Can a Tennessee clinical laboratory pay 85% of a doctor's electronic health records software cost if that doctor sends specimens to the lab for analysis?

Subject

Opinion No. 13-16, Donations for Electronic Health Records Software by Clinical Laboratories, March 4, 2013

Plain-English summary

Sen. Doug Overbey asked whether a licensed clinical laboratory could donate up to 85% of a physician's electronic health records (EHR) software cost when the physician's office continued or began sending specimens to that laboratory. The Attorney General answered no under Tenn. Code Ann. § 68-29-129(7).

That section prohibits soliciting specimen referrals or contracting to examine specimens “in a manner that offers or implies an offer of rebates” to those submitting specimens, fee-splitting inducements or arrangements, or other unearned remuneration. The opinion says the prohibition reaches explicit and implicit financial incentives. It concludes that the proposed monetary donation in either referral scenario would be unlawful.

The opinion also explains why the qualified federal EHR donation safe harbor at 42 C.F.R. § 1001.952(y) does not change that Tennessee-law answer. The federal provision protects certain donations from a federal anti-kickback statute under defined circumstances, but its authority does not preempt state anti-kickback laws.

The senator's second question asked whether increased or newly initiated referrals after a permissible donation would themselves violate § 68-29-129(7) or trigger a board investigation. Because the answer to the first question was no, the Attorney General pretermitted the second question. The opinion gives no separate analysis of later referrals.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What this means for you

If a laboratory is considering the EHR donation described in the question, this opinion concludes that the federal safe harbor does not make the arrangement lawful under the Tennessee Medical Laboratory Act. It addresses a monetary donation to a physician whose office continues or starts specimen referrals to the donor laboratory. It does not evaluate a different donation structure or answer the separate question about later referrals.

Common questions

Does compliance with the federal EHR safe harbor settle the Tennessee-law question?

No. The opinion says the federal safe harbor's legal authority does not preempt Tenn. Code Ann. § 68-29-129(7). It therefore applies that state provision to the proposed donation.

Does the answer change if the physician starts referring specimens only after receiving the donation?

The first question included both an existing referral arrangement and one initiated after the donation. The Attorney General concluded that the proposed donation was prohibited in either scenario.

Did the Attorney General decide whether a later increase in referrals is a separate violation?

No. The opinion expressly pretermitted the second question, which asked about increased or newly initiated referrals following a permissible donation. It makes no finding that those referrals are evidence of inducement or a separate violation.

Does this opinion approve a different way to fund EHR software?

No. It analyzes the monetary donation and referral circumstances posed in the question. It does not evaluate other arrangements.

Citations

• Tenn. Code Ann. §§ 68-29-101 to -138 (Tennessee Medical Laboratory Act)
• Tenn. Code Ann. § 68-29-129(7) (provision applied to the proposed donation)
• 42 C.F.R. § 1001.952(y) (qualified federal EHR safe harbor)
• 71 Fed. Reg. 45114 (authority for that safe harbor)
• Garrison v. Bickford, 377 S.W.3d 659 (Tenn. 2012) (statutory construction)
• Wash. Att'y Gen. Op. 7, 2012 WL 7148193 (Nov. 20, 2012) (state-law preemption comparison)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2013/op13-016.pdf

Original opinion text

S T A T E O F T E N N E S S E E
OFFICE OF THE
ATTORNEY GENERAL
PO BOX 20207
NASHVILLE, TENNESSEE 37202

March 4, 2013

Opinion No. 13-16

Donations for Electronic Health Records Software by Clinical Laboratories

QUESTIONS

1. Pursuant to Tenn. Code Ann. § 68-29-129(7), may a clinical laboratory licensed by the State of Tennessee lawfully make a monetary donation to a physician to cover up to 85% of the cost of software designed to manage the physician's electronic health records (EHR) when the physician's office that receives the EHR donation either continues an existing referral arrangement with the donating laboratory or subsequently initiates an arrangement for referral of specimens to the donating laboratory for analysis?

2. If such donations are permissible under Tenn. Code Ann. § 68-29-129(7), would either an increase in specimen referrals or a subsequent initiation of specimen referrals by the physician recipient who orders laboratory services from the donating laboratory be a violation or a potential violation of the above section and thus be subject to investigation by the Tennessee Medical Laboratory Board?

