HHS Final Rule Overview: Disincentives for Health Care Providers That Have Committed Information Blocking

On June 24, 2024, the Department of Health and Human Services (“HHS”) released a final rule implementing disincentives for health care providers who are found by the Office of Inspector General (“OIG”) to have engaged in information blocking practices as defined under the 21st Century Cures Act. This rule establishes a framework for the Centers for Medicare & Medicaid Services (“CMS”) and the Office of National Coordinator for Health Information Technology (“ONC”) to impose penalties on providers that the OIG determines have committed information blocking. The final rule will be effective 30 days after the date of publication in the Federal Register.

In finalizing the disincentives, CMS clarified its role is to impose appropriate disincentives on health care providers upon referral from the OIG, and not to review or vary the amount of the disincentive based on the egregiousness of the practice of information blocking. Furthermore, the determination by the OIG that a health care provider has engaged in information blocking is not subject to review by CMS, and ONC does not have the ability to provide technical guidance or otherwise compromise the determination by the OIG. Finally, the ONC and CMS clarified their ability to impose disincentives is limited to existing programs, and thus utilized existing programs and their associated administrative processes.

The final rule outlines three key disincentives that may be applied by CMS:

1. Medicare Promoting Interoperability Program:
   1. If an eligible hospital does not demonstrate that it has met the requirements to be a meaningful EHR user under section 1886(n)(3)(A), CMS will reduce the eligible hospital’s payment by three-quarters of the applicable percentage increase in the market basket update, or rate-of-increase for hospitals;
   2. If a Critical Access Hospital (“CAH”) does not demonstrate that it has met the requirements to be a meaningful EHR user under section 1886(n)(3)(A), CMS will pay the CAH 100% of its reasonable costs instead of 101%, which is the amount that the CAH would have received as a meaningful EHR user under the Medicare Promoting Interoperability Program.
2. Merit-based Incentive Payment System (“MIPS”): If an eligible clinician or a group practice is referred by the OIG for information blocking, CMS will assign a zero score in the Promoting Interoperability performance category for MIPS-eligible clinicians or group practice.
3. Accountable Care Organization (“ACO”) – Medicare Shared Savings Program: In the event of a referral by the OIG for information blocking with respect to an ACO, ACO participant or ACO applicant, CMS will utilize flexibility to align the disincentive with the actor found to have engaged in information blocking, in some cases permitting the ACO to remove the participant or otherwise take mitigating actions. The disincentives for the ACO include denial of participation in the Medicare Shared Savings Program for one year. However, prior to CMS imposing any disincentive, it will take into consideration any evidence that indicates whether conduct that resulted in a determination of information blocking has been corrected and whether appropriate safeguards have been put in place to prevent its reoccurrence.

With respect to eligible clinicians who are participating in the MIPS program as part of a group practice, ONC indicated that it would disaggregate an individual MIPS-eligible clinician’s data from a group’s data if the OIG determines that only the individual MIPS-eligible clinician (and not the group) committed information blocking. ONC indicated that it would be seeking comment regarding how to effectuate this through future rulemaking.

The rule also establishes procedures for notification of disincentives and creates a framework for public transparency regarding actors found to have committed information blocking. This includes posting information about health care providers subject to disincentives and health IT developers or health information networks/exchanges determined to have engaged in information blocking on the ONC public website.

Finally, the rule clarifies several issues related to the timing and application of the disincentives. The OIG will exercise enforcement discretion not to make any determinations regarding conduct occurring prior to the effective date of the rule. A determination by the OIG that a health care provider has engaged in information blocking will have a duration of one year in recognition that providers that have corrected their practices should not continue to be penalized. With respect to practices occurring after the effective date of the rule, which are found to constitute information blocking, CMS will impose the disincentive two years following the referral from the OIG concluding that the practice constituted information blocking (e.g., practices occurring in 2024, investigated by the OIG and referred to the appropriate agency in 2025 would result in the application of the disincentive in 2027).

Implications and Considerations

1. Increased Scrutiny: Health care providers should expect heightened scrutiny of their information sharing practices and potential investigations by the OIG.
2. Financial Impact: The disincentives established by this rule could have significant financial implications for providers, particularly those heavily reliant on Medicare reimbursement.
3. Reputational Risk: The public reporting requirements create reputational risks for entities found to have engaged in information blocking.
4. Compliance Programs: Information Blocking is an intent-based regulation. Organizations should review and strengthen their compliance programs to ensure they have robust safeguards against information blocking practices.
5. Education and Training: Providers should implement comprehensive education and training programs to ensure staff understand information blocking prohibitions and the potential consequences of violations.
6. Technology Assessment: Organizations should conduct thorough assessments of their health IT systems and practices to identify and remediate any potential information blocking issues.
7. Documentation: Maintaining clear documentation of information sharing practices and decision-making processes will be crucial in the event of an investigation.

Practical Takeaways

This final rule represents a significant step in HHS’s efforts to enforce information blocking prohibitions and promote interoperability in the health care system. Health care providers, executives and compliance professionals should carefully review the rule’s provisions and take proactive steps to ensure compliance with information blocking regulations. As enforcement activities ramp up, staying informed about OIG’s investigative priorities and any further guidance from HHS will be essential for managing risk in this evolving regulatory landscape.

In light of the recent decision in Loper Bright Enterprises v. Raimondo, ending Chevron deference to federal agencies regarding their interpretation of the statutes they operate under, there may be an opportunity to challenge this final rule. If you are interested in a potential challenge, please contact us as we are gauging the level of interest within the health provider community and collecting information regarding the impact of this rule on health care providers and exploring potential avenues that may be available to address concerns.

If you have any questions or would like additional information about this topic, please contact: 

• Michael Batt at mbatt@hallrender.com or (317) 977-1417; 
• Jeff Short at jshort@hallrender.com or (317) 977-1413; 
• Stephane Fabus at sfabus@hallrender.com or (414) 721-0904; or
• Your primary Hall Render contact. 

Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.