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AG Derek Schmidt: Kansas reaches Medicaid fraud settlement with California electronic health records company

Release Date: Jan 29, 2020

TOPEKA – (January 29, 2020) – Kansas has reached an agreement with a web-based electronic health records (EHR) company to settle allegations of fraud resulting in improper Medicaid reimbursements, Attorney General Derek Schmidt announced today. 

Under the terms of the settlement negotiated by the team of member states and the U.S. Department of Justice (DOJ), Practice Fusion, Inc., a web-based EHR company based in San Francisco, California, has agreed to pay a total of $118,642,000 to the federal government and the states. The settlement resolves allegations by the federal government, 49 states, the District of Columbia and Puerto Rico that the company accepted kickback payments from drug manufacturers in exchange for using its software to promote those manufacturers’ drugs to physicians. Of this total, Kansas will receive $180,221.12 for its combined federal and state share of the settlement to be returned to the Medicaid program, in addition to reimbursement for the cost of the litigation.

An investigation conducted by DOJ found that from November 2013 through August 2017, Practice Fusion solicited and received improper payments from pharmaceutical manufacturers based on the anticipated financial benefit from increased sales of drugs resulting from promotions deployed by Practice Fusion within its EHR software platform. The promotions took the form of pop-up notifications suggesting a particular drug be considered by physicians evaluating patients’ medical histories in the platform. Pharmaceutical manufacturers that paid Practice Fusion were able to select guidelines used to develop the notification, set criteria that would determine when a provider received one, and in some cases, even draft the language used in the notification itself.

Furthermore, the pop-up notifications did not always reflect accepted medical standards. Although the notifications appeared to provide unbiased medical information, they were designed to encourage providers to prescribe a specific drug or class of drugs. Practice Fusion’s actions resulted in false claims or information being submitted or presented to state Medicaid programs for reimbursement.

A copy of the settlement agreement is available at https://bit.ly/38H8Qum.

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