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The Push For Electronic Medical Records Technology: Where are We Now?

March 13, 2007

In the last few years, there has been a significant level of interest in, and commitment to, the creation of electronic medical records and making those records accessible to a defined group of users, such as all those involved in the treatment of the patient ( i.e., for the purpose of improving the quality, safety and effectiveness of health care). Such interest and commitment have been exhibited by various stakeholders, at all levels, including federal and state government as well as the private sector. In fact, in the last few years, we have seen a number of significant policy and legal developments that are intended to advance the goal of electronic medical records. This article briefly summarizes these developments and comments on the legal challenges to moving this new effort forward. 

Stark & Antikickback Developments
At the national level, the most critical development occurred on August 8, 2006, when the Centers for Medicaid and Medicare Services (CMS) and the Office of Inspector General, both of the U.S. Department of Health and Human Services (HHS), issued final rules under the Stark and Antikickback laws, respectively. These final rules permit entities, such as hospitals, to donate ( i.e., furnish for below market value), certain health information technology (HIT) to referral sources, such as physicians. Under the new rules, entities may furnish HIT for electronic prescribing and electronic health records and removes one hurdle in the move toward electronic medical records.

Wisconsin Developments & Initiatives
At the state level, on November 2, 2005, Governor Jim Doyle established the eHealth Care Quality and Patient Safety Board to review and make recommendations on issues surrounding the creation of an e-health information infrastructure in Wisconsin and to develop guidance for the users of such infrastructure. On January 25, 2007, Governor Jim Doyle also announced he would include $30 million in his proposed budget to fund grants and provide tax incentives to increase the use of electronic medical records in Wisconsin.

As a result of the move toward electronic medical records, various stakeholders in the health care industry have joined together to expand the electronic medical record into an electronic health information exchange system, whereby defined groups of users from various systems and from different parts of the health care industry, may access and view information from the record. These stakeholders include health care providers, health insurers, and employers. One organization, the eHealth Initiative, an independent non-profit organization, reports a total of 165 electronic health information exchange initiatives across the country. Such initiatives span 49 states, the District of Columbia and Puerto Rico. Initiatives in Wisconsin include, for example, the Wisconsin Health Information Organization and the Wisconsin Health Information Exchange.

Undoubtedly, all of these developments have brought the health care industry closer to the ultimate goal of electronic medical records, as well as electronic health information exchanges.

Remaining Legal Challenges
Despite the advancements that have been made, however, we are still a long way from a truly paper-less medical record. Not surprisingly, some of the challenges that must be overcome are legal in nature. First, the exceptions and safe harbors of the Stark and Antikickback laws are fairly limited and do not allow physician offices to receive HIT items that are necessary for creating, maintaining or accessing an electronic health record, such as computer hardware. This could be a major impediment for smaller physician offices that cannot afford to purchase or upgrade existing hardware.

Second, the exceptions and safe harbors under Stark and Antikickback do not preempt state law, meaning that organizations in states with mini-Stark or Antikickback law provisions would be operating without complete assurance that donated HIT would not be subject to prosecution under state law.

Finally, donors that are tax-exempt must be mindful that their provision of HIT does not constitute private inurement or private benefit to any individual under federal tax-exempt laws. While there is a strong public policy in favor of electronic medical records, the IRS has not issued any guidance on the furnishing of HIT for below market value by non-profit entities. Recent legislation introduced in Wisconsin would create income and franchise tax credits for the purchase of certain information technology equipment by health care providers and health facilities. In particular, a health care provider could claim a credit equal to 50 percent of the amount the provider paid in the taxable year for information technology hardware or software that is used to maintain medical records in electronic form. The full text of Wisconsin Assembly Bill 111 is available at (

Until these legal challenges are removed, the move toward electronic medical records and electronic health information exchanges will be impeded. We will continue to analyze and report on developments on this issue.

If you would like more information on implementing a program to provide electronic medical records technology and navigating the related regulatory concerns, please contact Choua Vang (920- 831-6351 or or another member of our Godfrey & Kahn Healthcare Team.

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