OIG Issues Advisory Opinion Relevant to Electronic Health Record Providers and Laboratories
OIG issued its advisory opinion No. 14-03 today.
Background: A publicly traded clinical laboratory (“Lab”) receives a substantial amount of its business through referrals from physicians (“Referring Physicians”) ordering the Lab’s tests. The Lab entered into an operating agreement with an EHR Provider (Provider), which allowed the Referring Physicians to receive test results from the Lab through the Provider’s services and to have those test results incorporated into their patients’ electronic charts. The Referring Physicians could also use the Provider’s services to generate and transmit an order to the Lab via facsimile, but they could not use the Provider’s services to send an electronic order that automatically would be incorporated into the Lab’s information system.
Proposed Arrangement: Under the proposed arrangement, Referring Physicians may now use the Provider’s service to electronically transmit and generate orders to, and receive results from, the Lab. Each time a Referring Physician generates an order for the Lab using the Provider’s services, the Lab is displayed as an “in network” Lab. With the “in network” designation, the Lab pays the Provider a per-order fee in return for each set of tests a Referring Physician orders from the Lab using the Provider’s services. However, if a Referring Physician orders a test through Provider’s service from an out of network laboratory, i.e., not the Lab, then the Referring Physician must pay a transmission fee of $1.00 to the Provider for per order. The Per-Order Fees are not capped, and decrease as the number of test orders the EHR Provider transmits to Requestor increases.
Analysis: OIG first emphasized that “the efficient exchange of health information between health care providers, practitioners, and suppliers is a laudable goal,” but noted that “when the exchange takes place in the context of patient referrals,” we must determine whether the methods used to obtain that goal implicate the anti-kickback statute.
OIG then determined, without considering any of the applicable safe-harbors to the anti-kickback statute, that the proposed arrangement posed more than a minimal risk of fraud and abuse, and, in doing so, reinforced the following points:
- The per order fee paid by the Lab for each test a Referring Physician orders using the Provider’s services relieves the Referring Physicians of a financial obligation;
- Under this arrangement, Referring Physicians have the option to pay a transmission fee or avoid paying that same fee based on their choice of laboratory, and therefore, “this fee structure could potentially influence Referring Physicians’ referral decisions in a material way;”
- The “arrangement appears to permit [the Lab] to do indirectly what it cannot do directly; that is pay compensation to the Referring Physicians…in return for the Referring Physicians’ laboratory test referrals”;
- Because the Lab offers additional software that Referring Physicians can use to electronically submit orders to the Lab, which are thereafter incorporated into the Referring Physicians’ patient charts, the arrangement does not “provide any additional technological benefits to the [Lab];” and
- Although the per fee charge is minimal and such fees are unlikely to influence a physician’s referral decisions in any meaningful way, “the risk that the per fee could influence a referring physician’s decision-making increases as the number of referrals increases and physicians typically order laboratory tests with considerable frequency.”
Takeaways: The recent OIG opinion demonstrates that healthcare providers, including diagnostic and clinical laboratories, would be well-advised to evaluate all existing relationships with IT vendors and Electronic Health Records providers. Indeed, according to the opinion, healthcare providers should carefully analyze all indirect compensation arrangements or agreements with third party vendors, to ensure that the agreement or relationship does not relieve, or have the potential to relieve, a referral source of a financial obligation since such arrangements implicate the anti-kickback statute. Furthermore, the opinion shows that even a “nominal” fee of $1.00, which may be reduced, may implicate the anti-kickback statute when there is a potential for an increase in referrals. Lastly, the opinion illustrates that OIG will not hesitate to find that a proposed arrangement involving physicians and clinical laboratories poses more than a minimal risk of fraud or abuse since physicians generally order from labs with “considerable frequency.”
Author: Andrew Feldman
Mr. Feldman represents professionals, corporations, health care providers, and health care marketers in government investigations and prosecutions throughout the United States. Mr. Feldman works tirelessly for his clients from the time an investigation begins until the time a jury renders a verdict.
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