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.).

Question: Assume that the supplier pays the LGC on a
“per lead” basis, how much information can the LGC obtain on the
lead (and provide to the supplier)?

Answer: The only guidance by the HHS Office of
Inspector General on this issue is contained in OIG Advisory
Opinion 08-19, which discusses Internet leads in the context of the
Medicare anti-kickback statute. The arrangement described in the
opinion involved one or more websites to which prospective
customers interested in chiropractic services would enter their zip
codes. The websites would display phone numbers and e-mail
addresses of chiropractors within the prospective customer’s zip
code. When the prospective customer would call the phone number or
send an e-mail, the call or e-mail would be routed to the
chiropractor selected by the prospective customer. The LGC would be
paid on a “per lead” basis.

The OIG indicated that it would not seek an enforcement action
(under the Medicare anti-kickback statute) against the parties to
the arrangement for a number of reasons, including the
following:

• The LGC is not a health care provider;
• The LGC would not collect health care information (such as
  “payer information, medical history, diagnosis, and the like”) on
  the prospective customer;
• The lead generation efforts would not target federal health
  care program beneficiaries (the website would be publicly
  accessible and use by prospective customers would be unrestricted);
  • The website would not “request insurer or other payer
  information about prospective patients;”
• All prospective customers utilizing the website would receive
  the same automated service (the arrangement would passively route
  calls and e-mails from the prospective customers);
• The LGC’s compensation would not depend on whether the
  prospective customers are Federal health care program
  beneficiaries;
• The fees paid by the chiropractor (subscriber) would not depend
  on whether the prospective patient decides to become a patient of
  the chiropractor;
• All chiropractors subscribing to the arrangement would be
  charged the same;
• The chiropractor would be charged for the lead generation
  services when the prospective customer uses the contact information
  from the website to contact the chiropractor;
• The arrangement would not actively “steer” prospective
  customers to a particular chiropractor (the Internet platform used
  by the LGC to connect prospective customers with chiropractors
  would serve the limited function of providing a prospective
  customer contact information for all chiropractors located within
  the prospective customer’s zip code); and
• The website would contain a disclaimer notifying prospective
  customers that the website is a directory where the chiropractors
  pay a fee to be listed.

An arrangement between an HME supplier and an LGC does not have
to be structured exactly as in the advisory opinion. However, the
opinion lays out guidelines to consider, and the parties to the
arrangement need to incorporate as many of these guidelines as
possible.

Jeffrey S. Baird, Esq., is chairman of the Health Care Group
at Brown &
Fortunato, P.C., a law firm based in Amarillo, Texas. He
represents pharmacies, infusion companies, home medical equipment
companies and other health care providers throughout the United
States. Baird is Board Certified in Health Law by the Texas Board
of Legal Specialization. He can be reached at 806/345-6320 or
[email protected].