As of 2010, only  25% of physician offices and 15% of acute care hospitals were taking advantage of Electronic Health Records technologies;  this is due in part  to barriers relating to lack of capital, the alteration of workflows, and the lack of an interoperable infrastructure to securely exchange health information. However, the creation of Medicare and Medicaid EHR  Incentive Programs have contributed to a rapid and widespread surge of activity by providers in purchasing and implementing certified  EHR systems. This is true especially among  providers who are seeking to achieve the Stage I of Meaningful Use in time to qualify for 2011 incentive payments (deadlines to register and attest  are November 30, 2011 for hospitals and February 29, 2011 for eligible providers).  Most providers are also aware that they will face payment reductions after 2015 if they do not meet Meaningful Use requirements.

The increase in adopting EHR has also been coupled with an increased level of donation of EHR systems by hospitals and other entities that bill for designated health services, such as  pharmacies, laboratories (but not in NY), and health plans.  While a federal Stark exception  and Anti-Kickback safe harbor for e-prescribing and EHR donations have been around since 2006, the upswing in technology adoption has caused donors to establish donation programs now  so that EHR technology can be donated to providers before the December 31, 2013 sunset.

Donation programs  must be organized so that the selection of recipients is made in a reasonable and verifiable manner, not directly taking into account the volume or value of referrals or other business generated between the parties.   Donors must structure their contractual arrangements (under which they may donate up to 85% of “covered” technology in which  EHR function predominates)  in accordance with federal regulations including IRS rules for tax-exempt entities, and state laws/regulations.  Donation transactions typically involve a provider’s obtaining technological items and services  through either  a) license/sublicense from the donor pursuant to a master agreement between a donor and a vendor,  or  b)  direct purchase  from a vendor appropriately subsidized by a donor.   

Federal regulations require a written agreement between the donor and recipient which specifies the items and services provided  as well as the donor’s costs and the recipient’s contribution. 

Practical considerations usually result in a three-way agreement between the vendor, donor, and recipient. This covers payment arrangements and termination, incorporating any  other two-way agreements, and ensuring that the recipient’s 15% share is paid in advance of the donor’s 85% share. Because all three participants have access to Protected Health Information, Business Associate Agreements which meet current regulatory standards  are also required.  Any EHR technology purchased must be capable of implementing  and verifying the measurement of a provider’s achievement of the Meaningful Use Core Objectives and Clinical Quality Measures; a central consideration which should impact the representations and warranties made in the transaction documentation.