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athenahealth Fined $18.25M for Illegal EHR Kickback Scheme

athenahealth will pay a monumental fine after conducting three illegal marketing kickback schemes to increase EHR sales.

athenahealth will pay a $18.25 million fine after an illegal EHR kickback scheme to boost its EHR sales, according to a statement released by the Department of Justice for the District of Massachusetts.

The Department of Justice alleged athenahealth violated the False Claims Act (FCA) and the Anti-Kickback Statute through three illegal marketing ploys between 2014 and 2020.   

“Across the country, physicians rely on electronic health records software to provide vital patient data,” Andrew E. Lelling, US Attorney, said in a statement. “Kickbacks corrupt the market for health care services and risk jeopardizing patient safety. We will aggressively pursue organizations that fail to play by the rules; EHR companies are no exception.”

First, leaders at athenahealth allegedly invited potential customers to all-expenses paid “bucket list” events, such as the Masters Tournament, Kentucky Derby, and New York Fashion Week. The vendor included complimentary travel, along with meals, alcohol, and luxury accommodations as a part of each trip.

Next, the EHR vendor paid additional and illegal fees to its customers through its “Lead Generation” program. The program aimed to identify new customers and paid each user up to $3,000 for signing up for the service. athenahealth still made payments even if the client did not actively participate in the program.

The third alleged violation occurred when athenahealth entered into deals with competitors that discontinued their respective health IT products. Also known as “Conversation Deals,” the competitors agreed to refer their clients to athenahealth and the vendor paid the competitor by both the value and volume of potential customers that became athenahealth customers.

“This resolution demonstrates the department’s continued commitment to holding EHR companies accountable for the payment of unlawful kickbacks in any form,” said Brian Boynton, acting attorney general for the Department of Justice’s Civil Division. “EHR technology plays an important role in the provision of medical care, and it is critical that the selection of an EHR platform be made without the influence of improper financial inducements.”

According to the statement, these three marketing schemes allegedly resulted in sales for the vendor and also caused providers to submit false claims to the federal government. These claims related to incentive payments for the Medicare and Medicaid EHR Incentive Programs, or meaningful use program.

“If the benefits of Electronic Health Records are to be fully realized, patients must be confident providers have selected the most effective system – not the one paying the largest kickbacks,” said Phillip M. Coyne, special agent in charge for the Office of Inspector General of the Department of Health and Human Services (HHS).

“Time and again, we’ve seen fraudulent activity undermine the integrity of medical decisions, subvert the health marketplace, and waste taxpayer dollars. We will continue to hold accountable those who provide illegal incentives in order to influence the decision-making of health care providers,” Coyne continued.

Furthermore, this settlement also resolved two related whistleblower lawsuits under the False Claims Act.

“It is illegal for companies to extend invitations to all-expense-paid sporting, entertainment, and recreational events, and other perk-filled offers to its prospective customers to win business and boost their bottom line through illegal kickback schemes,” said Joseph R. Bonavolonta, special agent in charge of the FBI Boston Division.

“Today’s agreement by Athena to pay $18.25 million should send a strong message to anyone thinking about engaging in this type of illegal activity. The FBI will continue to work with our law enforcement partners to do everything in our power to safeguard our government health care programs and the taxpayers picking up the bill,” Bonavolonta continued.

Although the EHR vendor admitted no wrongdoing, it did agree to the settlement.

“athenahealth places the highest priority on compliance with all laws and regulations governing our industry," said athenahealth in an emailed statement. "Our dedicated employees work every day to create a thriving ecosystem that delivers accessible, high quality, and sustainable healthcare for all, through innovative products and services on an interconnected network of more than 160,000 healthcare providers and 100 million patients.  We do so ethically and with integrity—values that are integral to our company’s culture.  While we have full confidence in our robust compliance policies and programs, we agreed to this settlement—under which we admit no wrongdoing—to put this matter behind us and move forward with our critical work on behalf of patients and healthcare providers.”

In 2018, athenahealth CEO, Jonathan Bush, resigned from the company amidst reports of old and new allegations. Bush’s resignation came when then the vendor faced a $7-billion buyout offer from a hedge fund, Elliott Management.

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