marketing healthcare

Guidelines, Concerns,

and Pitfalls

COMPETITION IS A FACT OF LIFE

MARKETING IS A NECESSITY

COMMON AND EFFECTIVE MARKETING TECHNIQUES MAY BE LIMITED BY LAW IF THE SOURCE OF FUNDS FOR PAYMENT IS THE FEDERAL OR A STATE GOVERNMENT

RESTRICTED MARKETING TECHNIQUES INCLUDE:

COMMISSION SALES

INTERNET COUPON SITES, AND

PAY PER CLICK OR PER CALL ADVERTISING

FEDERALLY FUNDED PROGRAMS

MEDICARE

MEDICAID / AHCCCS

INDIAN HEALTH SERVICE

URBAN INDIAN HEALTH SERVICE

TRICARE

RAILROAD UNEMPLOYMENT INSURANCE

FEDERALLY FUNDED PROGRAMS

FEDERALLY-SUBSIDIZED HEALTH PLANS UNDER NEW INSURANCE EXCHANGE PRODUCTS—?

WE DO NOT KNOW YET

PROGRAMS GO ACTIVE IN 2014

RESTRICTIVE FEDERAL LAWS AND REGULATIONS

STARK LAW

ANTI-KICKBACK STATUTE

OIG GUIDANCE

FALSE CLAIMS ACT

FEDERAL TRADE COMMISSION ACT

RESTRICTIVE STATE LAW

MANY STATES HAVE THEIR OWN VERSION OF THE ANTI-KICKBACK STATUTE

APPLIES TO HEALTH SERVICES FUNDED BY THE STATE GOVERNMENT

STARK LAW PROHIBITS A PHYSICIAN FROM REFERRING

A PATIENT TO AN ENTITY FOR A “DESIGNATED HEALTH SERVICE” IF THE PHYSICIAN OR ANY MEMBER OF HIS IMMEDIATE FAMILY HAS A FINANCIAL RELATIONSHIP WITH THE PROVIDER

PROHIBITS BILLING ANY FEDERALLY-FUNDED HEALTHCARE PROGRAM FOR SERVICES RENDERED PURSUANT TO A PROHIBITED REFERRAL

STARK DESIGNATED HEALTH SERVICES

(i) Clinical laboratory services.

(ii) Physical therapy, occupational therapy, and outpatient speech- language pathology services.

(iii) Radiology and certain other imaging services.

(iv) Radiation therapy services and supplies.

(v) Durable medical equipment and supplies.

(vi) Parenteral and enteral nutrients, equipment, and supplies.

(vii) Prosthetics, orthotics, and prosthetic devices and supplies.

(viii) Home health services.

(ix) Outpatient prescription drugs.

(x) Inpatient and outpatient hospital services.

STARK EXCEPTIONS There are more than forty recognized Stark exceptions

Stark applies only to provision of Designated Health Services

Stark applies only to referrals made by “physicians,” which includes MDs, DOs, chiropractors, and podiatrists--

But “physician” does not include nurse practitioners or physician assistants

ANTI-KICKBACK STATUTE42 U.S.C. Sec. 1320a-7b(b)

Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or kind—

in return for purchasing, leasing, ordering, or arranging for, or recommending, purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made, in whole or in part, under a Federal health care program, shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned not more than 5 years or both.


Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or kind to any person in order to induce such person—

to purchase, lease, order, or arrange for, or recommend, purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made, in whole or in part, under a Federal health care program, shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned not more than 5 years or both.


Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or kind—

in return for purchasing, leasing, ordering, or arranging for, or recommending, purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made, in whole or in part, under a Federal health care program, shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned not more than 5 years or both.


Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or kind to any person in order to induce such person—

to purchase, lease, order, or arrange for, or recommend, purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made, in whole or in part, under a Federal health care program, shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned not more than 5 years or both.

WHAT DID PPACA CHANGE

PPACA amended the Anti-Kickback Statute

Before PPACA, a conviction under the AKS required proof beyond a reasonable doubt of a specific intention to violate the AKS—both actual knowledge of the AKS and an intent to violate the law


PPACA amended the Anti-Kickback Statute

Before PPACA, a conviction under the AKS required proof beyond a reasonable doubt of a specific intention to violate the AKS—both actual knowledge of the AKS and an intent to violate the law

After PPACA, no proof of knowledge of the AKS or specific intent to violate it is required for criminal conviction


PPACA also revised the False Claims Act—31 U.S.C. §§ 3729 – 3733


Now, claims submitted to any federally-funded healthcare program as a result of an AKS violation are themselves “false claims.”


