The US Department of Health and Human Services Office of Inspector General (OIG) recently released Advisory Opinion No. 23-04, which found that fraud and abuse risks were sufficiently low in light of certain safeguards to avoid a “negative” opinion regarding online healthcare directories accessible to Federal health care program (FHCP) beneficiaries. The opinion evaluated current and proposed functionalities of an online healthcare directory utilized by healthcare providers that pay on a per-click basis to be featured in the directory—through which prospective patients may book appointments directly—and advertised.
Marketing in the healthcare industry frequently implicates the Federal Anti-Kickback Statute (AKS). Use of an online healthcare directory implicates the AKS when a healthcare provider whose services are reimbursable, in whole or in part, by FHCPs pays the directory host fees to recommend the provider and their services to prospective patients—who may include FHCP beneficiaries—through inclusion in the directory and other advertising efforts.
Online healthcare directories that include an appointment booking functionality in exchange for a fee from the listed provider also implicate the AKS since the directories serve to recommend and/or arrange for the provision of items and services that may be reimbursable by FHCPs.
When a directory service charges a healthcare provider a fee for each appointment booking or click-through advertisement link, these fees are referred to as “per-click” fees and have historically been scrutinized more closely than fixed fee marketing arrangements.
Additionally, as discussed in Advisory Opinion No. 23-04 (Advisory Opinion), OIG views healthcare directory services that allow individual Medicare or Medicaid beneficiaries to access free provider searches and appointment booking services as a form of inducement to those prospective patients to purchase healthcare items and services that are reimbursable by FHCPs.
Accordingly, online healthcare directories also implicate the civil monetary penalty provision prohibiting inducements to beneficiaries (Beneficiary Inducements CMP). [1] No safe harbor protection is available under the AKS for these arrangements.
In the Advisory Opinion, OIG ultimately concluded that, while the online marketing company’s (Requestor’s) proposed arrangement, which included per-click fees, would generate prohibited remuneration under both the AKS, if the requisite intent were present, and Beneficiary Inducements CMP, OIG would not impose administrative sanctions in connection with the online healthcare directory services given numerous safeguards put in place to reduce the risk of fraud and abuse under the arrangement.
The Advisory Opinion is welcome guidance for the healthcare community, as well as companies looking to provide marketing and advertising services to healthcare providers.
The Requestor operates an online healthcare directory accessible by users on its website and via a mobile application (together, Marketplace). Through the Marketplace, users—including FHCP beneficiaries—can search for healthcare providers using various criteria (e.g., services needed, geographic area, preferred appointment time, insurance carrier, star ratings) and also book appointments directly.
The Marketplace provides personalized search results for each user that prioritize healthcare providers based on both the search criteria set by the user and other factors (e.g., providers’ pending appointment bookings or cancellation rates). The Marketplace allows users to create an account and save certain medical and insurance information that can be shared with providers during the scheduling process. Users do not pay any fees to utilize the Marketplace.
Importantly to OIG’s analysis, the Requestor is not a provider or supplier of healthcare items or services or affiliated with any provider utilizing the Marketplace. Further, the Marketplace does not expressly recommend any particular provider to users.
Healthcare providers pay fees to participate in the Marketplace and for additional advertising services. To be included in the directory, providers pay a per-booking fee for each appointment scheduled through the Marketplace if the user self-identifies as a new patient and has not previously booked an appointment with the provider through the Marketplace. These per-booking fees are essentially per-click fees. The Requestor represented that the booking fees paid by healthcare providers were fair market value (FMV) and set in advance based on valuations by an independent, third-party valuation firm.
Notably, the per-booking fees vary based on the provider’s medical specialty, geographic location, and other factors impacting FMV. However, these fees are not determined based on a user’s insurance status (e.g., uninsured, commercially insured, or FHCP beneficiary) or in any manner that takes into account the value of FHCP referrals or business generated by the Requestor for the provider.
Providers may set spending caps on per-booking fees that limit the number of new patient appointment bookings the provider may receive and be charged for during a given month. If a provider’s spending cap is reached, the appointment functionality is turned off until it resets at the beginning of the next month. Currently, while new patients are not shown profiles of spend-capped providers in the Marketplace (and therefore cannot book an appointment), existing patients of those practices may still utilize the appointment-booking functionality.
The Requestor also proposed a change whereby users who self-identify as FHCP beneficiaries or who decline to specify their insurance coverage would still be shown profiles of spend-capped providers but would not be able to book appointments through the Marketplace. A spend-capped provider’s profile would include disclaimers that the provider has temporarily limited the number of appointment bookings through the Marketplace but that the provider may be able to accommodate appointments if contacted directly.
Additionally, these spend-capped provider profiles would feature a “Notify Me” option that, if selected, would automatically notify the user when additional appointments become available for the provider through the Marketplace.
In addition to the base per-booking fees, providers may elect to purchase banner advertisements from the Requestor that are featured both in the Marketplace’s search results and on third-party websites (both healthcare and non-healthcare related). These paid advertisements are visible to all Marketplace users, including FHCP beneficiaries. Notably, these advertisements only appear in the Marketplace when the provider matches the user’s search terms.
