Q&A with Jeff Baird: Purchasing Leads

According to health care attorney Jeff Baird of Brown & Fortunato, Amarillo, Texas, a lead generation company (LGC) compiles leads in different ways. "It may manage a number of websites. Ms. Smith, a prospective customer, will click onto a website and input her name, address and phone number," says Baird. "The LGC may advertise in the newspaper, over the radio, and over television. In response, Ms. Smith will call a toll-free number. The LGC will mail out promotional literature, along with a stamped, self-addressed postcard. Ms. Smith will fill out the postcard and mail it to the LGC.

"LGCs have been around for decades in non-health care sectors. Only within the last several years have LGCs moved into health care. While this is OK on its face, both the LGC and the lead purchaser need to be careful," Baird notes. "While the non-health care sectors are relatively unregulated, the health care sector is 'Alice in Wonderland' — highly regulated."

In the following Q&A, Baird focuses on how leads can be generated and purchased.

Question: If I am approached by a lead generation company, what are the questions I should ask?

Answer: You should first find out the number of years the LGC has been in business, and how long the LGC has been operating in the health care sector. You should ask if the LGC uses a health care regulatory attorney, if the attorney has reviewed the LGC's operations, and if the attorney has issued an opinion letter addressing the LGC's business model. You should find out how the LGC obtains its leads. Does the LGC generate the leads in-house or does it purchase "buckets of leads" from lead brokers? If it is the latter, then the LGC may not know, with any degree of assurance, where the leads initially came from.

Question: Can the LGC be a health care provider?

Answer: Generally speaking, no. Most health care providers are "covered entities" under HIPAA. HIPAA allows a covered entity to disclose protected health information (PHI) under limited circumstances (e.g., for treatment, payment and health care operations). A covered entity may not disclose PHI for marketing purposes.

Question: What does the law say about how leads, who happen to be Medicare beneficiaries, can be compiled?

Answer: The federal telephone solicitation statute is specific to HME suppliers. The statute says that a supplier may not call Ms. Smith (a Medicare beneficiary) unless one of three exceptions is met. The relevant exception to a prospective customer of the supplier (Ms. Smith) is the "written permission" exception. This says that the supplier cannot call Ms. Smith unless she first gives her prior written permission.

Likewise, the modified Supplier Standard No. 11 says that a supplier cannot directly solicit Medicare beneficiaries, which includes, but is not limited to, a prohibition on telephone, computer e-mail or instant messaging, coercive response Internet advertising on sites unrelated to DMEPOS products, or in-person contacts. The exceptions to this standard are essentially the same as the exceptions to the telephone solicitation statute.

It is important to keep in mind that a supplier "cannot indirectly do what the supplier cannot directly do." Let us say that a LGC obtains leads by cold-calling Medicare beneficiaries, and then turns around and sells the leads to the supplier. The supplier may want to take the position that it is not the supplier's problem that the LGC cold called the beneficiaries. If the arrangement between the LGC and the supplier is ever scrutinized by the government, such an argument will likely fall on deaf ears. The government will likely take the position that the leads resulting from the cold calls are "tainted."

Question: I think I understand what the previous answer says. However, what does the answer mean from a practical standpoint?

Answer: Here are some nuances you need to understand:

• When Ms. Smith is sitting in her living room, ABC Medical Equipment, Inc. cannot cold call her about selling her Medicare-covered items;
• ABC cannot contract with another entity to cold call Ms. Smith about ABC products;
• Neither ABC, nor an entity on behalf of ABC, can call Ms. Smith about a non-Medicare covered item (e.g., "final expense" life insurance) and then at the end of the telephone conversation, ask Ms. Smith if she would be interested in talking to ABC about Medicare covered items;
• If the LGC runs an ad on television or in the newspaper about a non-Medicare covered product, and no mention is made in the ad about a Medicare-covered product, then when Ms. Smith calls in response to the ad, the LGC cannot at the end of the conversation ask Ms. Smith if she would be interested in talking to ABC about Medicare-covered products;
• If the LGC runs an ad on television or in the newspaper about a non-Medicare covered item, but if the ad also says "When you call, we will visit with you about medical supplies offered by our partner companies" (or words to that effect), then when Ms. Smith calls in response to the ad, the LGC can ask Ms. Smith if she would be interested in talking to ABC about Medicare-covered items;
• If Ms. Smith calls the LGC in response to an ad, the ad contains the "other medical supplies offered by our partner companies" language, and the LGC can document that Ms. Smith made the call, then it is unlikely that the government would bring an enforcement action (even though "written permission" was not given); and
• If Ms. Smith checks a box on a webpage that clearly sets out her consent to be called by a supplier, then such action constitutes an electronic signature under the Federal E-Sign Act, and such electronic signature should satisfy the "written permission." (Note, however, that CMS has informally stated the opposite — that an electronic signature does not constitute "written permission," that only a blue ink signature is sufficient.).