Now, claims submitted to any federally-funded healthcare program as a result of an AKS violation are themselves “false claims.”

Violators are subject to claims for triple the actual damages caused plus penalties of up to $10,000 per occurrence

IMPLICATION FOR COMMISSION SALES AND OTHER MARKETING PROGRAMS In the typical arrangement, a healthcare sales

representative working on a commission basis provides information about available services and urges (a) individuals to seek healthcare services or (b) other providers to refer patients for healthcare services.

According to DHHS, such marketing activities may constitute technical violations of the AKS -- See 56 Fed. Reg. 35952,35974 (July 29, 1991)

SAFE HARBORS

As the Stark Law has exceptions, the AKS has “safe harbors”—but fewer

If a marketing arrangement is within the terms of a “safe harbor,” then the OIG and the Justice Department will not prosecute

SAFE HARBORS FOR HEALTHCARE MARKETING

Employee as marketing representative

Independent representative on personal services contract

EMPLOYEE SAFE HARBOR

AKS prohibits paying or receiving “remuneration”

Compensation paid to an “employee,” even if paid on a commission basis, is not considered “remuneration” for purposes of the AKS

But only “W-2” employees are considered employees for purposes of this safe harbor

PERSONAL SERVICES SAFE HARBOR

1. There must be a written contract signed by all parties

2.The agreement must specify all services to be performed by the marketing representative

3.If services are performed other than full time, the agreement must specify the exact schedule for the performance of services.

4.The agreement must be for not less than one year


5.The total compensation to be paid over the life of the contract must be set in advance, be fair market value for services rendered, and not determined in a manner that takes into account the volume or value of referrals or business for which payment is made under any federally-funded health care program


6.The services performed under the agreement cannot violate any state or federal law.

7.The aggregate of services to be provided under the agreement are not in excess of the services reasonably necessary to accomplish the commercially reasonable business purpose of the services


Payment on commission will not qualify under the “Personal Services” safe harbor

It does not matter that the percentage to be paid is fixed; it is the total compensation that must be fixed in advance for the life of the contract, which must be for a term of at least one year.

HOW SAFE IS A SAFE HARBOR?

In published guidance for the pharmaceutical industry, the OIG has stated that evidence of an “improper intent” will take a marketing arrangement outside of the recognized safe harbors. The OIG gave as an example the allowance of a “lavish” expense account and incentive bonuses to employed marketing representatives, giving them the means and the reason to induce sales through entertainment of referral sources.

ARE COMMISSION-BASED MARKETING CONTRACTS FORBIDDEN?

Not being in a safe harbor does not necessarily mean a violation of the AKS.

Upon request, the OIG has given “Advisory Opinions” promising “no action” against specific commission-based marketing plans which the OIG concluded offered “a sufficiently low risk of fraud or abuse.”

While technically the Advisory Opinions only protect the recipient from enforcement action, it is widely believed that they provide guidance of general application.

ARE COMMISSION-BASED MARKETING CONTRACTS FORBIDDEN?

However, at least two courts have ignored the nuanced analysis of the OIG Advisory Opinions and based their rulings only on whether the marketing arrangement was or was not within a regulatory safe harbor.

See: Zimmer Inc. v Nu Tech Medical, Inc., 54 F. Supp.2d 850 (N. D. Ind. 1999)

Medical Network, Inc. v Professional Respiratory Care, et al., 673 So.2d 565 (Fla. Ct. App. 1996)

PROBLEM FACTORSThe following have been considered by the OIG as factors triggering a “strict scrutiny” of a marketing arrangement:

1. Compensation based on a percentage of sales

2. Direct billing of a federal health care program by the seller for an item or service sold by the marketing agent

PROBLEM FACTORS

3. Direct contact between the sales agents and physicians in a position to order items or services that are then paid for by a federally-funded health program

4. Direct contact between sales agents and beneficiaries of federally-funded healthcare programs

PROBLEM FACTORS

5. Use of sales agents who are healthcare professionals or persons in a similar position to exert undue influence on purchasers or patients

6. Marketing of items or services that are separately reimbursable by a federally-funded healthcare program (e.g., mobility devices)

PROBLEM FACTORS

The OIG will also consider, independently of other factors, whether the service or product at issue is “particularly susceptible” to overutilization

The greater the number of factors present, the more likely is an OIG conclusion that the marketing arrangement is not safe from enforcement action

HOW DO I MAKE THE DECISION?