In exchange for such advertising services, providers pay the Requestor either a per-impression or per-click fee that does not exceed FMV, vary based on the user’s insurance status or whether they ultimately book an appointment or obtain services from the provider, or vary with the volume or value of items or services provided by the provider to the user. These per-impression and per-click fees are determined through a bidding process in which the Requestor sets a minimum bid amount and providers bid on particular search terms.
In evaluating the proposed arrangement, OIG highlighted that online healthcare directories are a type of advertising activity for which the agency evaluates various factors, including (1) the amount and structure of the compensation; (2) the identity of the party engaged in the marketing activity and the party’s relationship with its target audience; (3) the nature of the marketing activity; (4) the item or service being marketed; (5) the target population; and (6) any safeguards to prevent fraud and abuse.
In concluding that it would not impose any administrative sanctions on the Requestor related to the proposed arrangement, OIG emphasized the following safeguards of the online healthcare directory services at issue:
FMV Booking Fees Are Set in Advance and Do Not Impact Marketplace Search Results
Although per-booking fees may vary by provider, the fees are set in advance, FMV, and do not take into account the value of FHCP referrals or business generated by the Requestor for the client provider.
Further, these fees do not vary based on a user’s insurance status, and Marketplace search results are not filtered or prioritized based on fees, spending caps, or the volume or value of FHCP business generated through the Marketplace. In other words, a provider’s booking fees do not impact how frequently a provider appears or how favorably a provider is displayed in the Marketplace search results.
Likewise, both per-impression and per-click advertising fees are set at a FMV rate. Notably, OIG was sufficiently assured by the Requestor’s representation that such fees determined through an advertising bidding process were FMV. While FMV reports from third-party consultants remain the gold standard for establishing FMV, the Advisory Opinion highlights that alternative rate-setting metrics—such as a real-time, market bidding process—can also be used to determine FMV.
Notably, while the advertising fees might vary based on the results of the Requestor’s bidding process, no advertising fees are set based on users’ insurance status or the volume or value of FHCP business generated through the Marketplace.
Requestor Had an Arm’s Length Relationship with Providers and Is Not a Healthcare Provider or Supplier
Critically, the Requestor is neither a provider or supplier of healthcare items or services nor affiliated with any Marketplace provider. Moreover, it does not expressly recommend any provider’s services to users.
Accordingly, the proposed arrangement is distinguishable from so-called “white coat marketing” by healthcare providers, which is more closely scrutinized by OIG, given that providers are in a special position of trust with their patients and may therefore unduly influence patients when recommending healthcare items and services.
FHCP Beneficiaries Are Not Targeted or Given Additional Remuneration
While the Marketplace’s provider search and appointment booking functionalities are available to FHCP beneficiaries, the Requestor’s advertising efforts—in the form of sponsored provider search results and banner advertisements—are not specifically targeted at FHCP beneficiaries and are clearly marked as paid ads.
Additionally, while the Requestor collects insurance information from users, this information is used only to provide convenient provider search and appointment scheduling services to users, and not to target or otherwise influence FHCP beneficiaries. Other than free access to the functionalities of the Marketplace, nothing else of value is provided to FHCP beneficiaries.
OIG highlighted that the arrangement’s patient-facing advertising is passive in nature, given that any contact with the advertisements is initiated by users who visit the Marketplace or a third-party website where provider advertisements are featured. OIG contrasted these passive forms of patient-facing advertising against targeted emails, mailings, or text messages that might be sent to FHCP beneficiaries.
Marketing Activities Do Not Tie to Specific Healthcare Items and Services
Patient-facing advertising would not relate to any specific healthcare items and services that may be provided by a provider found through the Marketplace search results. Instead, only the provider profiles are highlighted through the search results and paid ads.
Importantly, the Marketplace also publicly discloses that providers pay a fee for new patient bookings, lowering the risk that users believe that the Marketplace reflects all area healthcare providers.
User-Centric Search Results
Additionally, the Marketplace’s algorithm filters and prioritizes provider search results based primarily on user search criteria and not based on provider fees, spending caps, or the volume or value of FHCP business generated for a provider through the Marketplace, or other non-user-centric factors. Accordingly, the Requestor’s algorithm is designed to populate provider search results that most closely match a user’s preferences, and providers correspondingly are equally likely to be featured higher in the search results.
Anti-Steering Safeguards
With respect to FHCP beneficiary users, the Requestor proposed stopping the removal of providers who have reached monthly spending caps from Marketplace search results and adding various transparent disclosures about spend-capped providers to the Marketplace results and the “Notify Me” feature for future appointment availability.
OIG noted that these safeguards reduce the risk that the Marketplace might inappropriately steer FHCP beneficiaries to certain providers.
The Advisory Opinion provides helpful guidance for online marketing and appointment booking services and has broader application to other current-day online marketing arrangements. OIG’s approval of the per-click fees, when accompanied by sufficient safeguards, may provide both parties flexibility in structuring the compensation for these arrangements.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following:
[1] 42 U.S.C. § 1320a-7a(a)(5).