The Stark Law Effect. Driving EMR Adoption and Connectivity to Hospitals

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1 The Stark Law Effect Driving EMR Adoption and Connectivity to Hospitals 1

2 Stark Law, often referred to as the physician-referral law, has governed hospital and physician relationships for more than two decades with tight restrictions on what hospitals could and could not do regarding their relationship with referring physicians. The law, until recently, had made it especially difficult for hospitals to assist physicians in updating outdated methods of managing patient medical records adopting EMR technology. Times have changed, and as recent as 2006, the Stark law prohibitions have eased slightly to increase momentum toward interoperability and EMR adoption within the healthcare community. This new open door, granted by the Department of Health & Human Services Office of the Inspector General, brings a new world of interoperability once looked upon as a pipe dream. Given the exciting implications of these new guidelines, how should hospitals and physicians navigate these new waters of freedom to improve patient care with EMR adoption and connectivity? The Stark Law of Old Before the Stark Law revisions, hospitals operated with extreme caution as not to violate the prohibitions relating to conflicts of interest stated in the law. Among many restrictions, Stark Law prevented hospitals from having any financial ties to referring physicians who sent patients to their hospitals. Therefore, one of the largest roadblocks in the law was that it restricted hospitals from giving shared information technology to referring physician offices. While Stark Law helped maintain an even playing field, it put a stranglehold on achieving interoperability among hospitals and referring physicians. In the case of adopting much needed EMR systems, many physician offices have lagged behind due to the sheer cost of EMR hardware and software needed to connect with affiliated hospitals. A large percentage of physician offices continue with paper recordkeeping, with greater margins of error, diminishing the quality of patient care. It is not uncommon for physicians or hospitals to lack a complete patient medical history with these methods. With the new Stark Law in effect, what are the perspectives of hospital and physicians moving forward from a fragmented healthcare approach to an interoperable relationship? Let s examine what the new rules provide. 2

3 The New Rules of Stark Law Among the many objectives in revising the Stark law, one major motivation was to spur the growth of healthcare information technology between hospitals and physicians. Ideally, hospitals would progress toward interoperability with EMR adoption, albeit with their referring physicians in tow. However, though restrictions are eased, there remain certain parameters to be followed within the new guidelines. Physician offices are still required to pay for EMR hardware; however, they may only have to pay 15 percent of the cost of EMR software 1 hospitals can pick up the tab for the remaining amount. The most promising changes, under the new Stark law, are the vital connections needed to link hospitals and physician networks together. Hospitals may now pay for the creation of an electronic interface between unique electronic health record (EHR) systems of individual physician practices and the hospital network s EHR system. The interface would allow physicians, from their practices, to order and communicate the results of tests and procedures performed. 2 In addition, hospitals may cover the cost of training for the software and connection services. 1 Picking Up The Check for EMRs, Government Health IT, November 5, Susan Van Meter, CMS Advisory Opinion Allows for Greater Electronic Health Information Exchange, HANYS News. 3

4 Below is a summary of services that may be provided to physicians by hospitals according to the revised law. 3 EHR Software Interface and Translation Software Connectivity Services Broadband and Wireless Patient Administration, Scheduling, and Billing Maintenance Services Training and Support Services Clinical Support and Information Services Related to Patient Care Though the changes in law are for the better, there are still many things to be considered like whether hospitals will fund the installations of EMR software for referring physicians, and what connectivity approach will be used to efficiently transfer data between EMR systems. Hospitals and EMR Adoption Challenges In almost two years since the new Stark Law took effect, hospitals are just beginning to warm up to the loosening of the regulatory collar to subsidize cost in upgrading referring physician networks with needed EMR technology. Fearful of overstepping their boundaries due to heavy fines proposed by the law, many hospitals are still hesitant about what they can and cannot donate to physicians. 3 HIMSS Webinar, June 17, 2008, So You Want to Provide IT to Your Referring Physicians? Part II Alternatives to The New Technology Donation Rules, 4

