In a recent advisory opinion, the United States Department of Health and Human Services Office of Inspector General (the “OIG”) appears to reaffirm its previous findings concerning the compliance of certain practices by online healthcare marketplaces with the Federal Anti-Kickback Stature (the “AKS”) or the Civil Monetary Penalty Law (the “CMP”). In 2019, OIG released Advisory Opinion 19-04 (the “2019 Opinion”) which commented on whether certain practices were violative of the AKS or CMP. The requestor of the 2019 Opinion has since been identified as Zocdoc, an online healthcare technology company.
Background
Zocdoc, via its online website and mobile applications (the “Online Marketplace”) permits patients, including federal beneficiaries, to search for, find and book appointments with various health care providers, including podiatrists, physical therapists, physicians, etc. (“Providers”). Zocdoc charges various fees for the Providers such as per-booking fees, per-click fees and per-impression fees, for being listed on the Marketplace). To insulate itself from any violations of the AKS or CMP, Zocdoc submitted a request to the OIG for the 2019 Opinion.
In the 2019 Opinion, the OIG reviewed Zocdoc’s operations and found that they both:
- implicated the AKS as they constitute “arranging for the furnishing of federally reimbursable items and services in exchange for the [fees]” and engaging in “advertising activities meant to induce the use of an item or service”; and
- (ii) would not satisfy any safe harbor of the AKS. Despite triggering the AKS, and lacking a safe harbor, the OIG concluded that Zocdoc’s business model did not warrant any enforcement actions under the AKS or CMP.
OIG cited the following mitigating factors:
- The fees being set in advance;
- The fees being at fair market value;
- The fees not being based on the volume or value of federally reimbursable items or services (the fees only applied when bookings were made, not services rendered);
- Zocdoc not being a provider of healthcare services, having little influence over patient choices;
- The lack of marketing specific healthcare services;
- Zocdoc not providing anything of value to patients in exchange for booking; and
- The accessibility of Marketplace to all patients (regardless of insurance status)
2023 Opinion and Expansions
More recently, in Advisory Opinion 23-04 released on July 11, 2023, ( the “2023 Opinion”) OIG confirmed its previous position regarding the compliance of online healthcare marketplaces and expanded on its previous findings. The 2023 Opinion focused on Zocdoc’s proposed changes to its online marketplace, which included transitioning to a “per-booking fee” and implementing a “spending cap” for providers. The OIG confirmed that, although the new fee arrangement and “spending cap” implicated the AKS and CMP, they would not result in enforcement actions. OIG highlighted that the “spending cap” notification would enhance transparency, giving patients more provider options, and providers wouldn’t gain visibility based on their willingness to pay per booking.. When the OIG reviewed these changes in the 2023 Opinion, OIG re-affirmed its position in the 2019 Opinion, finding that the arrangement would implicate both the AKS and CMP, but would not result in any enforcement action. In addition to re-stating its reasons set forth in the 2019 Opinion, the OIG highlighted the following points:
- The notification that a Provider has reached its spending cap would further enhance transparency and promote patients to seek out the providers of their choice;
- The identification of spend-capped Providers would give patients a wide array of Providers to choose from, allowing the patient the opportunity to contact a selected Provider directly; and
- Providers are not boosted based on how much they are willing to pay per-booking. Rather, the providers are displayed based on the same algorithm subject to the 2019 Opinion. Having reached the spend-cap would not result in a reduction in visibility.
Conclusion and Guidance
Through the 2023 Opinion, the OIG confirmed its outlook that, although these arrangements fall within the scope of AKS and CMP, and do not qualify for any safe harbor protection, these arrangements are still acceptable so long as they do not pose a high risk of fraud and abuse and the risk is low based on several mitigating factors.
Both the 2019 Opinion and the 2023 Opinion underscores the importance for non-clinical entities organizing such relationships and healthcare providers signing up to be listed on these platforms to consult with experienced healthcare counsel. This ensures that any potential online marketplace or list-based referral arrangement follows a structure similar to Zocdoc’s approach to minimize the likelihood of violating the AKS or CMP. Frier Levitt provides comprehensive regulatory and transactional counsel to stakeholders interested in creating or becoming a part of these types of arrangements. Contact us to speak to an experienced healthcare attorney today.
