1,260 CY 2015 deductible, according to an advance release of the CY 2016 inpatient hospital deductible notice from CMS. The Medicare Part A deductible covers patients’ shares of costs for the first 60 days of inpatient hospital care in a benefit period. The daily coinsurance amount for the 61st through 90th days of hospitalization will increase by seven dollars to $322 and the daily coinsurance for lifetime reserve days will increase by $14 to $644. Skilled nursing facility (SNF) coinsurance rates will increase by less than $4 to $161.00.

Percentage increase

The inpatient prospective payment system (IPPS) market basket percentage increase for 2016 is 2.4 percent and the multifactor productivity adjustment (MFP) is 0.5 percent. The percentage increase of IPPS hospitals that are meaningful users of electronic health records (EHRs) and submit quality data is 1.7 percent, while the average percentage increase for IPPS-excluded hospitals is 1.82 percent.

No comments requested

Per custom, CMS will waive notice and comment rulemaking in this matter, as the formulae used to calculate the hospital deductible and hospital and extended care services coinsurance amounts are imposed by statute. Furthermore, delaying publication would be contrary to the public interest. The notice will publish in the Federal Register on November 16, 2015.