5 A statement by Chantal Worzala, senior director for policy with the American Hospital Association in Hospitals & Health Networks, reveals many hospital positions on the relaxed restrictions. Hospitals are in the consulting phase right now, trying to understand what they can or can t do. Hospitals certainly want to move ahead, and I imagine quite a few will, but it will take time to see if this is really happening. It s a complicated set of rules, with pretty significant penalties for violations. Aside from being compliant with the new law, many hospitals and physicians site cost as a major challenge. A number of studies suggest that the single biggest barrier to adoption of electronic records is upfront cost. 4 Most physicians just do not have the outright funds to purchase an EMR system. Even as recently as 2006, only 17 to 24 percent of physicians had access to an EMR. 5 Furthermore, hospitals, particularly smaller providers, either lack or are hesitant about providing funds for physicians to acquire EMR software. Many hospitals also have reservations given the burden of continued support to keep the physician s EMR system running. Given the challenges of initial cost, and ongoing support, the cost of remaining static in a generation of increasing integration will ultimately be much higher. Paper recordkeeping is an obsolete way in handling vital patient medical records. To continue operating in this manner will only put hospitals and referring physicians at a greater disadvantage in offering competitive, quality patient care. This fragmented approach to healthcare is what the new Stark law seeks to change. To encourage defragmentation for increased participation in EMR adoption, the federal government issued a Safe Harbor amendment to the Stark regulations. This provision allows hospitals to donate hardware, software, internet connectivity, and training and support services to physicians without threat to the tax-exempt status of a hospital donor. As a note, these items and services must be necessary and used predominately to create, maintain, transmit or receive patient clinical information. 4 John Pulley, Picking up the check for EMRs, November 26, 2007, 5 Following The Rules: What Boards Need to Know About Regulatory Issues B.E. Smith 5

6 This Safe Harbor is meant to encourage hospitals, particularly in competitive markets, to offer EMR capability to physicians as a means to bond physicians to hospitals, creating a powerful virtual group through a common medical record. This would provide more opportunity to negotiate favorable rates with payers, and/or demonstrate the quality data necessary to support pay-for-performance. 6 Although with caution, many hospitals are moving forward in becoming interoperable among their physician networks. A recent article by Inside Electronic Medical Records titled Hospitals Take Tentative Start EMR Steps, Struggle with Charging Overhead to Doctors, discusses various approaches hospitals are taking toward EMR adoption in respect to referring physicians. The article highlighted two examples: 1. St. Francis Care in Hartford, Connecticut, is offering their physician community an EMR through the ASP model hosting the EMR centrally for their physician community is the key to their approach. 2. Hoag Memorial Hospital Presbyterian of Newport Beach, California, is offering their referring physicians 3-4 EMR options choice is a key component of their approach. This is good news for interoperability within the Healthcare IT community. Moving Forward with EMR Connectivity With or without Stark Law, EMR adoption is moving forward. A recent study by GE Healthcare shows promising news. In a blind study of 200 physicians, 57 percent of the physicians would acquire an EMR system in the next year and 62 percent would do so in the next three years. With the acquiring of new EMR systems, there will be a need for robust connectivity and communication solutions between hospital information systems and unique Physician EMR systems. What connectivity solution should hospitals deploy in connecting EMR systems? Cost, installation and support, and scalability should be considered when adopting the right 6 Hospital-Physician Clinical Integration. The American Hospital Association s Center for Healthcare Governance. 6

7 connectivity solution. Yet, a robust solution is needed to handle this capacity of data exchange while keeping cost at a minimum. What is your EMR connectivity solution? High Connection Responsiveness Rigid, Costly Rigid, Delayed Adaptive, Productive Adaptive, Productive Low Connection Flexibility High Low The above diagram outlines the various EMR connectivity approaches referenced in What is Your EMR Connectivity Strategy 7. Essentially, two questions can define the appropriate approach to take: 1. How responsive do you want to be in establishing EMR connections? 2. How flexible do you want to be in adapting to the different data specifications? The approach that your organization takes to implement interfaces to a referring physician s EMR will translate into how your organization is viewed by that physician. Establishing close, long-term relationships can sometimes be challenging, but the 7 Corepointhealth.com 7

