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November 16, 2006
HIT Perspectives | Guess the IRS Didn't Get The Memo ...
HIT Perspectives: Guess the IRS Didn't Get The Memo.
Guess the IRS Didn't Get The Memo
by Tony Schueth, Managing Partner
Guess the Internal Revenue Service (IRS) didn't get the memo that the Federal government would like to encourage physician adoption of ePrescribing and electronic health records.
In August, the US Department of Health and Human Services (HHS) Office of the Inspector General (OIG) and the Centers for Medicare and Medicaid Services (CMS) issued two final regulations aimed at allowing hospitals and certain other organizations to provide ePrescribing and electronic health records (EHRs) to physicians without fear of violating anti-kickback laws. The final rules created new exceptions and "safe harbors" to two federal fraud-and-abuse laws for arrangements involving the donation of certain electronic health IT and services.
Apparently that is fine, unless you’re a hospital with tax-exempt status. According to an article published in the November 14 issue of Today in eHealth Business, the IRS told American Medical News that donations of computer equipment may endanger a hospitals’ tax exempt status. Apparently the agency’s regulations only permit tax-exempt organizations to make donations that have "a public benefit or help them further their charitable missions," and the IRS hasn’t decided if donations to physicians would be seen as having a private benefit instead. Robert Belfort, co-chair of the health care practice at Manatt, Phelps and Phillips, says he expects hospitals to get a “private letter ruling” from the IRS. This document spells out the agency's position on a particular situation, according to the publication.
This issue has been discussed extensively but no organization has taken a position on it yet. The benefit to physicians could be seen as merely "incidental" to the bigger picture community benefit brought about by a hospital investing in information systems.
Word is, there has been a great deal of angst this year brought about by Sen. Charles Grassley, R-IA, and others turning up the heat on oversight of tax-exempts, questioning whether they are providing enough charity and other community benefit, and whether they are giving too much to physicians. Maybe HHS Secretary Mike Leavitt, Sen. Grassley and IRS Commissioner, Mark Everson, should chat about President Bush’s 10-year objective for interactive electronic health records that was announced in June 2004. From a timing standpoint, it seems like they might do so before next year's State of the Union address, since President Bush has mentioned EHRs in his last two such speeches.
Unless the IRS issues some sort of ruling, hospitals may think twice before proceeding with giving non-employed physicians technology. We’ve been told that “private letter rulings take time and clients often don't have the stomach to go through that process. Unfortunately they may instead just choose not to go down that path and put their resources elsewhere.
That would be a shame. Relaxing Stark and creating anti-kickback “safe harbors” were together a strategy that HHS devised as early as 2003 to encourage adoption of EHR technology, support the President's objective and encourage ePrescribing in support of the MMA.
Posted by cmayaud at 12:31 AM | Permalink| Comments (0)
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