AMARILLO, TX – The Department of Justice (DOJ) and Office of Inspector General (OIG) are scrutinizing arrangements that health care providers and suppliers (pharmacies, labs, DME suppliers, etc.) have with lead generation companies (LGCs). What is acceptable in the non-health care space is often not acceptable in the health care space. This is because of the federal anti-fraud laws.
It is my observation that the compliance and ethics of a number of LGCs are questionable at best. LGCs are not health care providers/suppliers … and they are in the business of making money. And most LGCs know that if the government does not like an arrangement between an LGC and a DME supplier, the focus will normally be on the supplier. This is because it is the supplier, not the LGC, that bills federal health care programs (FHCPs).
The federal anti-kickback statute (AKS) does not prohibit a DME supplier from paying for a “raw” or “unqualified” lead in which the compensation is on a “per lead” basis. This is because a raw lead does not rise to the level of a “referral.” On the other hand, the AKS does prohibit a supplier from paying per lead compensation for a “qualified” lead.
A raw lead consists of the lead’s name, address and phone number. The percentage chance of a DME supplier eventually selling something to a raw lead is low. A raw lead is similar to what happens when the supplier advertises in the local newspaper. A person may call the supplier in response to a newspaper ad, but at the time of the call the supplier has no idea regarding how serious the lead is in terms of purchasing a product.
On the other hand, a qualified lead is one in which the LGC gathers additional information about the lead. Such additional information will give the supplier a much better idea regarding the seriousness of the lead about purchasing a product from the supplier. The additional information can include: (i) physician’s contact information; (ii) diagnosis; (iii) treatment/products currently being used; and (iv) insurance information.
The only way that a DME supplier can safely pay an LGC for qualified leads is for the arrangement to fit within (or substantially fit within) the Personal Services and Management Contracts safe harbor to the AKS. Among other requirements, the methodology for calculating the compensation paid to the LGC must be fixed one year in advance. For example, the compensation can be (i) fixed one year in advance (e.g., $36,000 over the next 12 months, or $3000 per month) or (ii) on an hourly basis. Further, the compensation must be the fair market value equivalent of the LGC’s services.
Picture a continuum. On the left end of the continuum is a raw lead. On the right end of the continuum is a qualified lead. As the lead starts moving from the left to the right (i.e., as the LGC gathers additional information about the lead), the lead will cross a line at which point it is transformed from being a raw lead to being a qualified lead. The question is: What additional information must be gathered before the raw lead becomes a qualified lead?
Separate and apart from the kickback issue is the telephone solicitation issue. According to the telephone solicitation statute and Supplier Standard #11, a DME supplier cannot call an FHCP patient (who happens to be a new, not an existing, patient) unless the patient first gives his written consent to be called by the DME supplier. The consent can be electronic or blue ink.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or firstname.lastname@example.org.