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The Office of Inspector General at HHS has reversed course on an earlier ruling and now opposes a private HIE fee plan

OIG reverses course, opposes private HIE fee plan

By Joseph Conn
Posted: April 9, 2014 - 2:45 pm ET

The Office of Inspector General at HHS has done an unusual about-face on its own 2011 ruling regarding whether a payment method for a privately run health information exchange service runs afoul of federal anti-kickback laws.

The reversal will cause an electronic health-records vendor involved to change its fee structure.

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At issue is whether a health IT vendor can offer discounts to its EHR customers for buying additional HIE services and whether the vendor can be paid by two parties to a data transaction to provide both physicians and labs with a superior interface between their respective computer systems. The about-face comes in a pair of new opinions.

The names of the parties in the publicly available copies of both new OIG opinions were redacted—one being identified only as a “publicly traded corporation that operates a nationwide network of clinical laboratories” and the other as a “vendor of cloud-based EHR services.”

Athenahealth, a Watertown, Mass.-based vendor of electronic health-record systems to office-based physicians, has identify itself as the developer of the health information exchange services in question.

"We no longer find that the factors to which we cite in (the 2011 opinion) are sufficient to mitigate against the risk that the discount could be an improper payment to induce referrals of federal healthcare program business, particularly in the context of high-volume services, such as laboratory tests," according to the OIG statement.

In November 2011, Athenahealth asked for and received a favorable OIG opinion on a health information exchange service it was planning that would offer direct two-way connections between its EHR customers and other service providers, including labs. It would enable physicians to submit lab orders directly from their EHRs to labs and receive the results placed in the appropriate patient record, an improvement over other electronic ordering technologies.

The initial OIG opinion on this question, made public in January 2012, found that Athenahealth could charge both physicians and the lab for this service.

Complicating the opinion were the arrangements Athenahealth offered to its EHR customers and the participating labs. For example, physicians using both the EHR and HIE services would receive a discount, something akin to a cable television customer getting a lower rate on phone service if he buys both in a bundle.

With Athenahealth's program, however, these discounts could be wiped out by per-message fees for a sufficient number of lab orders to labs that are “non-trading partners,” for example, a lab that did not contract with and pay fees to Athenahealth.

“Trading partners” are defined as those providers or other organizations that have a contract with the vendor; non-trading partners are those who do not, according to the inspector general's opinion.

The fee differential for nontrading partners was identified by the OIG in its 2011 opinion as potentially problematic vis-a-vis anti-kickback laws. The OIG concluded the fee structure “could provide a financial incentive to ordering health professionals to refer to trading partners rather than non-trading partners to avoid a reduction in the EHR Service discount.”

But the OIG, in that earlier option, also declared health information exchange as a “laudable goal,” and in looking more broadly at all of the “facts and circumstances” of the services offered, it determined these combined factors “adequately reduce the risk” of an improper payment for arranging or making referrals.

The bottom line was, in 2011, the OIG approved the Athenahealth fee arrangement.

Athenahealth launched its HIE service. Today, most of its physician EHR customers also use the HIE, according to company Chief Operating Officer Ed Park.

Athenahealth has been crediting $1 against its discount to EHR customers for lab orders sent to non-trading partners. Meanwhile, lab orders to “trading partners” that did contract with Athenahealth were sent to the labs without charge to the physicians.

One of the national labs involved asked for its own opinion from the OIG about the deal with Athenahealth.

In response, the OIG issued two opinions, both made public Tuesday, one an eight-pager dealing with the lab's request (PDF), and the other, a three-pager (PDF), rescinding its 2011 opinion.

The lab in question, which had contracted with Athenahealth for its HIE, also had its own, multiple methods of receiving orders and sending results to physicians, according to the OIG.

The OIG in its new opinion to the lab determined that the fee structure, particularly with a high-volume business partner such as a lab, “could potentially influence the referring physicians' referral decisions in a material way” and “potentially generates prohibited remuneration” in violation of anti-kickback laws, its opinion said.

In practice, Park said, the company had discounted the fees charged to labs as “in network” HIE participants well below $1 per transaction, “As we've worked with some of the larger labs, it's substantially less than that because we take volume into account,” he said. Now, however, the transaction fees will be shifted to any messages across the network.

“We believe that the right thing to do here is to continue to charge the senders $1 an order,” Park said. To offset the cost, the company plans to lower its base price for its EHR and set a price cap on the total amount to be charged physicians in cost-per-order transaction fees.

Follow Joseph Conn on Twitter: @MHJConn

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