Many hospitals that were granted partial exemptions by the United States Department of Health and Human Services from federal fraud laws that had prohibited them from donating health IT tools still have not offered less expensive software and electronic health records to physician practices, because they are worried about losing their tax-exempt status with the Internal Revenue Service, Computerworld reports.

HHS in August 2006 granted hospitals partial exemptions from federal anti-kickback statutes, which allowed hospitals to sell Electronic Health Records (EHRs) and electronic prescribing software for 15 percent of the cost of the products to smaller physician practices and individual physicians, according to Computerworld.

John Morrissey, director of knowledge at the National Alliance for Health IT in Chicago, said the IRS has not yet responded to a request from the American Hospital Association for more guidance on the issue, Computerworld.
Liesa Jenkins, executive director of CareSpark, an organization that is developing an electronic network to connect providers in 17 counties in Tennessee and Virginia, said that most of its 18 affiliated hospitals are waiting for IRS approval before providing financial assistance so they do not lose their not-for-profit status, the technology magazine reported.

John Blair, president of Taconic IPA, said physicians "are stepping back and waiting before buying now, because there may be some additional financial relief on the horizon."

For other hospitals, however, the financial burden of providing the EHR software is a greater obstacle than HHS or IRS regulations, Computerworld says.

Pat Taffe, CIO at North Memorial Health Care in Robbinsdale, Minn., said that the HHS exemption "just shifts the burden from the small independent providers to large hospitals and health systems. We may be larger. However, we aren't financially any better off" (Havenstein, Computerworld, 1/8).

Source: Healthcare Information and Management Systems Society

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