OPINIONS

1. No. Tenn. Code Ann. § 68-29-129(7), which is part of the Tennessee Medical Laboratory Act, prohibits any person from soliciting the referral of specimens to such person's (or to any other) medical laboratory or from contracting to perform medical laboratory examinations of specimens "in a manner that offers or implies an offer of rebates to a person or persons submitting specimens, other fee-splitting inducements, participation in any fee-splitting arrangements, or other unearned remuneration." This provision would prohibit a licensed medical laboratory from making any monetary donation to a physician to cover the cost of software designed to manage the physician's electronic health records (EHR) when the physician's office that receives the EHR donation either continues an existing referral arrangement with the donating laboratory or subsequently initiates an arrangement for referral of specimens to the donating laboratory for analysis.

2. The response to question one pretermits the need to answer question two.

ANALYSIS

1. The Tennessee Medical Laboratory Act, codified at Tenn. Code Ann. §§ 68-29-101 to -138 (hereinafter "TMLA") is intended, among other things, "to protect the public health, safety, and welfare of the people of this state from the hazards of improper performance by medical laboratories." Tenn. Code Ann. § 68-29-102(a). The TMLA at Tenn. Code Ann. § 68-29-129 enumerates various prohibited acts. Specifically, Tenn. Code Ann. § 68-29-129(7) provides that it is a violation of the TMLA for any person to:

Solicit the referral of specimens to such person's or any other medical laboratory or contract to perform medical laboratory examinations of specimens in a manner that offers or implies an offer of rebates to a person or persons submitting specimens, other fee-splitting inducements, participation in any fee-splitting arrangements, or other unearned remuneration.

(emphasis added).

The prohibition of Tenn. Code Ann. § 68-29-129(7) is unambiguous, and thus the plain meaning of the statute must be followed. See, e.g., Garrison v. Bickford, 377 S.W.3d 659, 663 (Tenn. 2012) (stating the rule of statutory construction that, if the language of a statute is unambiguous, then a court is required to "apply the plain meaning of the words used in the statute" and to presume that the General Assembly intends to give each word its full effect). This "anti-kickback" provision prohibits any explicit or implicit financial incentive to solicit a referral of specimens to a medical laboratory by a person or to contract to perform medical laboratory examinations of specimens. Thus even the implication of an offer by a medical laboratory or other entity listed under Tenn. Code Ann. § 68-29-129(7) of a rebate, fee-splitting inducement, fee-splitting arrangement or "other unearned remuneration" to a person or persons submitting specimens is prohibited. Accordingly, a medical laboratory licensed by the State of Tennessee may not lawfully make a monetary donation to a physician to cover the cost of software designed to manage the physician's electronic health records (EHR) when the physician's office that receives the EHR donation either continues an existing referral arrangement with the donating laboratory or subsequently initiates an arrangement for referral of specimens to the donating laboratory for analysis.

The qualified federal "safe harbor" for EHR donations by clinical laboratories at 42 CFR § 1001.952(y) does not preempt state anti-kickback laws such as Tenn. Code Ann. § 68-29-129(7). This federal safe harbor rule, which is scheduled to sunset on December 31, 2013, does allow certain medical professionals to receive EHR software donations under defined circumstances without violating a federal anti-kickback statute. 42 C.F.R. § 1001.952(y). See also OIG Advisory Opinion No. 12-19, 2012 WL 7148095 (Nov. 30, 2012). However, the legal authority for the EHR safe harbor does not extend to preempt State anti-kickback laws. See 71 Fed. Reg. 45114 (stating that the legal authority for the EHR donation safe harbor is derived from section 1128B(b)(3)(E) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. 108-173, which does not provide authority to preempt state anti-kickback laws). See also Wash. Att'y Gen. Op. 7, 2012 WL 7148193 at *5 (Nov. 20, 2012) (reaching same conclusion in finding that Washington's anti-kickback provisions were not preempted by federal law).

2. The second question is pretermitted by the above response to question one.

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

SARA E. SEDGWICK
Senior Counsel

Requested by:

Doug Overbey
State Senator, 8th Senatorial District
4 Legislative Plaza
Nashville, Tennessee 37243