8 interface approach taken will be a determining factor in the success of the physician relationships and the success of the EMR support strategy. Let us quickly review the EMR connectivity solutions available to hospital and physician networks to improve patient care. Options in EMR Connectivity Three major approaches to connectivity are currently available: Point-to-Point, Interface Engine, and Web Services-Based Communication. Outlined are some of the advantages and drawbacks in selecting a particular connectivity strategy. Approach Advantages Disadvantages Point-to-Point Easy to implement for one or two interfaces No monitoring of interface Unmanageable in larger numbers Completely dependent on application vendor schedules for development, testing, and implementation Interface Engine Reduces interfacing costs Leverages data and workflow logic between similar EMRs Usually involves VPNs which can cause manageability challenges with hundreds of sites Monitors interface environment proactively 8

9 Web Services- Based Integration and Communication Reduces manageability costs by utilizing secure web service communication Requires a software agent or web access at the remote location Leverages interface engine platform Able to monitor interface connections from any location Defining a Shared EMR Strategy Regardless of the approach, hospitals need to define their EMR strategy with respect to their referring physician community. Three options seem to rise to the top. 1. Provide financial assistance for EMR only 2. Provide financial assistance for EMR electronic data exchange only 3. Provide financial assistance for both EMR and electronic data exchange Although the amount of financial assistance ultimately provided within each option may vary, the initial strategic decision is fundamental. EMR only Strategy Hospitals can easily take advantage of the Stark Law changes and deliver an approach to offering an EMR within the guidelines to the referring physician community. The pros and cons of this strategy are: 9

10 Advantages Disadvantages Drives further adoption of EMR applications Begins to place the patient s medical history into an electronic format Creates islands of information that is not tied together efficiently May be able to foster some electronic communication of patient history Limits hospital financial responsibility to EMR software and support only Electronic Data Exchange only Strategy In this approach, hospitals only offer to support the connectivity between the physician practice and their operations. The practices will go through their own EMR selection, implementation, and support processes. When they are ready to connect, the hospitals can offer the support for the results and orders electronic interfaces and communication. The pros and cons to this strategic approach are: Advantages Disadvantages Provides a last mile approach electronically connect from physician practice to hospital Limits hospital financial responsibility to integration platform and approach only Slows the implementation of a connected physician community need each clinic to select and implement an EMR on their own Increases the number of differing EMR applications the hospital may need to interface with 10

11 Both EMR and Electronic Data Exchange Strategy The hospital does it all for their physician community. By supporting both an EMR and connectivity approach, the hospital is fostering the complete picture of connected healthcare. The pros and cons of the complete approach are: Advantages Disadvantages Facilitates adoption of hospital-supported EMR systems Raises the hospital s commitments financial, technical, etc. Creates a complete connected environment More accurate patient clinical data from initial visit to patient discharge Summary The technology to make EMRs interoperable with internal hospital systems is here, but cost and productive enablement have always been the primary barrier to physician and hospitals moving forward toward an integrated approach. Now that Stark Law has eased restrictions, hospitals and physician networks can work together and share cost to create a more patient-centered, unifying experience to healthcare. Selecting the right EMR strategy to leverage the new connected physician networks is the essential first step. Resources Stark Law Centers for Medicare & Medicaid Services (CMS) 11

12 About Corepoint Health Corepoint Health solutions deliver interoperability for healthcare organizations and simplify the complexities of healthcare data through practical software applications, consulting and training. Our innovative and proven software solutions leverage clinical data flow efficiently for a diverse group of healthcare entities including hospitals, imaging centers, laboratories, clinics and healthcare vendors. This next generation approach to healthcare data and streamlined workflow is where Corepoint Health specializes in helping customers discover the power of integration. Corepoint Health 6509 Windcrest Drive Suite 160B Plano, Texas Corepoint Health. Corepoint Health is not responsible for errors in typography or photography.

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