A contractual dispute between an electronic health records (EHR) vendor and a federally qualified community health center based in Milwaukee over access to, possession of, control over electronic patient medical records demonstrates the need to negotiate EHR vendor contracts carefully for foreseeable legal risks.

In this case, a dispute over amounts claimed to be due the vendor led to the EHR vendor terminating remote access to the health center’s EHR records for patients. While it is not unusual in the medical billing arena for billing management companies involved in a dispute to withhold funds collected or limit access to past or current billing records as leverage, the Milwaukee dispute has tremendous ramifications for providers and EHR vendors.

In particular, providers are increasingly contracting with EHR vendors for “hosting” of their medical records systems and sites and/or storing the medical records information “in the cloud.” As a result, vendor control over the medical records of patients needed by providers to permit ongoing patient care raises implications for all providers who utilize outside EHR vendors as did this health center. Furthermore, patients and their physicians need access to such records for referrals and inpatient admissions.

Fairly obvious scenarios that could arise from medical records being unavailable include the potential for claims by patients for lack of access to their medical records under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and state law, and a real risk of a breakdown in the continuity of care, leading to claims for medical malpractice. Access to records needed for utilization and quality purposes by payors responding to audits by government programs and the need for medical documentation to demonstrate medical necessity for claims processing are additional risks to any organization denied access to its patients’ medical records. There may even be potential violations arising from the Business Associate Agreement (BAA) between the covered entity and the business associate. If the BAA is deemed terminated (which many do upon contract termination) and if the medical records continue in the control and possession of the EHR vendor, it raises the issue of the relationship of the covered entity and the EHR vendor under HIPAA.

What can providers and EHR vendors do to limit a similar drama unfolding with their EHR relationships? One can expect that similar vendor/provider disputes may erupt as prior allegiances fade, with the predicted consolidation in the EHR vendor industry, issues surrounding interoperability among EHR vendor systems, and the difficulties in complying with future meaningful use requirements.

Some suggestions for provider/EHR vendor contractual negotiations are:

• Consider fast-track mediation or arbitration provisions which reduce the risk of delay in courts. Without a fast-track option, court procedures will add cost and extend the timeline for resolution, which affects patients and their care.
• Provide for some type of penalty and liquidated damages for delays in turning over accessible medical records. No matter which party is at fault, consider a penalty for blocking access to patient records as a deterrent to implicating patients and their records into the dispute.
• Develop a mechanism to turn over medical records upon a “divorce” of the provider and the EHR vendor where records can be accessed from a neutral third-party site provided that contractual payments are made into an escrow pending a final resolution of the dispute.
• Providers may request stronger contractual warranties, indemnities and penalties to protect against a denial of access to medical records that the provider needs for continuity of services.
• Jurisdictional and venue provisions now become more important. These standard contractual provisions can become vital to a successful defense or prosecution to obtain these vital records.

As Pepper Hamilton pointed out in our April 29, 2013 Health Care Law Alert on the issue of decertification of EHR vendors for meaningful use (“Revocation of EHR Certification Rocks Industry”), it is inevitable that disputes will arise under the incentive payment program and as expected EHR vendor consolidation continues. Providers need to take contract negotiations seriously and, when problems arise, assess how the vendor’s culture and behavior will react to future disputes in the relationship. More importantly, both sides require experienced health care technology counsel to be available when you negotiate your EHR vendor arrangements to avoid the Milwaukee access issues in your own contractual dealings.