The third shoe has dropped in giving hospitals federal blessing to subsidize the cost of providing electronic health records systems software and technical support to affiliated physicians as the Internal Revenue Service today ruled that HHS-approved IT contributions won't jeopardize the tax-exempt status of not-for-profit hospitals.
In August, HHS and the CMS issued rulings that hospital assistance to physicians for IT would be given safe harbor from federal anti-kickback laws, and would be granted an exemption from Stark laws prohibiting financial inducements for referrals.
The IRS decision came in the form of a
memorandum from Lois Lerner, director of the exempt organizations division of the IRS, to the directors of the ruling and agreements and the examinations sections of the division.
Lerner noted the decisions by HHS and the CMS that "some hospitals believe that their medical staff physicians need a financial incentive to acquire and implement EHR software that would allow the physicians to connect to the hospitals' EHR systems."
IRS spokeswoman Nancy Mathis said the memo was a "field directive," an internal document directing officials within the IRS how to carry out agency business. When it comes to the IT issue, "I think it is our final answer," Mathis said.
Tom Hyatt, a healthcare attorney with the Washington firm of Ober Kaler, said the ruling will be good news for some hospital leaders.
"I've got several systems that have contacted me periodically saying, has the IRS said anything yet? They've really been waiting for this to come down," Hyatt said.
"I think it is a very good thing," Hyatt said. "I think many systems have been developing electronic health records, but the key is getting the physicians into the loop. Many systems I'm familiar with have been on hold waiting, (wondering) whether there is going to be a private inurement problem. This is going to be a green light."
Lawrence Hughes, regulatory counsel for the American Hospital Association, agreed with Hyatt that the IRS ruling was clear enough that it should assuage hospital officials' legal worries about IT assistance.
"I think that the IRS statement is a good signal to hospitals that they can move forward with their IT arrangements with physicians and we are pleased that IRS moved so quickly," he said. "We brought the issue to the IRS very specifically in the fall."
Scott Wallace, president and chief executive officer of the National Alliance for Health Information Technology, a Chicago-based IT booster group, was upbeat about the impact the ruling would have on hospital IT sharing programs, saying without the IRS clarification, "The Stark revisions were kind of hollow.
"It was a huge issue and getting such a broad statement of support was important," Wallace said. "I think this is big. The providers want to connect physicians. They have a solid business rationale for doing this."
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