NextGen Healthcare Pays $31M to Resolve False Claims Act Violations

NextGen Healthcare allegedly breached the False Claims Act, falsely certifying and misrepresenting EHR software capabilities to exploit federal incentives.

NextGen Healthcare has arrived at a $31 million settlement with the Department of Justice (DOJ) to resolve allegations that it overstated its EHR capabilities to gain government certification, a violation of the False Claims Act.

A lengthy investigation revealed that the EHR vendor exploited an auxiliary product to pass the 2014 Edition certification criteria set by the Office of the National Coordinator (ONC).

This allegedly concealed the fact that the company’s EHR software was missing key functionality, thus leading to the approval of a product that did not meet all requirements.

Consequently, NextGen released critically deficient EHR software to users. It fell short of providing the capability to record vital sign data, translate data into the required medical terminologies, and generate comprehensive clinical summaries.

“Medical providers must be able to rely on EHR systems to correctly document and process important health data for continuity of patient care,” Special Agent in Charge Maureen R. Dixon for the HHS Office of Inspector General (HHS-OIG), said in a press release. “We will continue to work with our valuable law enforcement partners to evaluate allegations brought under the False Claims Act and ensure the integrity of Medicare programs.”

Adding another layer to the controversy, NextGen Healthcare is also accused of using kickbacks to gain new customers, spanning from January 2011 to July 2017. The US government alleged that the EHR vendor provided improper incentives—breaking the Anti-Kickback Statute—to persuade providers to engage with its EHR technology.

Additionally, the DOJ reported that NextGen knowingly offered substantial credits, sometimes up to $10,000, to current customers who recommended their EHR software to new clients—a move considered a violation of the False Claims Act.

Beyond monetary rewards, the allegations include other forms of inducements. The company is said to have offered customers tickets to sporting events and other forms of entertainment, further highlighting the questionable sales practices under scrutiny.”

NextGen allegedly leveraged these practices to capitalize on the Medicare & Medicaid EHR Incentive Programs, also known as meaningful use.

Some users reportedly made purchases from NextGen as a direct result of these kickbacks, leading to tainted claims for incentive payments.

The Medicare and Medicaid EHR Incentive Program, established under the American Recovery and Reinvestment Act of 2009, aimed to promote the adoption and meaningful use of EHR technology by healthcare providers.

Later renamed the Promoting Interoperability Program by the Centers for Medicare and Medicaid Services (CMS) in 2011, the program granted incentive payments to providers who adopted certified EHR technology and met specific usage requirements.

However, to achieve certification, EHR vendors developing and marketing EHR technology are obligated to comply with HHS-adopted certification criteria, encompassing various aspects of EHR functionality and interoperability. Companies must also disclose any software components essential for their EHR system to meet the certification criteria.

The certification process entailed rigorous testing conducted by independent and accredited laboratories authorized by HHS. Following successful testing, developers had to obtain and maintain certification from independent and accredited certification bodies authorized by HHS. These measures were implemented to ensure the reliability and adherence of EHR technology to the established standards.

“EHR plays a pivotal role in the provision of safe, effective healthcare, and the testing and certification process of the EHR Incentive Program was intended to provide assurances to providers that their EHR can perform certain important functions,” said US Attorney Nikolas P. Kerest for the District of Vermont.

“With this settlement, our office has now resolved five investigations into misconduct by EHR companies, demonstrating our commitment to ensuring that EHR companies are held responsible for their misrepresentations.”

The settlement reached an end to a whistleblower complaint that was initially filed in 2018 in the US District Court of Vermont by the legal firm Phillips and Cohen LLP.

Elizabeth Ringold and Toby Markowitz, both former clinical providers at NextGen systems within the South Carolina Department of Corrections, brought this case forward and played a pivotal role in uncovering the alleged wrongdoing.

Despite the settlement, NextGen Healthcare maintains its innocence.

In a statement, a NextGen spokeperson told EHRIntelligence, “The Company denies that any of its conduct violated the law, and the settlement agreement does not include any admissions of wrongdoing. This agreement relates to claims from more than a decade ago.”

“The settlement resolves the matter without monitoring or changes to NextGen Healthcare’s products or compliance policies. To avoid the distraction and expense of litigation, we believe it is in the best interest of the Company to put this historical matter behind us and keep our attention focused on innovating solutions that enable better healthcare outcomes for all.”

Editor's note: This article was updated on July 20,2023 to include a statement from NextGen Healthcare.

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