Health Law Attorney BlogOIG Views Favorably Online Service Facilitating the Exchange of Information Between Healthcare Practitioners, Providers and Suppliers
On December 7, 2011, the Office of Inspector General (“OIG”) posted a favorable Advisory Opinion 11-18 pertaining to Requestor’s online service that would facilitate the exchange of information between healthcare practitioners, providers and suppliers (“Proposed Arrangement”). Requestor, a publicly traded company, currently provides web-based services that help physicians “achieve faster reimbursement from payors, reduce error rates, improve collection rates, improve patient compliance and satisfaction, and more efficiently manage clinical and billing information.” To facilitate this goal, Requestor provides three (3) principal services:
1. Billing Service – This service automates and manages the physician practices’ billing-related functions and assists with non-billing related, back-office operations (e.g., scheduling appointments, verifying insurance eligibility, reconciling accounts and reporting);
2. EHR Service – This service automates and manages physician offices’ medical record-related functions; and
3. Messaging Service – This service automates practice communications with patients and includes patient messaging services, live operator services, and a patient web portal.
Under the Proposed Arrangement, Requestor proposes adding a new service–the Coordination Service–which “is intended both to facilitate the exchange of information between health care practitioners, providers, and suppliers (collectively, ‘Health Professionals’), and to help them keep track of patients receiving services from other Health Professionals.” In its evaluation of the Proposed Arrangement, the OIG reviewed four (4) sub-arrangements:
1. Making referrals using the Coordination Service;
2. Receiving referrals using the Coordination Service: Trading Partners;
3. Receiving referrals using the Coordination Service: Non-Trading Partners; and 4. Fees Associated with the Coordination Service.
Making Referrals Using the Coordination Service
The Requestor states that because much of the benefit of the Coordination Service rests in the data contained within the EHR Service, only those Health Professionals purchasing the EHR Service could use the Coordination Service to transmit patient information to other Health Professionals when making a referral. As such, the Requestor proposes offering the Coordination Service in combination with the EHR Service (collectively, the “Coordination Service Package”). The Coordination Service Package would reduce the expense and opportunity for error associated with Health Professionals wishing to make referrals (“Ordering Health Professionals”) who communicate with other Health Professionals by facilitating the transmission of the following information:
• Sending the demographic, medical record, insurance and billing information of a patient when the patient is seen by other Health Professionals;
• Issuing appropriate referral reminders;
• Tracking communications with other Health Professionals; and • Exchanging information about orders, order results, and healthcare recommendations.
Ordering Health Professionals would also utilize an electronic database (“Network”) to identify Health Professionals to which they may make a referral. The Network would contain contact information (e.g., location, fax, and phone numbers) for physicians, laboratories, pharmacies, durable medical equipment suppliers and imaging providers. The Network would be populated by collecting information from Requestor’s existing database of Health Professionals, publicly available Health Professional databases, Requestor’s clients, and other Health Professionals that would like to be included. Inclusion in the Network would be free of charge.
Receiving Referrals Using the Coordination Service: Trading Partners
Requestor proposes that Health Professionals interested in receiving referrals through the Coordination Service would enter into Trading Partner Agreements with the Requestor. Those Professionals entering into the Trading Partner Agreements (“Trading Partners”) would have the opportunity to customize their Network profiles to include additional information, including subspecialty areas, availability for appointments, and any clinical information required as part of a referral. Trading Partners would also be able to receive comprehensive referrals (“Formatted Orders”) electronically from the Ordering Health Professionals. To become a Trading Partner would be free of charge; however, the services provided would be provided for a fee, as described below.
Receiving Referrals Using the Coordination Service: Non-Trading Partners
Being a Trading Partner is not required to receive referrals. However, Health Professionals that are not Trading Partners (“Non-Trading Partners”) will not have the opportunity to customize their Network profiles and would not receive Formatted Orders.
Fees Associated with the Coordination Service
Under the Proposed Arrangement, Requestor would charge the Ordering Health Professionals the usual monthly subscription fee for the EHR Service component of the Coordination Service Package at a discounted rate. In addition to the monthly subscription fee, Requestor would charge three (3) types of transaction-based fees for the referrals made and received using the Coordination Service, all fees being set at fair market value, individually and in the aggregate:
1. Transmission Fee – The Transmission Fee is the base fee for transmitting the referral. This fee would be charged each time an Ordering Health Professional makes a referral using the Coordination Service. The party responsible for paying the fee, however, would vary depending on whether the receiving Health Professional is a Trading Partner or a Non-Trading Partner. If the receiving Health Professional is a Trading Partner, the Trading Partner would pay the Transmission Fee. Those Trading Partners that are Requestor’s clients would pay a slightly lower fee (≤$1) as Requestor’s costs would be lower to transmit information from one client to another within its own system. For receiving Health Professionals that are Non-Trading Partners, the Ordering Health Professional would pay the Transmission Fee.
2. Functionality Fee – The Functionality Fee includes Requestor’s services of recording and maintaining the Trading Partner’s preferences, attaching the clinical documentation in accordance with those preferences, facilitating the appointment scheduling with the Trading Partner, and providing “report builder” functionality. The Functionality Fee would be assessed each time an Ordering Health Professional uses the Coordination Service to make a referral to a Trading Partner. This fee would always be paid by the Trading Partner and would be a fixed fee.
3. Service Fee – The Service Fee is associated with the referrals made to Trading Partners and the work performed by Requestor to verify benefit eligibility and obtain the referral authorization. The Service Fee would always be paid by the Trading Partner and would vary based on the level of effort required to provide the services.
After evaluating the pertinent facts, in its analysis, the OIG determined that the Proposed Arrangement implicates the federal Anti-kickback Statute (“AKS”) and does not fit within a regulatory safe harbor. However, an arrangements failure to fit within a safe harbor does not automatically imply violation of the AKS; instead, the OIG must make a determination, based on the facts, of whether the Proposed Arrangement adequately reduces the risk that the remuneration provided could be an improper payment for referrals or for arranging for referrals of Federal healthcare program business. The OIG concluded that, due to the following factors, the Proposed Arrangement appropriately minimizes the risk of AKS violation:
First – Inclusion in the Network is free of charge (however, payment could be made to obtain specific services) and Requestor would not control or influence the decision as to which Health Professional a referral would be made.
Second – Requestor certified that the Transmission Fee, Functionality Fee and Service Fee would all reflect fair market value of the actual services provided and the Requestor’s service would provide value that is unrelated to inducing referrals. Moreover, the fees Requestor would charge are independent of the value of the items or services that are being referred or ultimately provided.
Third – Even though the Requestor would charge a “per-click” Transmission Fee, this fee is reasonable as the fee would be assessed regardless of whether the patient actually receives the items or services from the receiving Health Professional.
Fourth – The Proposed Arrangement’s fee structure would unlikely materially influence an Ordering Health Professional’s referral decisions for two reasons: the Transmission Fee is low and the aggregate amount of the Transmission Fees that could have been charged to an Ordering Health Professional would be capped to ensure that the Ordering Health Professionals would not pay more for the Coordination Service Package than they would have paid for the EHR Service alone.
Fifth – The Coordination service is intended to facilitate the exchange of information between Health Professionals and is not intended to impede on a patient’s or provider’s freedom of choice.
Sixth – A Trading Partner’s payment of the Transmission Fee, Functionality Fee and Service Fee to the Requestor would not give the Trading Partner access to a referral stream not available to Non-Trading Partners.
For more information, please contact Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq. at (248) 996-8510 or (212) 734-0128 or visit the HLP website.