Wednesday, July 30, 2014

Health Care Marketing: Maintaining Legal Compliance

By Thomas (T.J.) Ferrante

The environment for providing health care services is becoming increasingly complex and competitive. Before entering into any arrangement for marketing, advertising, or similar communications services, health care providers should carefully consider how the arrangement must be structured to avoid running afoul of applicable laws. Although the facts and circumstances of each particular marketing arrangement require thoughtful review, the following general guidance will assist providers in structuring marketing arrangements in a manner that complies with the applicable legal framework:

• Providers should structure marketing arrangements to meet safe harbors under the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, such as the employment or personal services and management contracts safe harbors.

• If a marketing arrangement appears to implicate the Stark Law, 42 U.S.C. § 1395nn, providers should structure the arrangement to meet an exception under the Stark Law, such as the employment relationship exception, personal services arrangements exception, or nonmonetary compensation exception. (For example, if the real purpose of a hospital advertisement is to reward the physicians or drive services to the physician's practice, and not to show off the hospital's services, then the physician should bear a proportional percentage of the cost of the advertising.)

• Providers should not appear to endorse certain health care products or services in order to avoid “white coat” marketing.

• Payments for services rendered under a marketing arrangement should be for fair market value. Providers should document the fair market value determination, as well as the performance of the services rendered.

• Payments under a marketing arrangement should not include commissions or compensation that reflect the generation of business by the health care provider. Instead, a time-based marketing fee, such as an hourly or annual fee, that is owed by the practice regardless of any increase in patient flow is recommended.

• Providers should not provide gifts to potential referral sources. The government has long taken the position that, generally, free gifts to beneficiaries violate the Anti-Kickback Statute because such gifts may induce beneficiaries to purchase additional or unnecessary items or services.

• Providers should structure their marketing activity so as not to be interpreted as offering or paying “remuneration” to Medicare or Medicaid beneficiaries in an effort to influence the beneficiaries’ choice in selecting health care providers.

• Providers should tailor their marketing services to conform to the requirements of the HIPAA privacy regulations. In particular, where protected health information is to be used as part of a marketing activity, health care providers should ensure that adequate individual authorization has been obtained or, if not, that the activity is exempt from the provisions concerning marketing.

As market forces such as reimbursement cuts, caps, and other CMS initiatives continue to put financial pressure on health care providers, it is important for the health care provider to be creative and innovative in marketing to consumers and other referral sources. However, what are common marketing practices in other industries may pose significant risks in the health care industry. Therefore, to avoid governmental scrutiny, it is crucial that all marketing programs and business arrangements be established and implemented properly.