A. The marketing representative is in a position to exert influence over the patient’s or referral source’s decision—PROBLEM

B. All services or products are ordered subject to the independent professional judgment of a healthcare professional—PROBABLY OK


The marketing agent is a healthcare professional and able to exert influence over patients and referral sources—PROBLEM


The commission percentage increases as sales benchmark targets are reached—the OIG has identified this as a potential problem triggering increased scrutiny


Do the marketing agents receive compliance training and are compliance standards enforced? If yes, then the marketing program is less likely to generate situations that will trigger enforcement action.

Purchased Coupons andDaily Deal Sites

It seems prudent to exclude from eligibility for any purchased-coupon discounted or “daily deal” promoted services any service covered under Medicare, Medicaid and other federally-funded healthcare service

Because:

Purchased Coupons andDaily Deal SitesBecause:

Medicare requires that its charges be the lowest offered by the provider for the covered service—all Medicare patients would need to be charged the discounted price.

The OIG has suggested in a published Advisory Opinion that purchased-coupon discounts encourage the delivery of services not medically necessary.

Payments to “daily deal” sites are based on the volume or value of services ordered.

OTHER KINDS OF DISCOUNTS:THE AKS DISCOUNT SAFE HARBOR

The Anti-Kickback Statute contains an exception for: “a discount or other reduction in price obtained by a provider of services or other entity under [Medicare or Medicaid] if the reduction in price is properly disclosed and appropriately reflected in the costs claimed or charges made by the provider or entity under [Medicare or Medicaid]”

INTERNET COUPON SITES :One OIG Advisory Opinion

The OIG recently reviewed an arrangement involving an online website which hosted advertising and coupons. The operator of the site was not a provider of healthcare services or devices (and although the owner was a physician, neither his name nor credentials appeared on the site).


Advertisers could pay for pop-up or banner ads on the site and could post discount coupons for download. Fees charged by the site for advertising were set fees, consistent with fair market value. The fees did not take into consideration the volume or value of business generated or relate to the number of times a customer downloaded information or a coupon.


In order to post advertising on the site, the advertiser was required to agree in the Terms of Use to comply with the Discount Safe Harbor to the AKS.

Unlike the “daily deal” coupons, the patient did not pay anything for the coupon.

INTERNET COUPON SITES:One OIG Advisory Opinion

BASED ON THESE FACTS, THE OIG DETERMINED THAT THE ARRANGEMENT WAS NOT LIKELY TO LEAD TO OVERUTILIZATION OF SERVICES AND POSED A LOW RISK OF FRAUD OR ABUSE, AND THEREFORE IT WOULD TAKE NO ACTION TO

IMPOSE SANCTIONS

PER CLICK ADVERTISING:One OIG Advisory Opinion

“Per click” advertising gives payment to the site each time a browser “clicks” on the advertiser’s ad for more information.

In an arrangement reviewed by the OIG, a company which did not provide health services or products hosted medical content on a website. Providers of medical services and products could post advertising banner, and paid the website operator a fixed fee “per click” on their banners, which were hyper-linked to product and service information. The site posted a disclaimer of endorsement of any advertised services or products.

INTERNET COUPON SITES:One OIG Advisory Opinion

BASED ON THESE FACTS, THE OIG DETERMINED THAT THE ARRANGEMENT POSED A LOW RISK OF

FRAUD OR ABUSE, AND THEREFORE IT WOULD TAKE NO ACTION TO IMPOSE SANCTIONS

PAY PER CALL ADVERTISING:One OIG Advisory Opinion

Referral sites charge their subscribers a fixed fee to be listed on the site or a fee per lead generated (or both).

So long as the payment is not linked to any referral or recommendation for healthcare products or services, no violation of the AKS should occur.


In 2008, the OIG reviewed an arrangement where an internet advertising and referral site collected zip code information (but no health information) from potential patients and then referred the patients to local chiropractors (based on the patient zip code) who had paid a fee to be listed on the site. The site posted a notice explaining that the chiropractors to which the patient was being referred had paid a fee to be listed. The fee was fixed in advance at a fair market value and did not vary based upon the number of referrals.


The OIG concluded that this arrangement posed a minimal risk of healthcare fraud or abuse because:

1. The marketing was not conducted by healthcare providers

2. The marketing did not target federal healthcare program beneficiaries

3. The same service was provided to all potential patients

4. There was no steering of patients to any specific provider

5. The fees paid by the subscribers were uniformly charged irrespective of volume or value of referrals

6. Potential patients did not pay anything or receive anything of value for the service

WHERE DOES THAT LEAVE US?

DO NOT WALK BLINDLY FORWARD

Consider federal and state restrictions on healthcare marketing before undertaking a program

Get competent review by an attorney or other consultant experienced with healthcare regulations

Douglas O. GuffeyJaburg Wilk, PC3200 N Central Avenue, 20th FloorPhoenix, AZ 85012

[email protected]

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