Can Pay-Per-Lead Internet Healthcare Advertising Be Kosher?

The Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) issued an advisory opinion yesterday concerning an Internet advertiser’s proposal to extend its “pay per call” or “pay per lead” advertising business to the chiropractic industry. While the opinion did not take account of California state law, the OIG’s analysis is that arrangement did not violate the federal Anti-Kickback Statute (AKS). The AKS generally prohibits healthcare providers from paying (or getting paid) to encourage referrals. The OIG’s reasoning emphasized that, in this case, the advertiser was not a healthcare provider and had no affiliation with the healthcare industry; Medicare and Medicaid beneficiaries were not targeted by the advertising; payment for the referral was made without regard to whether the prospect actually generated reimbursement revenue; and the referral was not to a particular chiropractor but instead to all subscribers within a geographic area.

In recent years, Internet marketing has already become a significant area of interest for many healthcare providers. The importance of the Internet as a marketing tool in healthcare practice is certain to increase. While this opinion does not address the totality of legal issues for California providers, it is an instructive starting point as to issues to consider.

Consumer Spending on Healthcare Declines (Part 2)

The previously reported impact of the economic downturn on consumer healthcare spending (Fenton & Nelson e-advisory, Sept. 23) is attracting increased attention. The Washington Post reports that “[f]rom Park Avenue dental offices to the Arlington Free Clinic, the global economic crunch is forcing a growing number of Americans to scale back on medical care. Consumers are attempting their own form of triage, pushing off seemingly less-urgent services in the hope that their financial health will improve. But the danger, say physicians, is that the short-term savings may translate into more severe long-term health implications.” The article reports multiple surveys indicating a growing number of patients not filling prescriptions, skipping doctor visits, or borrowing from their retirement funds to pay healthcare costs.

Recommended Action: This article and the referenced studies provide further confirmation of a disturbing trend of patients foregoing care or, as the article references, seeking do-it-yourself (“DIY”) care via increasingly popular websites like www.justanswer.com, a website that allows customers to pose a health questions and “bid” $9 to $30 for a doctor’s or a nurse’s response. According to the article, traffic on the site rose 14%, with inquiries related to stress, high blood pressure, drinking and heart pain jumping 33%. As patients elect to forego care based on economic hardship, physicians need to protect themselves by documenting follow up on patient missed appointments and warnings of the long-term risks of DIY or missed care.

Allegations of Medtronic Physician Kickbacks Resurface

Medical device maker Medtronic has been accused of paying physicans kickbacks — again. In 2006, Medtronic paid the U.S. Department of Justice $40 million to settle allegations that it had paid physicians to use its spinal repair products. Last month, the Wall Street Journal reported that Medtronic allegedly entertained surgeons at a strip club, sent them on fully paid trips to Alaska, and awarded some royalties on inventions they had no part in developing — all as inducements to support off-label use of Medtronic spine products. (David Armstrong, “Lawsuit Says Medtronic Gave Doctors Array of Perks,” Sept. 25, 2008.) Weeks earlier, the Journal also reported serious complications in patients who received the same off-label use of Medtronic’s “Infuse Bone Graft” device.

Recommended Action: Medtronic’s recurring problems should serve as a reminder for healthcare providers about the value of exercising caution in accepting benefits from drug and device makers. Providers need to balance the value of supporting promising, innovative drugs and devices that benefit patients, on one side, against the risks of accepting enticements that create appearances of impropriety on the other. Providers who accepted payments and benefits from Medtronic have paid a heavy price not only by having been linked to this story but also by having been named as defendants in and forced to defend several “whistleblower” lawsuits filed against Medtronic. Moreover, providers risk liability if problems ensue from the off-label use of Infuse. Ultimately, providers need to protect themselves by investigating further.

Harry Nelson is a partner in Fenton & Nelson, LLP. Fenton & Nelson counsels healthcare providers on regulatory compliance and business matters. For additional information, please contact him at harry@fentonnelson.com

©Harry Nelson 2008

Consumer Spending on Healthcare Declines with Economic Downturn

Vanessa Fuhrmans reports in the Wall Street Journal on the impact that the economic slump is having on consumer healthcare spending. For the first time in over a decade, consumers are cutting back on healthcare expenses. Although attention has been focused previously on the declining demand for cosmetic medical services, the reduced demand is evident in healthcare spending across the board, ranging from skipping or splitting doses of prescription medication to foregoing tests, preventative care, and procedures based on financial pressure.

Recommended Action: These trends are forcing a revision of the conventional wisdom that health care is impervious to recession. As a business matter, providers need to be atturned to — and protect their businesses against — the risk of slumping demand for services. As a matter of clinical care, providers need to ensure patients understand that foregoing necessary tests and appointments will lead to increases in both medical compliactions and costs in the future. Providers need to communicate to patients the risk that delayed screening will lead to emergency room visits. In the words of Rand Corp. director of health economics, Dana Goldstein, “[o]nce you’ve had that heart attack and end up in the hospital, that’s when the expensive stuff begins.”

Harry Nelson is a partner in Fenton & Nelson, LLP, a law firm that counsels healthcare providers on business and compliance matters. For additional information, please contact Fenton & Nelson at harry@fentonnelson.com

©Harry Nelson 2008

Providers Need to Exercise Caution with Healthcare Marketers

Recent accusations of Medi-Cal fraud at three hospitals in Southern California have attracted national attention. At the heart of these Medi-Cal fraud charges are healthcare marketers who allegedly recruited homeless patients with Medi-Cal beneficiary cards for unnecessary medical services and then “dumped” the patients.

Recommended Action: Notwithstanding the sensational nature of the charges, the lesson that all providers should draw from the experience of the hospitals and administrators at issue is the danger inherent in working with unscrupulous healthcare marketers. Providers need to be careful in ensuring that their marketing avoids the use of personnel or activities that could remotely be construed as “capping” or “running” (i.e. recruitment or solicitation of patients without regard to medical need). In addition to the risk of criminal liability, Medi-Cal, Medicare, and other payors will ultimately hold providers financially responsible for repayment of the costs (and risk of potential fines) for any unnecessary services rendered.

Harry Nelson is a partner in Fenton & Nelson, LLP. Fenton & Nelson counsels healthcare providers on issues related to healthcare marketing. For additional information, please contact Fenton & Nelson at harry@fentonnelson.com

©Harry Nelson 2008