Is an online healthcare services directory a medical referral service?

Is an online directory of healthcare centers a medical referral service?

We’ve had several online directories of healthcare services ask us what legal rules govern their operation. Below we discuss some legal requirements relevant to an online healthcare services directory.

Healthcare Referral Service—Laws

Specifically, our online healthcare service directories have asked whether they are regulated as “referral service,” and they must do to comply with whatever rules exist out there.

Many states have statutes and regulations governing referrals services for some healthcare professions but not others.

For example, California has laws governing referral services for dentists, chiropractors, and marriage and family therapists (Business & Professions Code 650.2, 650.3 and 650.4).

In addition, California regulates practitioner advertising.

California Business & Professions Code Section 651 prohibits a licensee from disseminating “any form of public communication containing a false, fraudulent, misleading, or deceptive statement, claim, or image for the purpose of or likely to induce, directly or indirectly, the rendering of professional services or furnishing of products in connection with the professional practice or business for which he or she is licensed.”

The provisions are extensive and detailed and include, for example, a statement, claim or image that is “intended or is likely to create false or unjustified expectations of favorable results, including the use of any photograph or other image that does not accurately depict the results of the procedure being advertised or that has been altered in any manner from the image of the actual subject depicted in the photograph or image.”

State Law Regulation of Healthcare Referral Agencies

To satisfy state law regulation of healthcare referral agencies, we typically recommend that online healthcare service directories implement some of the following.

  • The referral service conforms with state advertising law, particularly with regard to advertising licensed healthcare services.
  • The service does not make use of “solicitors” to solicit prospective clients.
  • The service does not impose a fee on the member professionals that is dependent upon the number of referrals or amount of professional fees paid by the patient to the practitioner.
  • Participating practitioners charge no more than their usual and customary fees to any patient referred.
  • If more than 50 percent of its referrals are made to one individual, association, partnership, corporation, or group of three or more practitioners, the service discloses that fact in all public communications, including, but not limited to, communication by means of television, radio, motion picture, newspaper, book, or list or directory of healing arts practitioners.
  • When members pay any fee to the service, any advertisement by the service shall clearly and conspicuously disclose that fact by including a statement as follows: “Paid for by participating practitioners” (list type of practitioner or facility). In print advertisements, the required statement is in at least 9-point type. In radio advertisements, the required statement is articulated so as to be clearly audible and understandable by the radio audience.  In television advertisements, the required statement is either clearly audible and understandable, to the television audience, or, displayed in a written form that remains clearly visible for at least five seconds to the television audience.
  • The service does not engage in unlicensed practice.

Although these rules might technically apply only to certain healthcare referral services, it’s a good idea to implement them generally as a compliance and risk mitigation measure.

However, note that there are still concerns because of fee-splitting statutes and other laws, such as one in California that, in a nutshell, prohibits steering patients to a medical facility for profit.

The Federal Anti-Kickback Safe Harbor to Referral Services

Further, federal law contains an anti-kickback safe harbor for referral services. Based on the federal safe harbor, we recommend including the following too:

  • The referral service does not exclude as a participant in the referral service any individual or entity who meets the qualifications for participation (set by the service).
  • Any payment the participant makes to the referral service is assessed equally against and collected equally from all participants, and is only based on the cost of operating the referral service, and not on the volume or value of any referrals to or business otherwise generated by either party for the referral service.
  • The referral service imposes no requirements on the manner in which the participant provides services to a referred person, except that the referral service may require that the participant charge the person referred at the same rate as it charges other persons not referred by the referral service, or that these services be furnished free of charge or at reduced charge.
  • The referral service makes the following five disclosures to each person seeking a referral, with each such disclosure maintained by the referral service in a written record certifying such disclosure and signed by either such person seeking a referral or by the individual making the disclosure on behalf of the referral service—
  • The manner in which it selects the group of participants in the referral service to which it could make a referral;
  • Whether the participant has paid a fee to the referral service;
  • The manner in which it selects a particular participant from this group for that person;
  • The nature of the relationship between the referral service and the group of participants to whom it could make the referral; and
  • The nature of any restrictions that would exclude such an individual or entity from continuing as a participant.

Since federal law imposes additional disclosure requirements, we recommend that these additional federal disclosure requirements be included as a matter of good practice, in any disclosure online or in a call center, even if the particular facility involved does not treat Medicare/Medicaid patients.

If you’re an online healthcare services directory, or an app with a directory of healthcare practitioners, ask us about the legal issues involved.

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Michael H Cohen Healthcare & FDA Lawyers

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