Stark raving mad: the red tape keeps on rolling

October 27, 2006

In the absence of countervailing action from an election-crazed Congress, the new federal rules allowing hospitals to help physicians acquire health IT went into effect Oct. 10. Under the new exception to the Stark self-referral law and a new safe harbor to the Anti-Kickback Law, hospitals and group practices can donate up to 85 percent of the value of EHRs, e-prescribing systems, and technical support to physicians under certain conditions (Medical Economics, "Feds to hospitals: It's OK to help docs get IT," Aug. 18, 2006).

In the absence of countervailing action from an election-crazed Congress, the new federal rules allowing hospitals to help physicians acquire health IT went into effect Oct. 10. Under the new exception to the Stark self-referral law and a new safe harbor to the Anti-Kickback Law, hospitals and group practices can donate up to 85 percent of the value of EHRs, e-prescribing systems, and technical support to physicians under certain conditions (Medical Economics, "Feds to hospitals: It's OK to help docs get IT," Aug. 18, 2006).

But, according to Modern Healthcare (Oct. 9, 2006), there's a fly in the ointment that has nothing to do with whether physicians want to accept what their hospital offers them. The publication notes that the IRS has recently "increased its oversight of tax-exempt hospitals after a spate of shady hospital-physician deals." While the IRS has merely said it's reviewing the situation with donation of health IT, some observers think it could raise the specter of inurement, which risks revocation of a not-for-profit hospital's tax exemption. So, until the IRS situation is approved, not-for-profits may tread gingerly in this area.