In Short

The Situation: The Department of Health and Human Services ("HHS"), Office of Inspector General ("OIG") released an advisory opinion providing new insight into the evaluation of fraud and abuse risks of per-click fee advertising models and enforcement efforts involving healthcare technology that improves or enhances patient care.

The Result: Despite the use of per-click fees, which OIG has traditionally disfavored as posing an increased risk of overutilization, OIG held that a proposed arrangement involving a technology company's online healthcare directory (i) did not implicate the federal civil monetary penalty provision and (ii) would implicate the federal anti-kickback statute, but posed a sufficiently low risk of fraud and abuse due to certain key safeguards.

Looking Ahead: OIG's analysis of the fraud and abuse risks posed by the online healthcare directory may signal increasing willingness to accept new forms of healthcare technology that are specially tailored to promote consumer convenience and avoid the common pitfalls of similar per-click and white-coat marketing arrangements.

Proposed Arrangement

On September 10, 2019, OIG posted Opinion No. 19-04, involving a technology company ("Requester") that provides users, including federal healthcare program beneficiaries, free access to its online healthcare directory ("Proposed Arrangement"). Using a proprietary algorithm, the directory generates personalized search results listing providers based on the user's search criteria ("Marketplace Results") and allows users to book appointments.

Requester charges monthly subscription fees to providers to be included in the Marketplace Results. Requester charges providers additional per-booking fees for each appointment booked with a provider for which a user identified as a new patient, or per-click fees for each time a user clicks on a provider's Marketplace Results.

Additionally, providers may purchase banner advertisements viewable in Marketplace Results or third party websites ("Sponsored Results"). To be included in Sponsored Results, Requester would charge either (i) per-impression fees for each display of an advertisement viewed by a user or (ii) per-click fees for each time a user clicks on a provider's Sponsored Result.

Analysis

OIG first concluded that the structure would not implicate the federal civil monetary penalty provision prohibiting inducements to beneficiaries. OIG determined that remuneration consisting solely of the functionality and convenience of the online marketplace would not influence a beneficiary's selection of providers—a decision impacted by many factors.

OIG then concluded that the Proposed Arrangement would, however, implicate the federal anti-kickback statute. By scheduling services, Requester would arrange for the furnishing of covered items and services in exchange for advertising fees. The display of both Marketplace Results and Sponsored Results would constitute advertising activities meant to induce use of covered items or services.

Nevertheless, OIG found that the Proposed Arrangement posed a sufficiently low risk of fraud and abuse due to several safeguards:

  • Although per-booking and per-click fees varied based on multiple factors (i.e., geography, specialty), such fees would be set in advance and aggregate fees would not exceed fair market value. OIG emphasized that the fees would not take into account the volume or value of any business generated. The per-booking fee applied (i) only when a user identifies as a new patient, (ii) regardless of insurance status, and (iii) regardless of whether a user cancels the appointment.
  • Requester is not a provider or supplier, is not affiliated with any provider, and would not recommend any particular provider. This characteristic distinguishes the arrangement from other problematic "white coat" marketing arrangements.
  • Marketplace Results and Sponsored Results would not specifically target beneficiaries. Instead, OIG viewed the advertising as "essentially passive in nature" because the user must initiate contact with Requester through the website or mobile application (as opposed to direct mailings). Additionally, Sponsored Results would be conspicuously marked as paid advertising.
  • Marketing activities would not relate to, or advertise any specific items or services, or prioritize providers based on the amount paid. OIG noted that users were notified that providers paid a fee to be listed, which reduced the chance that users would think the directory reflected the full scope of available providers.
  • The online directory would be accessible by the general public, regardless of insurance status.
  • Requester would not provide anything of value to beneficiaries (other than the inherent functionality and convenience of the online directory).

Three Key Takeaways

  1. OIG's analysis of the fraud and abuse risks posed by per-click/booking/impression advertising fees may signal OIG's increasing willingness to accept new forms of healthcare technology that demonstrate a public benefit.
  2. While OIG opinions cannot be relied upon by any entity other than the requester, they may provide insight into how OIG would analyze similar relationships in the future. In the past, OIG has generally disfavored per-click fee arrangements because they may promote overutilization in violation of federal fraud and abuse laws. Opinion No. 19-04, however, recognizes that under some circumstances, these types of fee arrangements can be made in a manner that does not promote overutilization.
  3. In particular, the opinion demonstrates that the inherent functionality and convenience of an online tool made available to the general public, including federal healthcare program beneficiaries, may not be enough on its own to constitute prohibited remuneration. Additionally, efforts taken to reduce the risk of specifically targeting beneficiaries and to conspicuously label advertising will be considered in OIG's analysis.