On May 31, 2017, the U.S. Department of Justice announced a $155 million settlement with electronic health records (EHR) company eClinicalWorks (eCW). The settlement resolved allegations that eCW violated the False Claims Act (FCA) by falsely certifying that its software included certain design features and functionality. The settlement marks the first resolution of an FCA case related to an incentive program that has made over $30 billion in Medicare and Medicaid incentive payments available to health care providers to promote the use of EHRs and raises questions about the potential exposure of EHR companies to FCA liability as a result of issues with software design and functionality.

Shortly after the eCW settlement was announced, the Department of Health and Human Services (HHS), Office of Inspector General (OIG) issued an audit report (the OIG report) estimating that the Center for Medicare and Medicaid Services (CMS) paid $729.4 million in EHR incentive payments to health care providers who did not meet the criteria for demonstrating meaningful use of their EHR technology and were thus not entitled to such payments. The primary issue cited in the OIG report is the inability of the health care providers to provide documentation supporting their attestations that they met the requirements to establish meaningful use of their EHR software.

The eCW settlement and the OIG report will likely prompt a significant increase in enforcement activity related to EHR incentive payments. We review these developments, their ramifications, and steps EHR companies and health care providers can take to protect themselves from liability related to EHR incentive payments below.

Medicare, Medicaid Incentives

In 2009, to promote the adoption of EHRs, as part of the Health Information Technology for Economic and Clinical Health Act (HITECH Act), Congress created an incentive program under Medicare and Medicaid to reward health care providers for adopting and demonstrating meaningful use of certified EHRs. Under the incentive program, physicians and other eligible professionals such as dentists and podiatrists are eligible for a total of up to $43,720 over five years from Medicare or $63,750 over six years from Medicaid.