IRS to allow NFPs to give financial aid for EHRs

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.”

{The IRS ruling that allows hospitals and insurers to ‘gift’ doctors with electronic medical records systems has a very dark underside: it facilitates the data mining of all the medical records of that physician’s patients without consent. By contract, these software systems illegally grant the software company itself, insurers, and/or hospitals the right to data mine ALL the records of any physicians who use their electronic system. This means that patients who are NOT insured by the health plan that ‘gifted’ the electronic records system to the doctor or who were never admitted to the hospital that ‘gifted’ the electronic records system to the doctor will still have their personal health information data mined by the insurer or hospital. These ‘gift’ electronic records systems are actually a ‘gift’ of YOUR personal health records to corporations. Physicians who accept these ‘gift’ electronic records systems are violating medical ethics. ~ Dr. Deborah Peel, Patient Privacy Rights}