FDA ponders regulating your billing software

Claims processing programs could be included

The software program that runs your billing system soon could become illegal under a proposal being considered by the U.S. Food and Drug Administration (FDA).

The agency is considering whether to create regulatory standards for patient information software, a move that, if adopted, would impose a federal approval process on all financial systems and computerized medical record programs currently in use at hospitals and other health facilities.

Affected would be all software that is not part of a medical device but runs systems that contain patient-related data. The standards would extend to claims processing programs and applications that enable physicians to prescribe, order, or implement services that affect treatment and outcomes.

Depending on the outcome of the debate, facilities not in compliance might have to alter their existing programs to comply or replace them with federally approved commercial software even if a hospital’s existing system is similar or identical. Providers also may have to submit to regular quality assurance audits and periodic reviews conducted by the FDA.

The issue should be of special concern to anyone involved in reimbursement due to the increasing reliance by financial departments on computerized claims processing systems, says Carla Smith, executive director of the Center for Healthcare Information Management (CHIM) in Ann Arbor, MI. Compliance also could affect accreditation and possibly even certification for federally sponsored health care programs such as Medicare or Medicaid. "They should take this seriously," Smith adds.

Commercially developed software would be the biggest target of the regulations. But of special interest to the FDA are custom-designed software programs developed internally by facilities to meet their own information needs. Hundreds of hospitals have developed such in-house programs, which the FDA says has raised consumer-protection concerns and the possible need for oversight.

The FDA broached the subject of regulating the software in meetings with vendors last September and is continuing talks to determine whether to draft new oversight regulations or place the programs under the existing Safe Medical Devices Act of 1990. A wide-ranging group of health care associations that have an interest in advancing the use of computerized information has submitted a white paper to the FDA arguing against new regulations.

Is software a medical device?

The regulation issue was broached in 1989, but the FDA then decided to strictly define its role and set down standards for software embedded in medical devices, such as that in a heart-lung machine.

"Everything is still under discussion. We’re doing a lot of active listening, but no real decisions have been made," says FDA spokeswoman Sharon Snider. Among its choices, the agency could very well do nothing at all, Snider says.

Industry representatives expressed concerns about the proposal, citing the difficulty of regulating technology that has taken such multifaceted forms. For example, with the way providers typically use software today, it is often impossible to say where the clinical function ends and the facility’s operational concerns begin, Smith says.

Providers generally tie peripheral systems to a core software program. The peripherals perform a variety of tasks, from inventory control to patient scheduling and prescription ordering.

Another issue is that large facilities are likely to run into problems with vendors. Most large providers deal with several software companies and consultants at the same time.

In trying to comply with regulations, administrators may have a difficult time, especially if some vendors have gone out of business, says Warren L. Chandler, senior vice president and chief information officer with Baptist St. Vincent’s Health System in Jacksonville, FL.

In addition, their software may no longer be licensed or may not be adaptable to meet compliance standards, Chandler says.

Vendors will cooperate

Most large vendors with mainstream products, however, are likely to "bend over backwards to help modify their clients’ software," which will probably make compliance affordable for most facilities, Chandler says. It would be extremely rare for a facility to have to replace its software with something entirely new, says Smith of CHIM.

But providers may have to incur costs in paying for consulting advice and extra staffing for internal regulatory affairs departments.

The software industry hopes to work with the FDA prior to its reaching a decision, Smith says. "We’re trying to help them understand the complexities of the market," she adds. The 100-member vendor trade group has released a position paper that favors voluntary industry standards over federal oversight.

The FDA had indicated that it would draft a policy sometime this year, says Smith. But speaking for the agency, Snider said no timetable has been set for any decision.