The OIG Approves an Online Service to Facilitate Information Exchange

Written by on January 6, 2012 in Law & Finance - No comments
Three doctors working on a laptop.

By Kimberly Licata

Increasingly, health care providers are turning to online services and vendors to provide them with electronic medical record software or management services. Many of these services and vendors have begun to expand their service offerings to include asynchronous messaging capabilities, geolocation tracking, and information exchanging. Not surprisingly for the second time in 2011, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services considered whether a proposed arrangement under which an online service would facilitate the exchange of information (and referrals) between and among health care providers, suppliers, and practitioners could violate federal fraud and abuse laws. The OIG concluded in Advisory Opinion 11-18 that while the proposal could potentially generate prohibited remuneration, the OIG would not impose sanctions in connection with the proposal as described.

A publicly traded company who provides electronic health record (EHR) services and other online business services to physicians and physician practices requested the OIG’s opinion on its proposed new service. The Company proposed new offering (in addition to its EHR services for practitioners for which they pay a monthly fee) was a “Coordination Service” intended to facilitate information exchange and to help participants track patients and their service providers. The Coordination Service involved two specific functions and associated information about providers, suppliers, and patients:

  • Making referrals for services. Practitioners or providers would be permitted to use an electronic database created by the Company to identify appropriate practitioners to whom to refer patients for services. There would be no charge for being included in this database and the Company intended for the database to be as complete as possible. The database would include physicians, labs, pharmacies, DME suppliers, and imaging providers, including those currently working with the Company and others from available information and resources.
  • Receiving referrals for services. Health professionals could elect to become a Trading Partner with the Company and be permitted to customize their database profile and to receive electronically transmitted, comprehensive referrals that include a formatted order with significant information about the referral and patient. Trading Partners may be an existing client of the Company and using its services already (permitted greater communication opportunities) or may be interested only in using the Coordination Services of the Company. Non-Trading Partner professionals would be able to receive referrals and basic information (insurance and demographic information, but would not be able to customize their profile nor receive a formatted order with comprehensive information.

The Company would charge a fee to users of the Coordination Service by based on the type of transaction used, including (i) a Transmission Fee ($1 or less), (ii) a Functionality Fee (assessment each time an ordering health professional uses the Coordination Service to make a referral to a Trading Partner), and (iii) a Service Fee (assessed when applicable, such as benefits verification or referral authorization service). All fees were asserted to be fair market value. The Functionality Fee and Service Fee would always be paid by a Trading Partner; the Transmission Fee could be paid by either the Ordering Health Professional or the Trading Partner depending on certain factors. In addition, the Company would be offering discounts on monthly EHR Service subscription fees to those purchasing the Coordination Service Package.

The OIG considered whether the proposal implicated several federal laws (and regulations) frequently used to thwart fraud, abuse and waste in the health care system, including the Anti-Kickback Statute (AKS), Civil Monetary Penalties law (CMPs) or Exclusion Authority. Violations of these laws result in serious civil penalties and even criminal sanctions in severe cases. The OIG commends the Company’s goal of efficient exchange of health information as “laudable,” but considers whether the payments under the proposal could impermissibly influence referrals to Trading Partner (versus Non-Trading Partners). The OIG concluded that the proposal did not fit into a protective safe harbor, but the risks of the proposal were reduced to an acceptable level because of the following six factors:

  • Inclusion in the Company’s comprehensive database of professionals was at no cost and the Company would not control or influence the decision as to which professional a referral would be made;
  • All fees were certified both individually and in the aggregate to reflect the FMV of the actual services provided, the services had a value unrelated to inducing referrals, and the fees would not vary on the value of items or services ultimately provided.
  • While the fees were “per click,” this was reasonable under the circumstances and reflective of the services actually provided.
  • The fee structure would be unlikely to influence the referral decisions in a “material” way.
  • The Coordination Service was intended to facilitate information exchange, not to limit the potential pool of professionals for referral.
  • A Trading Partner’s payment of any fee would not provide that entity with enhanced access to a referral stream over Non-Trading Partners.

The sixth and final factor sets the proposal in Advisory Option 11-18 apart from Advisory Opinion 11-06, in which participants in an online referral services were not permitted to receive referral information unless they paid a fee putting them at a substantial competitive disadvantage.

What can you learn from this opinion? The OIG supports efficient information exchange, which often includes the electronic exchange of information. Further, the OIG will not blindly enforce its arsenal of laws against companies who develop creative solutions to information exchange, including online services charging reasonable per-click fees for services. The OIG considers the entire arrangement in determining whether fraud, abuse or waste are likely. Notice the words “privacy” and “security” are not mentioned in the advisory opinion. Don’t be fooled – these arrangements do implicate laws governing information privacy and security. The OIG, however, does not have any responsibility for enforcing these laws or regulations. Companies considering solutions to facilitate information exchange have a great opportunity to grow their businesses exponentially with a well-designed product, but they must seek appropriate counsel to navigate the myriad of applicable laws.

Editor’s Note: These comments are not intended to establish an attorney-client relationship and are not intended to be legal advice.

Kim Licata
is an attorney practicing in the Health Law Section of Poyner Spruill, LLP. She focuses her practice on providing regulatory, compliance, and litigation advice to health care providers from the perspective of a former in-house counsel and business person. She may be reached at and (919) 783-2949.

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