Case reveals Practice Fusion’s kickback scheme.
Healthcare providers often talk about the importance of behavioral “nudges” to their patients – gentle pushes to encourage healthy and positive choices. However, news broke about a settlement in which healthcare providers were the ones being nudged – in this case, to prescribe highly addictive extended-release opioids in a manner that was not consistent with accepted medical standards.
Who nudged them? Their own electronic health record (EHR) system, which was paid to do so by the pharmaceutical company that made the drugs.
In a first-of-its-kind settlement, electronic health records provider Practice Fusion Inc. has agreed to pay a total of $145 million to resolve criminal charges and civil claims that it solicited and accepted unlawful kickbacks from pharmaceutical companies and misrepresented the capabilities of its EHR software. The settlement represents the first time that an EHR provider has been criminally charged with a violation of the federal Anti-Kickback Statute, and appears to be the first enforcement action alleging kickbacks from a pharmaceutical provider to an EHR company.
As part of the settlement, Practice Fusion entered into a deferred prosecution agreement (DPA), admitting that it accepted a $1 million kickback from an unnamed pharmaceutical company (which Reuters has reported is Purdue Pharma) in exchange for programming provider alerts into its EHR software that were designed to increase the prescription of opioid medications sold by Purdue. Practice Fusion agreed to forfeit criminal proceeds of $1 million and pay a $25.4 million criminal penalty. In addition, the DPA requires Practice Fusion to make specified public disclosures, cooperate in ongoing investigations, implement a comprehensive compliance program, and submit certain aspects of its software for approval to an independent oversight organization.
The civil settlement requires Practice Fusion to pay $113.4 million to the U.S. and up to $5.3 million to the affected states. The settlement resolves claims related to the kickback scheme at issue in the criminal complaint, as well as 13 additional similar schemes with different pharmaceutical manufacturers. In addition, the civil settlement resolves claims that Practice Fusion knew that certain versions of its software would not satisfy certification criteria that had to be met in order for providers using the software to be eligible for federal EHR incentive payments, but nevertheless falsely represented to the certification body that the software was compliant.
Practice Fusion was acquired by Allscripts Healthcare Solutions, Inc. in February 2018. In August 2019, Allscripts, which is publicly traded, announced that it had recorded a $145 million charge related to U.S. Department of Justice (DOJ) investigations of Practice Fusion, stating that it believed that amount was sufficient to resolve all potential civil and criminal liability in connection with the investigations.
Practice Fusion’s Kickback Scheme
EHR software is required to include “clinical decision support” (CDS) features that give providers both general and patient-specific information based on data in the patient’s health record that is “intelligently filtered or presented at appropriate times, to enhance health and health care.” For example, CDS features for providers can include:
According to the criminal complaint against Practice Fusion, CDS features are required to be consistent with applicable evidence-based medical guidelines, and with the U.S. Department of Health and Human Services’ (HHS’s) Clinical Quality Measures.
Practice Fusion is alleged to have developed 14 separate CDS arrangements with pharmaceutical companies between 2013 and 2017, accepting payment from the companies and permitting them to participate in designing the CDS alerts. This participation included:
Although the CDS alerts were designed to look like unbiased medical information, the U.S. prosecutors alleged that they did not always reflect medical standards, and in some instances, were designed to encourage providers to prescribe a specific product or class of products.
In the case of the unnamed opioid company Reuters reported to be Purdue Pharma, Practice Fusion admitted that it acted to further Purdue’s commercial objective of increasing prescriptions for its extended release opioids (EROs) by targeting patients who were not currently opioid users, and those who were on immediate-release opioid medications, contrary to guidelines stating that ERO use should be limited to specific situations. Practice Fusion and the pharma company worked closely to develop the “Pain CDS” program that was introduced in Practice Fusion’s EHR system. As implemented, the Pain CDS alert deviated significantly from clinical guidelines, including by listing EROs as a treatment option without regard to whether a patient’s pain was severe, whether alternative treatments had failed, or whether the provider had adequate experience to prescribe EROs.
The Anti-Kickback Statute is designed to keep medical treatment free from unlawful financial influence, ensuring that patients receive care based on their medical needs, and not on the financial interests of other participants in the healthcare system. Here, Practice Fusion accepted payments from pharmaceutical companies in exchange for implementing CDS alerts designed to increase revenues for those pharmaceutical companies, influencing patient treatment not based on medical guidelines, but instead based on the fact that the pharmaceutical company had paid a kickback.
The Pain CDS paid for and designed in conjunction with the unnamed pharmaceutical company accomplished its commercial goals: between 2016 and 2019, Pain CDS issued more than 230 million alerts, and healthcare providers who received the alerts prescribed EROs at a higher rate than those who did not.
It appears that the U.S. is not done investigating this fraud: the Practice Fusion settlement discloses that the company entered into 13 other CDS arrangements with a range of different pharmaceutical companies, and has agreed to cooperate in ongoing investigations. In addition, with the pharmaceutical company at issue in the criminal scheme remaining unnamed, further investigations of it may be ongoing.
Practice Fusion’s Software Failures
In addition to the kickback claims, the civil settlement resolves Practice Fusion’s liability for claims that it caused its customers to submit false claims for federal incentive payments by misrepresenting the capabilities of its EHR software in the certification process.
EHR software certification is required in order for healthcare providers that purchase that software to be eligible for federal incentive payments, based on their use of the software. The U.S. alleges that Practice Fusion’s software was unable to provide features required for certification, including standard export summaries, data portability standards, and standardized vocabularies. The fraudulent certification of EHR software has previously led to substantial False Claims Act settlements, including with Greenway Health ($57.25 million) and eClinicalWorks ($155 million).
Blowing the Whistle on Pay-to-Play Kickbacks to EHR Providers
The conduct of Practice Fusion posed a serious risk of patient harm. CDS alerts of the type alleged are designed to conceal their origin. They are not advertisements; instead, they conceal the fact that pharmaceutical providers are paying for preferential placement of material within an EHR system in order to increase their own revenues. The Practice Fusion settlement discloses that the company entered into a substantial number of these arrangements with a range of different pharmaceutical companies.
Information technology, marketing professionals, and others with knowledge of such arrangements between EHR providers and healthcare providers can play a critical role in maintaining the integrity of the system, protecting patients and saving taxpayer money. Whistleblowers who report healthcare fraud by bringing a case under the False Claims Act may be eligible to receive a share of the government’s recovery as a financial reward.
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