Home Health Care Practice Fusion allegedly weaponized EHRs in kickback scheme

Practice Fusion allegedly weaponized EHRs in kickback scheme

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A health IT company that made a free, ad-supported electronic health record system will pay $145 million to resolve an investigation of a kickback scheme the company entered with an unnamed pharmaceutical company.

Practice Fusion admitted to receiving kickbacks from a major opioid company in exchange for using its software to influence opioid prescriptions, the Department of Justice said on Monday. The company agreed to pay more than $26 million in criminal fines and forfeiture as part of a deferred prosecution agreement. It will also pay $118.6 million to resolve civil allegations related to pharmaceutical kickbacks and misrepresenting its EHR software’s capabilities.

“Practice Fusion’s conduct is abhorrent.  During the height of the opioid crisis, the company took a million-dollar kickback to allow an opioid company to inject itself in the sacred doctor-patient relationship so that it could peddle even more of its highly addictive and dangerous opioids,” U.S. Attorney for the District of Vermont Christina Nolan said in a news release.  “The companies illegally conspired to allow the drug company to have its thumb on the scale at precisely the moment a doctor was making incredibly intimate, personal, and important decisions about a patient’s medical care, including the need for pain medication and prescription amounts.”

In their criminal probe of opioid makers, federal prosecutors have indicted pharmaceutical company executives, physicians and pharmacists. But this is the first ever criminal action against an EHR vendor, making the case all the more shocking.

“It’s completely unexpected. It really underscores just how many different ways pharmaceutical companies were exploring to drive up utilization and prescription of opioids,” said Matthew Fisher, a partner with Massachusetts-based firm Mirick O’Connell, on his reaction to the case.

According to court documents, Practice Fusion received just short of $1 million from an unnamed pharmaceutical company to develop a clinical decision support tool that could boost prescriptions of extended-release opioid painkillers. The payment was allegedly made by the opioid company’s marketing department, which also had input in how the software tool was designed.

Sometimes, Fisher said, pop ups will appear in a health record system to remind physicians to do particular things, or check off certain quality measures.

“What’ll frequently be done in an EMR, it will provide prompts to provide reminders about needed actions, or guide (physicians) down a particular workflow,” O’Connell said. “It could guide in that direction by making it feel like part of the normal workflow.”

The final version of the system included three separate alerts related to pain, according to court documents. The first one encouraged healthcare providers to record a pain score from patients. The second encouraged them to take a brief pain inventory (BPI) of patients that had recorded pain scores above a four. A third alert indicated that the physician should create a follow-up plan for treating the patient’s pain, which included a drop-down menu of treatment options, including opioids.

Opioids were reportedly listed on equal footing with other, non-opioid treatments, even for patients reporting less-than-severe pain. It’s still not clear to what extent the alerts affected physicians’ prescribing behavior.

The alert system was live on Practice Fusion’s platform from July of 2016 to spring of 2019. During that time, it alerted more than 230 million times, with physicians writing hundreds of thousands of extended-release opioid prescriptions after the alerts had been triggered, according to court documents.

“Healthcare providers who received the Pain CDS alerts prescribed (extended release opioids) at a higher rate than those that did not,” the lawsuit stated.

Practice Fusion was charged with two felony counts for violating the Anti-Kickback Statute and for conspiracy. In addition to the criminal fine, the company must forfeit the nearly $1 million it received in payments, cooperate in ongoing investigations of the kickback arrangement, and make information about the investigation public through a website.

 

Three strikes

This isn’t Practice Fusion’s first run-in with the law. The San Francisco-based EHR vendor settled with the Federal Trade Commission in 2016 over allegations that it misled patients into sharing medical information in reviews of their physicians, which were posted in a public directory online. Later, the DOJ began investigating the company around how it had received its software certification from the Department of Health and Human Services.

Prior to these allegations, the high-flying heath IT startup had raised more than $150 million, with J.P. Morgan estimating its valuation at $1.5 billion in 2016. Allscripts had planned to acquire the company for $250 million in 2017, but the deal fizzled after news broke that another EHR vendor, eClinicalWorks, would pay $155 million to resolve a False Claims Act lawsuit. Allscripts ultimately acquired Practice Fusion in a fire sale for $100 million in 2018.

In mid-2019, Allscripts disclosed it would pay $145 million to settle an investigation the DOJ had brought against Practice Fusion for its compliance with the anti-kickback statute and HIPAA.

“These investigations had many similarities to investigations that have either been settled or remain active with many of our industry competitors,” Allscripts President Rick Poulton said in the company’s second quarter earnings call. “After acquiring Practice Fusion, the DOJ investigations continued to expand and required expanding levels of resources from us to support. The main focus has been on actions that occurred prior to our ownership, and thus we were highly motivated to reach an accord with the DOJ as soon as possible…”

Three months later, Poulton answered questions around the investigation in another earnings call, noting the company was finalizing the settlement with the Department of Justice. He also indicated that Allscripts expects to receive recoveries from “a variety of third parties.”

“But I think that’s going to play out through 2020, possibly even beyond,” Poulton said.

One might think Allscripts would have buyer’s remorse, with the legal costs now outweighing the original purchase price.

“This does create one of those horror stories that you always worry about in health care,” Fisher said. “If you’re buying a company and taking it over, and assuming liabilities, you’re always doing diligence, but if it’s something you might not have known about… you always worry about that.”

Despite the allegations, Allscripts doesn’t appear to be abandoning its investment in Practice Fusion. In an emailed statement, the company said it had strengthened Practice Fusion’s compliance program and was pleased to complete the settlement.

“Allscripts recognizes the devastating impact that opioids have had on communities nationwide, and we are using our technology to fight this epidemic,” Allscripts Executive Vice President, General Counsel and Chief Administrative Officer Brian Farley wrote in an emailed statement. “We remain committed to Practice Fusion and believe this matter should not overshadow the important and valuable work it is currently performing.”

The DOJ still appears to be investigating the broader kickback scheme, given that it has asked Practice Fusion to report similar behavior from competitors as part of the settlement. It’s unclear whether any other EHR vendors might be implicated in the case.

“The bottom line is this one was extremely surprising,” Fisher said. “I hope it’s not indicative of other cases that could be out there. This is one of those cases where you hope it’s an outlier.”

 

Photo credit: VladimirSorokin, Getty Images

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