OIG Advisory Opinion Permits Charging Per-Click and Per-Booking Fees

Health Highlights

On September 10, 2019, the Office of Inspector General (OIG) of the federal Department of Health and Human Services posted OIG Advisory Opinion 19-04 (the Opinion), which addressed two proposed arrangements between providers and a technology company. While the name of the company was redacted from the Opinion itself, the company subsequently publicly identified itself as ZocDoc.

The proposed arrangements are as follows:

  • An arrangement under which the company would make its online healthcare directory for searching and booking medical appointments available to federal healthcare program beneficiaries, notwithstanding the fact that the providers included in the directory pay per-click or per-booking fees in order to be included.
  • An arrangement under which the company would make sponsored advertisements on its online healthcare directory and third-party websites available to federal healthcare program beneficiaries, notwithstanding the fact that providers pay per-impression or per-click fees for such sponsored advertisements.

The OIG determined that the proposed arrangements would not constitute grounds for the imposition of civil monetary penalties under the Civil Monetary Penalties Law (the CMPL). The OIG also concluded that while the proposed arrangements could potentially generate prohibited remuneration under the federal Anti-Kickback Statute (AKS) if the requisite intent were present, the OIG would not impose administrative sanctions on the technology company in question.

Description of the Proposed Arrangement

Online Directory. The Opinion describes ZocDoc as a technology company that operates a platform through its website and mobile applications (the Marketplace) that allows users to search for and book medical appointments with providers that match the user’s search criteria, such as the services needed, a specific geographic area, a preferred appointment time and the user’s medical insurance. The Marketplace uses a proprietary algorithm to filter and prioritize providers based on various user-centric criteria, including user-specified criteria, and generate up to 200 organic, personalized search results. The algorithm does not take into account the amounts the providers pay the technology company or any other non-user-centric criteria. The Marketplace also allows users to create an account and store certain medical and insurance information in advance of medical appointments in order to reduce the time users spend in medical offices completing forms and the risk of transcription errors by providers’ staff. The technology company is not a healthcare provider, is not affiliated with any healthcare provider and does not recommend any particular healthcare provider to users.

Users are not charged a fee to utilize the Marketplace. Instead, providers pay fees to be listed in the Marketplace. In some locations, providers pay a flat monthly subscription fee. In other states, providers pay a lower subscription fee plus either a per-booking fee for each appointment booked by a new patient (Per-Booking Marketplace Fees) or a per-click fee each time a patient clicks on a search result in which the provider is listed (Per-Click Marketplace Fees).

All fees are set in advance, are based on valuations by an independent third-party valuation firm and would not exceed fair market value.

Sponsored Advertisements. Providers may also purchase banner advertisements that are displayed on the same screen as the search results described above, as well as on third-party websites. The advertisements advertise providers, but do not promote any particular item or service. Currently, advertisements on the Marketplace are only available to users who do not indicate that they are federal healthcare program beneficiaries, but the technology company wishes to make them available to federal healthcare program beneficiaries. The company also wishes to display such advertisements on third-party websites, which would be visible to anyone viewing the websites, including federal healthcare program beneficiaries. Advertisements on the Marketplace are clearly labeled as such and are readily distinguishable from Marketplace search results. Advertisements on third-party websites would be clearly labeled as advertisements, and a third-party expert advised that the vast majority of Medicare beneficiaries would understand that the advertisements are paid advertising. The company also certified that when it determines that a user is a federal healthcare program beneficiary, advertisements on the Marketplace would include more pronounced lettering and conspicuous coloration.

The company charges providers a per-impression fee each time an advertisement is viewed by a user (the Per-Impression Advertising Fee), and intends to charge providers a per-click-advertising fee each time a user clicks on the provider’s advertisement (the Per-Click Advertising Fee). The fees are determined through a bidding process that allows providers to bid in an advertisement auction for user searches for which the provider is relevant, or that involve keywords that are relevant to the provider. The fees do not exceed fair market value, do not depend on a user’s insurance status, and do not vary with the volume or value of items or services any provider furnishes to users.

