Health IT Company to Pay $145 Million for Violating Federal Law

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Last week, Practice Fusion, an electronic health records (EHR) company, was fined $145 million for setting up a business arrangement that violated the federal Anti-Kickback Statute. This law prevents anyone from offering, soliciting, paying, or receiving anything of value in order to induce referrals or generate federal healthcare business. Practice Fusion designed their technology to alert providers to the opportunity of prescribing extended release opioids (EROs), a drug for which their pharmaceutical company partner had a majority market share. This illegal arrangement generated less than $1 million, of with the EHR company was forced to forfeit in addition to the fine.

What does this mean for health IT companies?

  • This is the first time criminal penalties have been sought against an health IT company for an anti-kickback violation. This ruling opens the door for health IT vendors to be prosecuted for perverse business models encouraging health care delivery practices that are beneficial to the company and not the patient.

  • The US government is sending a clear messaging that gambling with violating federal law for financial gain should never be an option.

Best practices to follow:

  • ALWAYS work with regulatory experts to understand if your business model or product design violates federal or state statutes. This year, there will be several new federal laws being released that affect health IT and health data. The federal government is already gearing up to prosecute violators.

  • ALWAYS create health technology to enable providers to offer evidence-based care… this means care practices that are backed up by medical science.

  • ALWAYS create health technology that ultimately benefits patients by improving their outcomes.

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