Healthcare Alert: EMR donations violate Washington Anti-Rebate Statute

In an Attorney General opinion dated November 20, 2012, the Washington Attorney General ruled that the donation by a laboratory to a referring physician of 85 percent of the software cost of the physician’s electronic health record, when the physician either continued a referral arrangement with the laboratory or subsequently initiates a referral relationship with the laboratory, violates the Washington Anti-Rebate Statute. The Washington Anti-Rebate Statute (RCW 19.68.010) provides that it is unlawful to “request, receive, or allow, directly or indirectly, a rebate, refund, commission, unearned discount or profit by means of a credit or other valuable consideration in connection with the referral of patients . . .” The Washington Attorney General considered a donation by a laboratory to a referring physician for 85 percent of the electronic health record software expenses as well as a donation to a physician practice transferred its referrals to the donating laboratory. While such a donation can be structured to fall within the applicable exception under the Stark Law and the applicable safe harbor under the Medicare and Medicaid Anti-Kickback Law, the Washington Attorney General ruled that such a donation would still be in violation of RCW 19.68.010. 

The State Attorneys General of Missouri and Pennsylvania also have issued opinions that question the legality of EMR donations, and regulations in New Jersey and New York also place limitations upon EMR donations. Many states have fraud and abuse laws, and these recent Attorney General opinions raise the possibility that other state Attorney Generals could issue similar opinions.

For more information, please contact:

Jane Pine Wood
508.385.5227
jwood@mcdonaldhopkins.com

Healthcare Practice

McDonald Hopkins has a large and diverse healthcare practice, which is national in scope. The firm represents a wide variety of healthcare providers, facilities, vendors, technology companies and associations. Our diverse experience enables us to give our clients a unique perspective on the issues that may confront them in the rapidly evolving healthcare environment.

 

Carl J. Grassi, President
600 Superior Avenue, East, Suite 2100, Cleveland, Ohio 44114

Chicago 312.280.0111 Fax: 312.280.8232

Cleveland 216.348.5400 Fax: 216.348.5474

Columbus 614.458.0025 Fax: 614.458.0028

Detroit 248.646.5070 Fax: 248.646.5075

Miami 305.704.3990 Fax: 305.704.3999

West Palm Beach 561.472.2121 Fax: 561.472.2122

IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments), was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding any penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction matter addressed herein.