Catch of the Week: Practice Fusion Pays $145 Million for EHR Kickbacks and Misrepresentations about Software

Healthcare providers talk about the importance of behavioral “nudges” – gentle pushes to encourage healthy choices and positive behaviors. In our Catch of the Week, healthcare providers were nudged 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 records 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 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 admitting facts set forth in a criminal information. Practice Fusion admitted that it accepted a $1 million kickback from an unnamed pharmaceutical company in exchange for programming provider alerts into its EHR software that were designed to increase the prescription of opioid medications sold by the pharma company (Reuters has reported that the pharma company is 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, which does not reference any filed action, requires Practice Fusion to pay $113.4 million to the U.S., and up to $5.3 million to states, with state agreements to be separately negotiated.  The civil settlement resolves claims related to the kickback scheme at issue in the criminal information, 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 which 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 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” 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 aimed at providers can include:

• The targeted highlighting of relevant data, such as high blood pressure numbers displaying in red text
• Preventative care reminders
• Links to treatment guidelines and other reference materials
• Care plans and protocols based on diagnosis or other results

According to the criminal information filed against Practice Fusion, CDS features are required to be consistent with applicable evidence-based medical guidelines and with 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 pharmaceutical companies and permitting them to participate in designing the CDS alerts.  This participation included:

1. Selecting the guidelines used to develop the alert;
2. Setting the criteria that would determine when the alert was triggered; and,
3. In some cases, drafting the language used in the alert.

Although the CDS alerts were designed to look like unbiased medical information, the U.S. 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, Practice Fusion admits that it acted to further the company’s commercial objective of increasing prescriptions for its extended release opioids (“ERO”) by targeting those patients who were not currently opioid users and those who were on immediate-release opioid medications, contrary to guidelines stating that EROs 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 Pain CDS paid for and designed in conjunction with the pharmaceutical company accomplished its commercial goals:  between 2016 and 2019, the Pain CDS alerted more than 230 million times, and healthcare providers who received the Pain CDS alerts prescribed EROs at a higher rate than those who did not.

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.

It appears that the U.S. is not done investigating this fraud: 13 other CDS arrangements are alleged, and Practice Fusion 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

The civil settlement resolves Practice Fusion’s liability for the submission of claims tainted by the CDS kickback scheme, as well as 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 who 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 lead 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.  If you have information about fraud by EHR providers, an experienced whistleblower attorney can answer your questions, help you decide whether to blow the whistle, advise you on the merits of your potential claim, and work with you to plan your next steps.

Read More:

• Fraud Related to Electronic Health Records
• Healthcare & Pharmaceutical Fraud
• The Anti-Kickback Statute
• The False Claims Act
• Whistleblower FAQs
• The Constantine Cannon Whistleblower Team
• Contact us for a confidential consultation

Tagged in: Anti-Kickback and Stark, Catch of the Week, Criminal Proceedings, Electronic Health Records, FCA Federal, Healthcare Fraud, Pharma Fraud,