Lead Generation And Patient Referrals In Healthcare Law

Tuesday, November 17th, 2015

Federal laws are very particular when it comes to how healthcare providers, including durable medical equipment (DME) suppliers, get information on patients. These laws may come into play when DME suppliers attempt to generate new business. Lead generation efforts are one part of the sales process that can cause suppliers to violate any number of healthcare laws. It is important for DME suppliers to understand the lead generation techniques of today compared to those used in the past. DME suppliers should also understand laws like the Anti-Kickback Statute, including the “one purpose” test, the Anti-Solicitation Statute, and the Health Insurance Portability and Accountability Act (HIPAA).

Lead generation techniques of today and in the past

In the past, if a DME supplier wanted to generate new business, they would send sales representatives to visit doctors’ offices, hospitals, and other healthcare facilities. The representatives would demonstrate their products to the staff of the healthcare facility. They would also leave promotional materials in the facilities for patients to read. The goal of these visits was to get patients to talk to their doctors about their needs and get the doctors to refer patients to the DME supplier.

Marketing directly to patients and doctors is less popular with DME suppliers these days due to the costs involved. To keep a steady flow of new patients, suppliers are turning to alternative lead generation options, such as hiring lead generation companies. DME suppliers pay the lead generation company to give them a list of patients who might be interested in their healthcare products. These arrangements must be examined carefully to determine if they violate federal or state laws.

The Anti-Kickback Statute and the “One Purpose” test

The federal Anti-Kickback Statute is applicable to lead generation arrangements that result in patient referrals for DME if the equipment dispensed to the patient is paid for by a federal healthcare program. The “one purpose” test has been adopted by many courts to determine if a payment is in violation of the Anti-Kickback Statute. Even if there are legitimate business reasons for the arrangement under the “one purpose” test, if any purpose of the payment under the arrangement is to generate referrals, the arrangement likely violates the Anti-Kickback Statute. Determining whether a lead generation arrangement violates the Anti-Kickback Statute comes down to the details of the arrangement.

Generally speaking, and depending how the compensation under the arrangement is structured, the lead generation company should not collect healthcare information from the patient. The company should ask for name and basic contact information only, because this makes the patient appear to be an unqualified lead. An unqualified lead is unlikely to be considered a “referral” under the Anti-Kickback Statute. This means that the DME representatives will need to speak with the patient directly to determine whether the supplier can help that person. If the lead generation company gathers healthcare information on the patient, such as age and health status, that patient starts to look more and more like a “referral”. The arrangement would have to substantially comply with the Anti-Kickback Statute and relevant safe harbors.

The Anti-Solicitation Statute and lead generation

Besides the Anti-Kickback Statute, DME suppliers must also adhere to the Anti-Solicitation Statute. This law prevents suppliers from contacting a Medicare beneficiary by telephone, unless an exception is met. The exceptions include that the beneficiary has given written permission for the contact by telephone from the DME supplier and that the DME supplier is calling about a Medicare covered item that the supplier furnished to the beneficiary in the past. Another exception would be that the DME supplier has furnished a Medicare covered item within the last 15 months and is calling about a different product.

The Health Insurance Portability and Accountability Act and lead generation

HIPAA focuses on preventing the disclosure or use of protected health information to anyone not permitted by law to have that information. The law protects information related to any past, present or future medical conditions.

Lead generation arrangements have the potential of violating HIPAA because the information provided to lead generation companies may include protected health information. To prevent this, the arrangements must provide for obtaining authorization for the disclosure of protected health information for marketing purposes or meet an exception to the HIPAA requirements. If the arrangement provides that the lead generation company will get appropriate authorizations from leads, the DME supplier should occasionally audit the lead generation company’s records to make sure consent was given.

If you are a DME supplier, you need to use caution with lead generation and other marketing arrangements. Contact our healthcare team at Brown & Fortunato at (806) 345-6300. You can also connect with us on our Contact Us page. Our website offers a full review of our other practice areas. Feel free to visit our law offices at 905 S. Fillmore, Suite 400 in Amarillo, Texas.

This information is subject to change. Please check for updates that are more recent than the published date of this article.