Issued November 30, 2011, and posted December 7, 2011
Written by Heather Deixler; reviewed by Joseph Kahn
On November 30, 2011, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion 11-18, a favorable opinion concerning an online service that would facilitate the exchange of information between healthcare practitioners, providers, and suppliers (Proposed Arrangement). OIG noted that while the Proposed Arrangement could generate prohibited referrals under the Anti-Kickback Statute (AKS) if the requisite intent were present, OIG would not impose administrative sanctions in connection with the Proposed Arrangement.
The Requestor of Opinion 11-18 is a publicly traded company that provides web-based business services to physician practices (Requestor). Its services include administrative support to physician practices for billing and clinical data management, as well as automated and live patient communication services. Requestor currently provides three principal services: (1) automating and managing billing-related functions for physician practices and assisting clients with tasks such as appointment scheduling and insurance eligibility verification (Billing Service); (2) automating and managing medical record-related functions for physician practices (EHR Service); and (3) automating practice communications with patients (e.g., services such as patient messaging, live operator, and a patient web portal) (Messaging Service). Requestor currently charges its physician practice clients a monthly subscription fee in the form of either a percentage of collections or a flat monthly fee.
Under the Proposed Arrangement, Requestor would offer an additional service (Coordination Service) designed to facilitate the exchange of information between healthcare practitioners, providers, and suppliers (collectively, Health Professionals) and help such Health Professionals monitor patients receiving services from other Health Professionals. Health Professionals who wish to make referrals (Ordering Health Professionals) would have the option of using this Coordination Service in order to do so.
In order to use the Coordination Service, Ordering Health Professionals would need to access an electronic database (Network) to identify Health Professionals to whom referrals could be made. There would be no cost to Health Professionals to be included in the Network, and Requestor's stated goal is to populate the Network as extensively as possible with contact information for a variety of Health Professionals.
Requestor would give Health Professionals the option of customizing their Network Profiles by entering into "Trading Partner Agreements" with Requestor (Trading Partners). Trading Partners would also be able to receive electronically transmitted referrals from Ordering Health Professionals. While there would be no cost to Health Professionals to become a Trading Partner, Trading Partners would be charged for any services provided by Requestor. Those Health Professionals that are not Trading Partners (Non-Trading Partners) would not be able to customize their Network profiles or receive the electronically transmitted, comprehensive referrals to which the Trading Partners would have access. The Non-Trading Partners, however, would be able to receive referrals using the Coordination Service.
Under the Proposed Arrangement, Requestor would maintain its monthly subscription fee for the EHR Service, but that service would be discounted. Requestor would also charge three additional transaction-based fees for referrals made via the Coordination Service, namely: (1) a base fee for transmitting the referral (Transmission Fee); and for referrals made to Trading Partners; (2) a fee for services such as recording and maintaining Trading Partner's preferences, attaching clinical documentation, facilitating appointment scheduling, etc. (Functionality Fee); and (3) a fee for work performed by Requestor to verify insurance benefit eligibility and obtain the referral authorization (Service Fee). Requestor has certified that the Transmission, Functionality, and Service Fees would all be set at fair market value, both individually and in the aggregate.
While Requestor would charge the Transmission Fee every time an Ordering Health Professional makes a referral using the Coordination Service, the party that would be charged for such fee would depend upon whether the receiving party is a Trading Partner or a Non-Trading Partner. If the referral is made to a Trading Partner, the Trading Partner would pay. If, on the other hand, the referral is made to a Non-Trading Partner, the Ordering Health Professional would pay.
The Functionality and Service Fee would always be paid by the Trading Partner. The Functionality Fee would be a fixed fee, assessed each time an Ordering Health Professional uses the Coordination Service to make a referral to a Trading Partner. The Service Fee would depend upon the extent to which services are provided, and would be assessed each time it is applicable.
In analyzing the Proposed Arrangement, OIG stated that the "efficient exchange of health information between Health Professionals is a laudable goal," but noted that in the context of patient referrals, such an exchange must be evaluated to determine whether the "means used to achieve that goal" trigger the restrictions under the AKS. OIG analyzed whether payments made by Trading Partners to Requestor constituted remuneration in return for Requestor's influencing Ordering Health Professionals to refer federal healthcare program beneficiaries to Trading Partners, or otherwise arranging for the furnishing of items or services for which payment would be made by a federal healthcare program. OIG also considered whether the Proposed Arrangement's fee structure could constitute indirect remuneration from the Trading Partners to the Ordering Health Professionals in order to induce referrals.
OIG analyzed the Proposed Arrangement on a facts-and-circumstances basis, after concluding that it fails to qualify for protection under the safe harbor for referral services. Based on a number of factors set forth below, OIG concluded that the facts and circumstances of the Proposed Arrangement would "adequately reduce" the risk that the remuneration provided under the Proposed Arrangement could be an improper payment for referrals or for arranging for referrals of federal healthcare program business.
Those factors include the following:
- Requestor would offer a comprehensive Network, available to all Health Professionals, free of charge. Ordering Health Professionals would select a receiving Health Professional from this Network, and Requestor would not control or influence those Health Professionals to which referrals were made.
- The Transmission, Functionality, and Service Fees would reflect the fair market value of the actual services Requestor would provide to Health Professionals, both individually and in the aggregate. Such fees would not vary based on the value of the items or services that a receiving Health Professional might provide to federal healthcare program beneficiaries. Additionally, Requestor's fees would add value unrelated to inducing referrals, thereby distinguishing the Proposed Arrangement from an arrangement in which a party pays a fee for priority in receiving referrals, rather than for actual services provided.
- The Proposed Arrangement's fee structure would be unlikely to influence an Ordering Health Professional's referral decision, both because the amount of the Transmission Fee would be low, and the aggregate amount of Transmission Fees that could be charged to an Ordering Health Professional would be capped to ensure that Ordering Health Professionals do not pay more for the aggregate services than they would have paid for the EHR Service alone.
- The Coordination Service, which would utilize the comprehensive Network open to all Health Professionals, is designed to facilitate the exchange of information between Health Professionals, not restrict the potential Health Professionals to which an Ordering Health Professional may refer.
- Trading Partners would not have access to a larger referral stream than Non-Trading Partners, and Non-Trading Partners would not be disadvantaged with regard to the opportunity to receive and respond to referrals made through the Coordination Service.
Based on these factors, OIG concluded that there was no need to impose administrative sanctions in connection with the Proposed Arrangement.
*We would like to thank the Fraud and Abuse Practice Group Leadership for providing this summary, and its Advisory Opinions Task Force members Heather B. Deixler, Esquire (Morgan Lewis & Bockius LLP, San Francisco, CA), and Joseph M. Kahn, Esquire (Nexsen Pruet PLLC, Raleigh, NC), for drafting and reviewing, respectively, this summary.