Modernizing Medicine, Accepting Kickbacks, Vermont 2023

GRIMY TIMES EXCLUSIVE

Modernizing Medicine, Inc. (ModMed), a Boca Raton, Florida-based electronic health record (EHR) technology vendor, has agreed to pay $45 million to resolve allegations that it violated the False Claims Act (FCA) and the Anti-Kickback Statute by accepting and providing unlawful remuneration in exchange for referrals and causing its users to report inaccurate information in connection with claims for federal incentive payments.

The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.

In a complaint filed in conjunction with today’s settlement, the United States alleged that ModMed violated the FCA and the Anti-Kickback Statute through three marketing programs:

First, ModMed solicited and received kickbacks from Miraca Life Sciences, Inc. in exchange for recommending and arranging for ModMed’s users to utilize Miraca’s pathology lab services.

Second, ModMed conspired with Miraca to improperly donate ModMed’s EHR to health care providers in an effort to increase lab orders to Miraca and simultaneously add customers to ModMed’s user base.

Third, ModMed paid kickbacks to its current healthcare provider customers and to other influential sources in the healthcare industry to recommend ModMed’s EHR and refer potential customers to ModMod.

As a result of this conduct, the government alleges that ModMed improperly generated sales for itself and for Miraca, while causing healthcare providers to submit false claims for reimbursement to the federal government for pathology services, and for incentive payments from the Department of Health and Human Services (HHS) for the adoption and “meaningful use” of ModMed’s EHR technology.

In January 2019, Miraca (now known as Inform Diagnostics) agreed to pay $63.5 million to resolve allegations that it violated the Anti-Kickback Statute and the Stark Law by providing to referring physicians subsidies for EHR systems and free or discounted technology consulting services.

“Electronic health records serve a critical role in informing physician decision making, and it is therefore essential that healthcare providers select such technology free from the influence of improper financial inducements,” said Principal Deputy Assistant Attorney General Brian M. Boynton.

“Vendors of electronic health records will be held to the same standards of compliance that we expect of everyone who impacts the delivery of health care services.”

“Today’s settlement marks the fourth resolution that our office has achieved as we seek to root out fraud in the electronic health record technology field,” said United States Attorney for the District of Vermont, Nikolas P. Kerest.

“It is imperative that medical providers be able to trust the health record systems with which they document important and sensitive patient information, and for too long electronic health record vendors have prioritized only sales.

The government alleges that for years, ModMed knew that its EHR did not always allow physician users to electronically record medical records using the required standard vocabularies, thereby causing certain of its users to submit false claims for incentive payments under that program.

Defendant: Modernizing Medicine, Inc.

Criminal Charges: Violated the False Claims Act (FCA) and the Anti-Kickback Statute

City, State: Boca Raton, Florida

Date: January 2023 (Settlement agreement)

Sentence: Paid $45 million to resolve allegations

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