Legal Analysis

Civil Monetary Penalties Law (CMPL)

The OIG concluded that the arrangements described above do not implicate the CMPL because the remuneration the company would provide to federal healthcare program beneficiaries—the functionality of the Marketplace and the convenience inherent to using the Marketplace—likely would not influence a beneficiary to select a particular provider. The OIG stated that although the Marketplace would present one convenient way for federal healthcare program beneficiaries to view available appointment times and book appointments with providers, many factors influence someone’s decision to seek services from a provider, and access to the Marketplace alone would not be likely to influence a user to receive services from a particular provider on the Marketplace as compared to the broader group of available providers.

Anti-Kickback Statute (AKS)

The OIG concluded that the arrangements described above do implicate the AKS, however, because, among other things, the company would be arranging for the furnishing of federally reimbursable services in exchange for the fees described above. However, the OIG concluded that the arrangements present a low risk of fraud and abuse under the AKS for the following reasons:

  • While the Per-Booking Marketplace Fees and the Per-Click Marketplace Fees would vary, they are (or will be) set in advance, and none of the aggregate fees would exceed fair market value. In addition, they would not take into account the volume or value of healthcare program business generated by the Marketplace. In particular, the Per-Booking Marketplace Fees apply only when a user who identifies as a new patient books an appointment; regardless of the user’s insurance status; and, except in limited circumstances, regardless of whether the user cancels the appointment. Further, providers’ listings in Marketplace Results depend only on user-centric criteria, so the fees providers pay, or would pay, do not affect the frequency with which providers appear, or their placement, in Marketplace Results.
  • The Per-Impression Advertising Fees do not, and the Per-Click Advertising Fees would not, exceed fair market value. Additionally, the Per-Impression Advertising Fees vary, and the Per-Click Advertising Fees would vary, by the amounts providers bid for advertising, but none of the advertising fees would take into account users’ insurance status or the volume or value of any business generated for providers through the Marketplace or on third-party websites.
  • The company itself is not a provider or supplier, so the proposed arrangements are distinguishable from potentially problematic arrangements involving marketing by healthcare providers and suppliers. Marketing by healthcare professionals is subject to closer scrutiny because they are in a position of trust and may exert undue influence when recommending healthcare-related items or services, especially to their own patients. Because the company is not a provider or supplier, is not affiliated with any provider listed on the Marketplace, and does not recommend any particular provider to users, this same concern is not present.
  • The company’s advertising activities do not specifically target federal healthcare program beneficiaries. The advertising activities are essentially passive in nature because any contact with the technology vendor must be initiated by a federal healthcare program beneficiary. Unlike more direct forms of advertising, such as emails, mailings or text messages, the advertisements in question would be visible to federal healthcare program beneficiaries only if they visit the Marketplace or a third-party website where the advertisements are displayed. Further, the advertisements are clearly marked as paid advertising, and as an additional safeguard, advertisements on the Marketplace would include more pronounced lettering and conspicuous coloration when a user is a federal healthcare program beneficiary.
  • The marketing activities would not relate to any specific items or services users may obtain from providers as a result of appointments booked through the Marketplace. The advertisements advertise particular providers but do not, and would not, promote any particular item or service. Importantly, the Marketplace does not prioritize providers based on the amount they pay or any other non-user-centric criteria. Additionally, the website notifies users that providers pay a fee to be listed in Marketplace Results, which reduces the chance that users would think the Marketplace reflects the full scope of healthcare professionals available to them.
  • The potential user base is the general public, and any individual, regardless of insurance status, can access the Marketplace and view Marketplace search results and advertisements. Although the company collects insurance information from users, it would not use this information to target federal healthcare program beneficiaries or otherwise influence their decision making. It merely uses this information to match users with providers who accept their insurance and to allow users to store medical and insurance information in advance of medical appointments to reduce the time users spend in providers’ offices completing forms and the possibility of transcription errors by providers’ staffs.
  • The company does not provide anything of value to federal healthcare program beneficiaries (other than the inherent functionality of the Marketplace and the convenience inherent to using the Marketplace) to induce them to use the Marketplace or that otherwise might serve to influence their selection of a healthcare professional or other healthcare choices.

Conclusion

This Advisory Opinion offers insight to the factors considered by the OIG in evaluating a new form of technology, which can provide helpful guidance to technology companies looking to provide value-add services to medical practices and receive payment based on a per-click or per-service model. However, companies must proceed with caution when entering into these types of arrangements because each Advisory Opinion is limited to the specific requestor. Thus, similar arrangements should always be reviewed by counsel who specializes in the AKS and CMPL.

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