United States: Health Care Providers’ Use Of Groupon Stirs Up Controversy

Last Updated: August 10 2012
Article by Judy Wang Mayer

Every day Groupon, Living Social, Buy With Me, and a host of other social coupon websites flood  the inboxes of millions of consumers with daily deals. These websites offer discounts on a variety of products and services, and are extremely popular among restaurants and businesses for their ability to bring in new customers and generate revenue.

But what if the deal is for a dental exam, laser vein removal, or Botox® treatments? The general public probably doesn't care about the ramifications of using social coupons for health care services, because, let's face it, everyone likes a great deal. Health care providers, however, definitely should.

Why? Because, depending on the nature of the daily deal, a health care provider who offers a discount through these types of social coupon websites could be violating federal and/or state laws.

The Model

In a typical daily deal arrangement, a business agrees to sell its product or service at a discount.  While the discounts vary, they are traditionally 50 percent or more off the regular price. Consumers who choose to purchase the product or service pay the social coupon website directly, and the revenue generated from the promotion is split evenly between the business and that website. These websites generally do not charge a fee to publicize the promotion.

For example, a dentist typically charges $300 for an exam, cleaning and x-rays. The dentist partners with Groupon and offers a promotion featuring the same exam, cleaning and x-rays for $100.  Groupon would promote the deal, pay the dentist $50 for each deal sold, and retain the remaining $50.

State Fee-Splitting Prohibitions

Many states prohibit a licensed health care provider from splitting professional fees with unlicensed third parties. As previously stated, a social coupon website generally receives payment directly from the consumer/patient and then submits a portion of that payment to the health care provider.  Because the website retains a portion of the original payment, which technically represents a portion of the fee that the provider would have generated for his or her professional service, this arrangement, depending on the state, may constitute illegal fee-splitting.

In New York, for example, it is considered unprofessional conduct for a health professional to engage in fee splitting.  Specifically, the regulations at 8 NYCRR 29.2 provide that a health professional is engaging in unprofessional conduct if he or she "permit[s] any person to share in the fees for professional services, other than:  a partner, employee, associate in a professional firm or corporation, professional subcontractor or consultant authorized to practice the same profession, or a legally authorized trainee practicing under the supervision of a licensed practitioner . . . ."

Accordingly, before partnering with Groupon, a health care provider would be well advised to consider whether a social coupon arrangement constitutes illegal fee-splitting under the laws of his or her respective state.  Failure to conduct this element of due diligence risks censure, reprimand, fines, suspension, and even license revocation.

Federal and State Anti-Kickback Statutes

Health care providers who receive payments from a federal health program, such as Medicaid or Medicare, and partner with social coupon websites face additional concerns.

The federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b) is a criminal statute that prohibits the offer, solicitation, payment, or receipt of any remuneration in return for, or to induce, the referral of any patient for any item or service that may be paid by a federal health care program.  In other words, where remuneration is paid to induce or reward referrals of items or services payable by a federal health care program, the Anti-Kickback Statute may be violated.  For purposes of this statute, "remuneration" encompasses anything of value, including the transfer of items or services for free or other than fair market value.  Prohibited conduct includes not only paying and receiving remuneration to induce referrals, but also to induce the purchasing, leasing or ordering, or arranging of any good, facility, service or item payable by a federal health care program.

With respect to a daily deal arrangement, the federal Anti-Kickback Statute should not apply if the discount offered is solely for medical procedures and other services that are not covered by the Medicare or Medicaid programs.  However, to the extent that such procedures or services may be payable by Medicare or Medicaid, a daily deal arrangement could trigger kickback concerns, if the payment made to (or retained by) the website  is determined to be an illegal payment in exchange for referrals.

To clarify how the federal Anti-Kickback Statute would apply, if we modify the example above from a dental exam, cleaning and x-rays to cataract surgery, then the $50 fee paid to (or retained by) the social coupon website could be  determined to be remuneration in exchange for the arranging of referrals for cataract surgery (a service that may be paid by the Medicare program) if the health care provider participates in Medicare and the patient is a Medicare beneficiary.  Such beneficiaries may be economically motivated to use a social coupon for covered services when their co-payments, co-insurance, and/or deductibles create a cost to them that exceeds the social coupon price.

At present, most of the services (including dental exams) sold on social coupon websites are elective, non-insured, out-of-pocket services, so the federal Anti-Kickback Statutes would not apply.  Still, many states have similar statutes that apply to situations where other insurance or out-of-pocket payments are involved. For example, both Massachusetts and Texas have broad anti-kickback statutes that apply to all types of health care insurers.

A violation of the Anti-Kickback Statute constitutes a felony and can subject a health care provider to fines, imprisonment, and exclusion from federal health care programs.

Insurance Contract Violations

Health care providers considering social coupon arrangements should also ensure that they are not violating their contracts with insurance companies.  Some of these agreements contain a "most favored nation" clause, which traditionally requires the provider to give the best price for a particular service to beneficiaries of the insurer. If a provider offers a daily deal promotion for a particular service, an insurer could invoke this clause to compel the provider to offer the same reduced price for that service to all patients covered by the same insurer.

Ethical Implications

Finally, the provision of daily deal discounts also may have ethical implications.  The codes of ethics for certain professional associations, including the American Medical Association ("AMA") and the American Dental Association ("ADA") provide, respectively, that physicians and dentists may not split fees for the referral of a patient.  For the reasons described previously, daily deal arrangements may violate these prohibitions.  Although compliance with the AMA's or ADA's code of ethics is not mandatory, members voluntarily agree to abide by the applicable code as a condition of membership.

Conclusion

To date, no state has disciplined a provider for offering a deal through a social coupon website. It is in all likelihood, however, only a matter of time before most state boards of licensure and national professional associations take a position on the legality of these types of promotions.  Until then, health care providers should be cautious and consult an attorney before signing up with a daily deal website like Groupon or Living Social.

www.cozen.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions