Legal Services for Medical Marketing Companies
In an ever-competitive industry, healthcare providers turn to medical marketing companies to differentiate their practice from others. Marketing has the potential to boost a patient care provider’s profits, attract patients, and build a practice’s reputation.
However, medical marketing is subject to a complicated laundry list of laws and regulations, where noncompliance can lead to severe penalties.
Government agencies, insurance providers, and other regulatory institutions are keeping a watchful eye on medical marketing companies to ensure compliance with industry standards of accurate data representation and ethical advertisements.
What is “Medical Marketing Fraud?”
“Medical marketing fraud” involves trusted health care providers who engage in recommending services or products to public advertisements.
Incentivizing patients through marketing means is a trend that has mushroomed across the country, and regularly raises compliance issues.
Predominantly, medical marketing fraud is encompassed under four laws. They include the:
What is “Kickback?”
The Anti-Kickback Statute (“AKS”) went into force in 1972 and prevents the increase of healthcare costs to federal programs. The AKS enforces civil and criminal penalties against intentionally offering, paying, soliciting, or receiving remuneration to induce or reward.
(1) the referring of an individual for the furnishing or arranging for the furnishing of items or services reimbursable by a federal healthcare program or
(2) the purchasing, leasing, or ordering, or the arranging for or recommending the purchasing, leasing, or order of items or services reimbursable by a federal healthcare program.”
What does that mean?
Essentially, a healthcare provider’s relationship with its marketing company can trigger the statute. If a healthcare provider is paying a marketing company to advertise on its behalf, the payment could be seen as inducing someone to purchase services that the federal government will reimburse.
On the flip side, a marketing company can be accused of fraud if it provides a healthcare provider with the opportunity to earn money by referring patients for a particular service or product that could be federally reimbursed.
What Law Governs Physician Referrals?
The Stark Law prohibits physicians from self-referring family members. The law provides that if a physician (or a member of the physician’s immediate family) has a financial relationship with an entity the following apply:
- The physician can’t make a referral to the entity for health services for which payment may be made by Medicare, and
- The entity can’t present a claim for a health service rendered pursuant to a prohibited referral unless a specific exception is met
These health services include clinical laboratory services, physical therapy, radiology treatments, inpatient and outpatient hospital treatments, and medical equipment and supplies.
Unlike the AKS, the Stark Law is a strict liability statute and doesn’t require intent.
The Stark Law can be triggered by a marketing agreement where a healthcare provider markets on behalf of an entity that supplies health services, or vice versa. Physicians may be paid to market on behalf of hospitals with which they are affiliated. Similarly, hospitals may run advertising initiatives that market their physicians, and those physicians receive remuneration.
Healthcare providers need to examine whether marketing plans offer remuneration to federal healthcare programs to influence beneficiaries into choosing certain healthcare providers over others.
The Civil Money Penalty Law (“CMP”) imposes civil monetary penalties against individuals who offer remuneration or transfer remuneration to anyone eligible for federal healthcare benefits.
The CMP law prevents healthcare providers and marketing companies from influencing an individual’s selection of a particular healthcare provider, practitioner, or supplier of medical items that may be covered by Medicare or Medicaid.
Health Insurance Portability and Accountability Act
The Health Insurance Portability and Accountability Act (“HIPAA”) controls the structure of marketing ploys. Medical marketing must comply with HIPAA’s extensive privacy and security regulations by omitting individually identifiable health information.
HIPAA requires that most healthcare providers must implement administrative, physical, and technical safeguards to protect the security of such information.
This is enforced by requiring healthcare providers and medical marketing companies to obtain valid HIPAA authorization before sending marketing communications to individuals.
Who Investigates Medical Marketing Fraud?
Currently, the Department of Justice and U.S. Attorney’s Offices usually spearhead investigations on medical marketing companies and business owners who employ medical marketing companies.
The Office of Inspector General (OIG) has expressed concern over advertising where a trusted healthcare provider is engaged in recommending a service or product.
Medical marketing fraud allegations can involve several entities (patients, marketing companies, healthcare providers, state agencies, federal prosecutors). This makes DOJ investigations all the more aggressive and robust and leads the DOJ to partner with the Federal Bureau of Investigations, Office of Inspector General, and Department of Health and Human Services, where necessary.
