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Last week I was reading the Burlington (Vermont) Free Press (as I often do), and there, between a story about the Vermont City Marathon and an ad for the sale on Glen’s Maple Syrup was a headline that read “U.S. Attorney’s Office of Vermont nabs its largest settlement.”

That certainly got my attention.

The article under the headline went on to note that an electronic health record (EHR) software company, eClinicalWorks (ECW), settled a dispute with the federal government for the lofty sum of $155 million.

ECW has a very large user base: more than 850,000 subscribers. And first, let’s point out that in the settlement, ECW admitted no wrongdoing.

But the settlement comes as the result of a lawsuit filed under the False Claims Act, which accused ECW of obtaining meaningful use certification by misrepresenting the capabilities of its software. The company was also accused of paying kickbacks of almost $400,000 to customers for promoting its product.

The initial investigation was the result of a former employee’s allegations – and that whistleblower will receive $30 million. The balance of the $155 million settlement will go back into the Medicare Trust Fund.

In its complaint, the U.S. Department of Justice (DOJ) alleged that the company also concealed the fact that its software wasn’t able to meet criteria for retrieving standardized drug codes. EHR software is required to be able to retrieve any drug code from a comprehensive database to get certification. ECW allegedly took a shortcut and hardcoded only the 16 drug codes required for testing directly into its software.

Because of ECW’s alleged falsifications, any entities depending on the company’s software ultimately submitted false claims for federal meaningful use incentive payments. The government also cited the software’s alleged inability to transfer data from its system to that of other EHR vendors.

The lawyer representing the whistleblower called the settlement “groundbreaking!”

“It is the first time that the government has held an electronic health records vendor accountable for failing to meet federal standards designed to ensure patient safety and quality patient care,” Colette G. Matzzie, a partner at Phillips & Cohen, said in a statement.

The settlement is also significant because of what it could mean to other EHR vendors. Farzad Mostashari, former national coordinator for health information technology within the Office of the National Coordinator for Health Information Technology at the U.S. Department of Health and Human Services (HHS), tweeted:

“Let me be plain-spoken. eClinicalWorks is not the only EHR vendor who ‘flouted certification /misled’ customers. Other vendors better clean up.”

Now, I don’t know if Twitter was intended for inflammatory statements like that, but some auditors (and probably some potential whistleblowers) out there probably took note of Mostashari’s statement.

Providers have been under scrutiny for misrepresenting their meaningful use capabilities for the last few years under the HHS Office of Inspector General’s (OIG’s) annual work plans.

In 2012, a hospital in Texas was found to have falsely attested to meeting meaningful use criteria – and to have received almost $800,000 in incentive payments. In 2014, the CFO at the hospital pleaded guilty to fraud charges and was ordered to pay $4.5 million in restitution.  The owner of the hospital was sentenced to 11 years in prison.

In September 2016, California was found to have overpaid 61 hospitals $23.2 million in incentive payments.

Around the same time, Washington state issued $9.2 million in incentive program overpayments.

An earlier audit in Massachusetts found that 19 of 25 audited hospitals received overpayments of about $2.7 million. The audit also found that six hospitals had been underpaid by $564,000.

Meaningful use audits are ongoing as part of the OIG’s 2017 Work Plan.

So let this be a warning to vendors and providers.

CMS giveth, and CMS taketh away.


Dennis Jones

Dennis Jones is the patient financial services administrator at Nyack Hospital in Nyack, New York. He is an experienced healthcare leader with broad and detailed knowledge of the revenue Cycle, compliance issues, denials management, process and workflow, and uncompensated care. Well known in the northeast region for his active leadership and diversified areas of expertise, Dennis is a past-president of the New Jersey Chapter of AAHAM and has held senior management positions in reimbursement consultant and provider organizations. While Dennis is recognized as a leading expert in Revenue Cycle process and technology, his expertise covers a wide variety of topics including RAC issues, managed care, uncompensated care, Medicare and Medicaid compliance, HIPAA, and process improvement. As a result, he has presented on topical healthcare issues for a variety of organizations including Deutsche Bank, The National RAC Summit, The World Research Group, The New Jersey Hospital Association and various state chapters of HFMA, AAHAM, and AHIMA. Dennis has been a frequent contributor to RACmonitor. Dennis is a graduate of the Pennsylvania State University with a degree in health planning and administration.

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