In issuing Advisory Opinion 14-03 (the “New Opinion”) in early April, OIG also took the highly unusual step of rescinding another advisory opinion issued in 2011, Opinion 11-18 (the “2011 Opinion”). Both opinions involve electronic health record (EHR) interfaces that facilitate physician referrals to outside providers and suppliers for ancillary services. As OIG continues to signal its increasing interest in policing EHR-related fraud, this action only serves to reinforce the idea that not only should providers using such systems should be vigilant in ensuring that their systems are compliant with established meaningful use requirements, they should also ensure that vendor relationships that involve EHR coordination comply with federal anti-kickback and Stark law rules as well.
The 2011 Opinion originally examined and found acceptable an arrangement whereby a provider of electronic practice management services (the “First Requestor”) offered a package of EHR software to clients for a discounted monthly subscription fee. The First Requestor charged a small per-transaction fee for the service of facilitating electronic referrals between health professionals and other physicians and ancillary service providers who were not “trading partners,” meaning that they had not enrolled in First Requestor’s service. The total amount of fees that the First Requestor could collect from a provider was capped at the amount of the discount on the overall package. Services provided included the transfer of relevant records, tracking communications between the providers, tracking orders by referring providers, and issuing patient referral reminders. The First Requestor provided trading partners with access to a database of information about providers offering certain services (i.e., labs, pharmacies, DME suppliers, and imaging services) that included both trading partners and non-trading partners.
In the now-rescinded 2011 Opinion, the OIG found that while this fee structure provided a financial incentive for referring professionals to make referrals to trading partners rather than non-trading partners, certain aspects of the arrangement reduced the risk of improper payment for referrals. In particular, it noted that all healthcare professionals could participate in the network without cost, all fees reflected the fair market value of the services provided, and the transmission fee was charged regardless of whether services were actually provided by the provider receiving the referral. Further, the service was intended to facilitate the exchange of information between professionals rather than to limit the pool of professionals to whom a provider may refer. A trading partner’s payment of fees did not give it enhanced access to a referral stream over non-trading partners.
In the New Opinion, a nationwide operator of clinical laboratories (the “Second Requestor”) requested OIG’s opinion on its use of the First Requestor’s system to create a bi-directional interface between its electronic systems and those of its client providers. The interface would allow a physician to transmit lab orders electronically from within the patient’s EHR directly to the Second Requestor using an interface designed by the First Requestor. The results, when available, would be incorporated directly into the patient’s medical record. Under the proposed arrangement, the Second Requestor, rather than the ordering provider, would pay the associated fee for the transmittal of the order. Per-order fee amounts would be subject to volume-based discounts. Absent this bi-directional system, physicians could submit orders via fax or by hand at no cost and results could be incorporated into the patient’s EHR.
In rejecting the proposed arrangement in opinion 14-03, OIG focused on the fact that “Referring Physicians therefore have the option to pay a transmission fee or to avoid paying that same fee, with the determinative factor being the Referring Physician’s source of laboratory.” OIG expressed the concern that as referral volume increased, the fee would become an increasingly important factor affecting medical decision-making. This finding, in and of itself, would be sufficient to derail the findings of the earlier opinion, which prioritized the efficiencies of facilitating EHR interconnectivity over concerns that a small fee could affect referral decisions. The Notice of Termination notes that goal as a “laudable” one, but determined that these efficiencies did not, in the end, outweigh the risk that the structure of the system would encourage referrals to trading partners over non-trading partners.
In general, advisory opinions are a useful tool for evaluating the OIG’s general position regarding certain types of arrangements, but insofar as they are specific to the facts of the particular arrangement evaluated, they cannot be relied upon to the exclusion of independent legal analysis. Nevertheless, the fact that the OIG terminated an opinion is significant. Although the OIG has the right to reconsider issues raised in advisory opinions, it has not done so in recent memory. Since there is often little authoritative guidance available to providers in determining whether to enter into an arrangement, advisory opinions on a topic do serve to telegraph OIG’s general position and are often relied upon as guidance in “borderline” kickback situations. EHR vendors and providers may have considered similar arrangements, and, despite the until-recently theoretical risk that an opinion could be rescinded, used it to make decisions regarding how to structure their business relationships with one another. OIG’s action, then, sends a clear signal that its willingness to be forgiving of kickback risks in order to facilitate EHR adoption is coming to an end. Accordingly, healthcare providers and suppliers should be cautious about arrangements with EHR vendors similar to the one described above and should work with counsel to determine any risks before entering into one.