DOJ recently announced a settlement agreement in one of its first cases against an electronic health records (EHR) vendor—eClinicalWorks (eCW). According to the terms of the settlement, eCW and three of its founders will pay $154.92 million to the government to settle claims alleging that eCW falsified the certification of its software and thereby caused physician practices to submit claims for payment that were materially false. Three other eCW employees—a software developer and two project managers—will pay between $15,000 and $50,000 each for their roles.

Practitioners Get Financial Incentives for Making “Meaningful Use” of Certified EHR Technology

eCW is an EHR vendor that develops and sells software for  physician practices to use in maintaining EHR for their patients. To incentivize physician practices to make use of the EHR technology, the U.S. Department of Health and Human Services (HHS) established the Meaningful Use Program under the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009. The HITECH Meaningful Use Program gives medical practitioners monetary incentives for submitting claims for payment that make “meaningful use” of certified EHR technology. To become certified, the HITECH Act requires that software companies, such as eCW, submit their EHR programs for testing.

eCW’s EHR Technology’s Certification Was Not Obtained Properly

The relator filed a qui tam complaint against eCW in May 2015, alleging that eCW had improperly obtained certification for its EHR software. The government intervened in the case and subsequently filed its complaint-in-intervention on May 12, 2017.

The government’s FCA violations against eCW were premised on three allegations:

  1. eCW falsely obtained certification for its software.
  2. in obtaining this false certification, eCW caused individual practitioners to submit false claims for payment to the government while obtaining the false certification.
  3. eCW violated anti-kickback laws by improperly paying for referrals.

EHR Vendor Falsely Obtained Certification for its Software

To be certified for meaningful use under HITECH, software needs to implement certain prescription code vocabulary.  eCW allegedly pre-determined which prescription codes would be tested in the certification process and then only fully implemented the vocabulary for those 16 prescription codes.

HITECH requires software to satisfy certain data portability requirements, including the ability to batch export patient information. The government alleged that eCW not only failed to implement this task in its software, but also ignored user concerns that the software could not complete this task.

The government also alleged that eCW failed to implement proper audit log requirements in the software and failed to reliably perform drug interaction tests based on a patient’s electronic prescription information.

Falsely Obtained Certification Causes Practitioners to Submit False Claims

The government alleged that by falsely obtaining certification for its EHR software, eCW caused practitioners to submit false claims for payment. In order to receive the incentive payments for using EHR software, practitioners must certify that they make “meaningful use” of certified technology. According to the government, both “meaningful use” and proper certification are material to payment under the incentive program, and because eCW’s software was improperly certified, thousands of medical practitioners who used eCW’s software unknowingly submitted false claims for payments.

Improperly Paying for Referrals Violated Anti-Kickback Laws

Finally, the government alleged that eCW relied on an unlawful referral system. eCW allegedly obtained customers through direct referrals by existing customers, site visits that involved current customers hosting prospective customers, and by using current customers as references who would talk to prospective customers. In each of these situations, eCW paid the existing customer between $250 and $500, with additional payments made if the new customer purchased additional eCW software. The complaint-in-intervention noted one particular physician who was paid tens of thousands of dollars for acting as a customer consultant but never executed a written agreement with eCW or kept track of his consulting hours.

EHR Vendor Must Implement CIA and Pay Steep Fine for Violations

In addition to the $155 million payment from eCW and its founders, the settlement agreement requires eCW to implement a five-year corporate integrity agreement (CIA). The CIA requires eCW to engage independent oversight organizations to ensure the integrity of eCW software, as well as the legality of its referral program with practitioners. It also requires eCW to provide free, updated software to all of its customers, free transfer of customers’ data to the new software, and free customer service concerning any potential safety risks of the eCW software.

Takeaways for Electronic Health Record Vendors in Light of FCA Settlement

Companies that provide EHR technology solutions should take note of the recent settlement and ensure compliance when obtaining software certifications. This not only will protect your business, but ensure the compliance of practitioners who use your product.

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