Identifying Compliance Issues Raised By E-Health Transactions and Strategies

1. Identifying Compliance Issues Raised By E-Health Transactions and Strategies Guy Collier, Esq. Gadi Weinreich, Esq. Shaw Pittman September 27, 2000

2. Supplier/ Provider Hospital Website Vendor Physician Patient Example

3. Laws • Anti-Kickback Laws • Physician Self-Referral Laws • Beneficiary Inducement Laws • Patient Privacy Laws • Physician Licensure Laws • Provider Licensure Laws • Supplier Licensure Laws • State Fee Splitting Laws

4. Hospital Website Vendor Physician Hospital-Vendor-PhysicianArrangement

5. Analysis • Arrangement • Hospital wants to provide websites to affiliated physicians • Website will have hospital logo and link to hospital website on home page • Hospital hires third party vendor to establish/ maintain physician websites • Vendor furnishes “data mining” services for hospital and reports results

6. Analysis • Potential Legal Issues • Kickback: Payment for “referrals” • Payment = free website • Is one purpose to induce referral of patients? • If not, why is hospital giving physician website? • Other explanations (e.g., marketing hospital to physician’s patients) • Exceptions/Safe Harbors: personal services? • Nominal value issue

7. Analysis • Kickback: Payment for “recommendation” • Discussed below • Physician Self-Referral (“Stark”) • Compensation arrangement between hospital and physician? Direct? Indirect? • Remuneration = website • Exceptions: personal services/other? • Patient Privacy • Data mining; reports

8. Supplier/ Provider Physician Supplier/Provider-Physician Relationship

9. Analysis • Arrangement • Pharmacy places banner advertisement and link on physician’s website • Pharmacy compensates physician: • Flat fee • Traffic volume; “hits” on pharmacy link/website • Percentage of on-line purchases (Rx versus non-Rx) • Other

10. Analysis • Legal Issues • Kickback • Payment for “referrals” (same as above) • Payment for “recommendation” • Recommendation = advertisement/link • Exclusivity • Size • Placement • Text • Disclaimers • AO 99-8 (Yes); AO 99-12 (No)

11. Analysis • Exceptions/Safe Harbors: personal services • Fair market value • Aggregate compensation set in advance • Volume or value • Full-time versus part-time • One-year term (termination with/without cause)

12. Analysis • Risk: Four Factor Test (AO 99-8) • Party engaged in marketing (physician versus non-practitioner/provider) • Nature (coerciveness) of marketing (telemarketing versus newspaper advertisement) • Item or service being marketed (specific item/service versus provider logo) • Target audience (beneficiaries versus general public)

13. Analysis • Risk: Other Factors • Is compensation tied to purchases of covered items/services • Fixed fee versus compensation based on volume/value of hits or business generated

14. Analysis • Physician Self-Referral (“Stark”) • Does supplier/provider “furnish” DHS? • Physician has “compensation arrangement” with supplier/provider? • If physician makes a “referral,” Stark law implicated • Exception: personal services; other?

15. Supplier/ Provider Physician Patient Supplier/Provider-Physician- Patient Relationship

16. Analysis • Arrangement • Pharmacy offers discounts (rebates, coupons, “points,”etc.) to patients who access pharmacy website through physician website and purchase items from pharmacy

17. Analysis • Legal Issues • Kickback: From pharmacy to patients • Payment to induce “purchases” • What can discount, points, etc. be used for: covered items versus non-covered items • See AO 99-12 (coupons for non-covered items only) • Exceptions: discounts • Kickback: From pharmacy to physician • Payment to induce “referrals”

18. Analysis • Beneficiary Inducement Law • Elements • Remuneration • Knows/Should Know • “Likely to influence” beneficiary • Purchase/receive from particular “provider, supplier, or practitioner” • Penalties • CMP = $10,000 • Exclusion • Exceptions

19. Analysis • Analysis • Points as inducement to use pharmacy • Remuneration = discount/points • Knows/Should Know = possibly • “Likely to influence” = possibly • Purchase covered items = ? • See AO 99-12 (coupon could not be used re covered items) • From particular “provider, supplier, or practitioner” = yes, the pharmacy

20. Analysis • Exceptions • Discount • Nominal value (?) • Cash Equivalent (?)

21. Analysis • Points as inducement to use physician • Remuneration = discount/points • Knows/Should Know = possibly • “Likely to influence” = possibly • AO 99-12 (no) • Purchase covered items = yes, physician services • From particular “provider, supplier, or practitioner” = yes, physician • Exceptions:

22. Contact Information • Guy Collier, Esq. • (202) 663-8138 • guy.collier@shawpittman.com • Gadi Weinreich, Esq. • (202) 663-8236 • gadi.weinreich@shawpittman.com