Investigations of Medical Marketing Fraud
Agencies look to the following suspicious activity when investigating medical marketing fraud:
- “Success fees” or compensation that reflects a generation of new business for the healthcare provider
- “White coat marketing” by healthcare professionals that pushes certain products or services, and exploits the professionals’ position as a trustworthy provider
- Direct billing of a federal program by the seller of an item, or service sold by a sales agent
- Direct contact between the sales agent and physician in a position to order items or services that are subsequently reimbursed by a federal healthcare program
- Direct contact between the sales agent and federal healthcare program beneficiaries
- Marketing of individual items or services that are separately reimbursable by a federal healthcare program
- The degree to which the marketing activities may be coercive, or perceived to be coercive
How Is Medical Marketing Fraud Investigated?
Investigations usually commence when data analysts at insurance or federal healthcare agencies notice suspicious claim patterns. Then, specialized investigators and auditors enter the picture.
Investigators and auditors scrutinize unusual patterns in purchasing and billing and interview medical marketing personnel and affiliated healthcare providers. Federal and state auditors may also ask to interview you, or your employees.
If you’re subpoenaed or asked to provide evidence in furtherance of an investigation, you have the right to consult an attorney who can properly guide you through the interview and investigation process.
Medical Marketing Companies
Medical marketing companies provide an effective way for healthcare providers to connect with patients. However, the process of incentivizing healthcare can run counter to compliance regulations.
For example, marketing techniques that are permissible in other industries may be unlawful in the medical industry. Without an awareness of statutory requirements for medical marketing, many medical marketing companies engage in violations of the law and become implicated in healthcare fraud.
By affiliating with medical marketing companies that are susceptible to healthcare fraud, healthcare providers may also become entangled in violating statutory requirements.
If the healthcare provider is brought under investigation and audits, the reputation of its practice will certainly suffer. Patients will be likely to relocate their medical needs, and the provider might be excluded from federal healthcare programs.
Federal Healthcare Program Providers
Federal healthcare providers become involved with incidents of healthcare fraud during the investigation and auditing process.
The government allocates significant resources towards cracking down on medical marketing, including data analysis of billing and coding procedures, traveling to on-site locations to conduct interviews of medical marketing company employees, and affiliated healthcare staff.
Because the government takes a hands-on role towards the investigation process, the investigation of a single case can require multiple employees, and the partnering of several federal agencies such as the FBI, DHHS, and OIG.
Anti-Kickback Statute Violations.
AKS violations are a felony punishable by a criminal fine of up to $25,000 per violation, jail time for up to five years, or both.
Civil fines can include up to $50,000 per violation, damages of up to three times the amount earned in remuneration, and possible exclusion from participating in federal healthcare programs.
Stark Law Violations.
Stark Law violations include issuing mandatory refunds in the amounts received for services provided pursuant to prohibited referrals.
Civil monetary penalties include up to $15,000 per violation and possible exclusion from federal healthcare programs.
Civil Money Penalty Law Violations.
In addition to the imposition of civil monetary penalties, violations of the CMP law may lead to exclusion from participation in federal healthcare programs.
Fraud Detection in Your Practice
Generally, there is a lower risk of medical marketing fraud when:
- Marketing is not executed by healthcare professionals themselves;
- Ads representing products or services are accurate and not deceptive; and
- Ads are targeted towards a broad audience, and not towards a particular patient.
Preparing a Defense Against Accusations of Medical Marketing Fraud
Some successful defenses to “healthcare fraud” and “medical marketing fraud,” include:
Lack of intent: Allegations of fraud require that you have an intent to defraud federal healthcare providers. If you can show that the alleged fraudulent conduct was done unintentionally, you have a valid defense.
Seemingly fraudulent conduct can commonly occur due to human error and can be established through your record keeping. You may be able to resolve the situation with minimal fines.
Good faith: If you can show that the alleged fraudulent conduct was a good faith mistake, then you have a valid defense.
Proactive Advice and What You Should Do If Accused
If you are suspected of healthcare fraud, hiring legal counsel immediately is in your best interest. Medical marketing is intricate, hinging on a very particular set of statutes, and potentially carries severe fines.
The attorneys at Blanch Law Firm have substantial expertise in defending clients involved with medical marketing investigations. Medical marketing companies and healthcare professionals sometimes become entangled in fraudulent activity simply because of the complex nature of the law and are often unaware of what is permitted in medical marketing.
We can conduct internal audits at your practice, learn the facts, and strategize effective defense arguments so that your exposure to hefty fines is minimized. If you have questions about medical marketing activities or looming investigations, contact our firm.