If you sell healthcare technology, you might reasonably ask whether you can have software referral programs, contribute to your customers’ charities, pay folks to write reviews for your software, and more. In many software verticals, these practices are commonplace. However, for healthcare technology developers, these practices are radioactive because they may implicate the Anti-Kickback Statute (“AKS”). The AKS is a criminal statute that makes it illegal to obtain a referral or induce a purchase by offering something of value. It criminalizes both sides of the transaction (the seller and the buyer, the referrer and the referee).
Whether the AKS applies to you depends on whether your product is (at least) partially reimbursable by a federal healthcare program. The Department of Justice has made it clear through its recent enforcement actions that it views vendors who benefit from programs like the EHR Incentive Program as squarely within the AKS’s purview, and that a developer’s sales and marketing activities are a target area for enforcement. The following activities, when conducted by health IT vendors, have been implicated in recent settlements:
- Event programs (e.g. sports and entertainment)
- Site visit programs
- Consulting and speaker arrangements through which providers recommended health IT software
- Lead generation programs
- Reference and referral programs
- Offering free migrations to select platforms
The problem is that many developers are unaware that the AKS may even apply to these activities, and sales and marketing leaders often react less than enthusiastically to the idea that something that isn’t a drug or medical device could be regulated like this (a view I empathize with, but the DOJ has no room for my empathy). And frankly, simply shutting off all potential activities that could implicate the AKS very well may needlessly paralyze growth.
What these developers should do is first internalize that the AKS exists, and if it applies to you, you must comply. Second, rather than getting frustrated at the statute’s breadth, take advantage of its limitations. The AKS is first and foremost intent-based: you have to knowingly offer something of value in exchange for a referral (or purchase) of something reimbursable under a federal healthcare program. Next, the Department of Health & Human Services has promulgated a host of exceptions that operate as safe harbors for certain activities.
To keep yourself and your sales team straight, you should implement a customer experience program and an AKS policy (and procedures), or something analogous. Together they should spell out what your organization offers to providers to improve their experience with your company and how it does it. Of course, it should also specify what is prohibited.
First, no payments, gifts, contributions, or ANY sort of item should be distributed in exchange for a referral, purchase, or review, or during the sales and marketing process. The AKS has no de-minimus exception, which means a fraction of a fraction of a fraction of a cent could be sufficient. Free services could be sufficient. A free meal could be sufficient. A small pen could be. A sales representative or marketing program should not offer a provider anything of value unless it meets an exception outlined in your policies and procedures. In other words, don’t give your customers or prospects anything, unless you have controlled for its AKS risk through a policy and procedure.
Now, let’s talk about things that the right policies and procedures will enable you to do. We’ll talk about reviews, discounts, and provider speaking engagements (although there are many other viable tactics that you can fit into an AKS policy).
First, rather than paying for referrals or positive reviews , your goal should be to create a great customer experience, where among other things, people can freely talk about your software. The business idea is that a great customer experience will lead to organic free referrals that your organization facilitates and encourages. You can create a program where your customers are provided with something of value in exchange for a review – say a credit, gift card, or other item that would normally violate the AKS, so long as you don’t discriminate between those who provide you good reviews and bad ones.
Discounts are another common commercial tool that can implicate the AKS. In short, offering somebody a discount on any good or service that is reimbursable through a federal healthcare program could violate the AKS because it could induce that person to buy even more. However, Congress’s intent in passing the AKS was not to foreclose every potential business break, especially those that could benefit Medicare. This includes, perhaps especially, discounts. Therefore, there is an exception you can take advantage of and claim safe harbor when offering your customers a discount. There’s a host of requirements that basically aim at making sure that CMS is aware of the discount and can recoup its cut if necessary.
You can get providers to talk about how they use your software so long as you take advantage of the personal service exception so long as you ensure they are not being incented to recommend or refer your software for purchase. For example, leveraging the personal services exception to compensate a community health center to discuss how to successfully implement your health IT would likely be safe. Another example would be compensating a provider to talk about how to manage reporting clinical and financial data to payers through your software. But again, doing so for explicitly for referrals would not be.
Those are just a few of the basics for complying the with the AKS in the sales and marketing process for health IT developers. Step 1 though is to get your policies and procedures in place, now. How developers sell and market their technology matters to the DOJ today.
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