BREAKING: EHR Company Practice Fusion to Pay $145M in Opioid Kickback Case

Jan. 28, 2020
In the first ever criminal action against an EHR vendor, prosecutors allege that Practice Fusion solicited a payment of nearly $1 million from a major opioid company to create a CDS alert that encouraged doctors to prescribe more extended release opioids

In a stunning and disheartening health IT development Monday, the Department of Justice (DOJ) announced that web-based electronic health record (EHR) vendor Practice Fusion will pay $145 million to resolve criminal and civil charges for creating a system that resulted in physicians prescribing more opioids to patients than were medically necessary. 

As part of the criminal resolution, the San Francisco-based Practice Fusion has admitted that it solicited and received kickbacks from a major opioid company in exchange for utilizing its EHR software to influence physician prescribing of opioid pain medications, according to federal prosecutors in Vermont.

In troubling details released by the DOJ on Jan. 27, federal prosecutors allege that Practice Fusion solicited a payment of nearly $1 million from the opioid company to create and implement clinician decision support (CDS) alerts in the EHR software that would lead to an increase in prescriptions of extended release opioids.

What’s more, the EHR vendor permitted the opioid company’s marketing department—which financed the $1 million payment—to have input in the design of the CDS alert. Practice Fusion and the opioid company, identified only as “Pharma Co. X,” according to court documents reviewed by The New York Times, participated in the partnership because they felt that the clinical decision support would impact the providers’ prescriptions of extended release opioids, according to federal prosecutors. “In marketing the ‘pain’ CDS alert, Practice Fusion touted that it would result in a favorable return on investment for the opioid company based on doctors prescribing more opioids,” they stated.

Practice Fusion allegedly allowed multiple pharmaceutical companies to even select the guidelines used to develop the CDS alerts, setting the criteria that would determine when a healthcare provider received an alert, and in some cases, even drafting the language used in the alert itself, the DOJ revealed.

The department further noted that the CDS alerts that Practice Fusion agreed to implement did not always reflect accepted medical standards. In its discussions with pharmaceutical companies, according to the DOJ, Practice Fusion flaunted the expected financial benefit to the pharmaceutical companies from increased sales of products that would result from the CDS alerts. Between 2014 and 2019, prosecutors said, healthcare providers using Practice Fusion’s EHR software “wrote numerous prescriptions after receiving CDS alerts that pharmaceutical companies participated in designing.”

Christina E. Nolan, U.S. Attorney for the District of Vermont, said in a Jan. 27 statement, “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." She added, “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.”

Nolan noted that the case represents the largest criminal fine in the history of Vermont “and requires Practice Fusion to admit to its wrongs.” What’s more, the case is the first ever criminal action against an EHR vendor, she said.

In 2017, EHR vendor eClinicalWorks, and some of its employees, paid $155 million to resolve allegations that the company allegedly violated federal law by misrepresenting the capabilities of its software and for paying kickbacks to certain customers in exchange for promoting its product. But that was a  civil investigation settlement.

For these criminal charges on Practice Fusion—two felony counts for violating the Anti-Kickback Statute (AKS), and for conspiring with its opioid company client to violate the AKS—the company has executed a deferred prosecution agreement and agreed to pay over $26 million in criminal fines and forfeiture.

The agreement also calls for the EHR company to ensure acceptance of responsibility and transparency as to its underlying conduct, and to invest heavily in compliance overhauls and an independent oversight organization that will be required to review and approve any sponsored CDS before it’s implemented. The vendor must also make documents relating to its unlawful conduct available to the public through a website.

Just last week, John Kapoor, the founder of the opioid manufacturer Insys Therapeutics, was sentenced to five-and-a-half years in prison his role in a racketeering scheme that bribed doctors to prescribe a highly addictive opioid and misled insurers, The New York Times reported.

A 2018 CNN report revealed that despite the fact that tens of thousands of Americans die from prescription opioid overdoses each year, an analysis by CNN and researchers at the Harvard T.H. Chan School of Public Health, Harvard Medical School (HMS), found that opioid manufacturers pay U.S. physicians huge sums of money for speaking, consulting and other services, and that the more opioids a doctor prescribes, the more money he or she gets paid by those manufacturers.  Thousands of doctors were paid over $25,000 during 2014 to 2015, the report found.

In 2018, Practice Fusion was acquired by another EHR vendor, Allscripts, for $100 million. Practice Fusion was founded in 2005 and grew as a free, web-based EHR to help small physician practices earn federal Meaningful Use incentives. An Allscripts executive told The New York Times that “the conduct predated his company's acquisition of Practice Fusion.” Last year, Allscripts rebranded the EHR as Veradigm.

Civil charges, too

Further, in a separate civil settlement, Practice Fusion also agreed to pay approximately $118.6 million to the federal government and states “to resolve allegations that it accepted kickbacks from the opioid company and other pharmaceutical companies, and also caused its users to submit false claims for federal incentive payments by misrepresenting the capabilities of its EHR software,” according to the DOJ. More specifically, the settlement resolves allegations of kickbacks relating to 13 other CDS arrangements where Practice Fusion agreed with pharmaceutical companies to implement CDS alerts intended to increase sales of their products.

The civil settlement is related to two intersecting Department of Health & Human Services (HHS) programs, one at the Office of the National Coordinator for Health IT (ONC) that regulates the voluntary health IT certification program, and one at the Centers for Medicare & Medicaid Services (CMS) that oversees EHR incentive programs. 

Specifically, the United States alleges that Practice Fusion falsely obtained ONC certification for several versions of its EHR software by concealing from its certifying entity—an ONC-Authorized Certification Body—that the EHR software did not comply with all of the applicable requirements for certification. When Practice Fusion sought certification of 2014 Edition criteria, according to prosecutors, Practice Fusion falsely represented to that its software met a data portability requirement that would enable users to electronically create a set of standardized export summaries for all patients.

What’s more, Practice Fusion’s software allegedly did not incorporate standardized vocabularies as required for certification. As such, the U.S. alleged, “by fraudulently obtaining certification for its products, Practice Fusion knowingly caused eligible healthcare providers who used certain versions of its 2014 Edition EHR software to falsely attest to compliance with HHS requirements necessary to receive incentive payments from Medicare during the reporting periods for 2014 through 2016 and from Medicaid during the reporting periods for 2014 through 2017.”

The $118.6 million civil settlement amount includes approximately $113.4 million to the federal government and up to $5.2 million to states that opt to participate in separate state agreements.

“Across the country, physicians rely on electronic health records software to provide vital patient data and unbiased medical information during critical encounters with patients,” Principal Deputy Assistant Attorney General Ethan Davis of the Department of Justice’s Civil Division said in a statement.  “Kickbacks from drug companies to software vendors that are designed to improperly influence the physician-patient relationship are unacceptable.  When a software vendor claims to be providing unbiased medical information – especially information relating to the prescription of opioids – we expect honesty and candor to the physicians making treatment decisions based on that information.”

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