Is It Legal to Purchase Medicare Leads?

This summary, co-written by former DOJ healthcare fraud prosecutors, attempts to answer a question of increasing importance: under what circumstances is it legal to purchase patient leads? What is the difference between a raw and a qualified lead—and why does it matter? What is the Justice Department’s position on the sale of Medicare or Tricare leads? How can business owners obtain patient related information without breaking the law? The question becomes relevant in the following marketing situations:

• Medicare Leads
• DME Patient Lead Purchases
• CGX Patient Lead Purchases
• Online/SEO Patient Lead Purchases
• Others

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Oberheiden P.C. advises healthcare marketing specialists, business owners, and patient advocates to make sure that their advertisement, marketing, and business development complies with state and federal regulations. Our experience is profound and supplemented by numerous lawyers and consultants with Justice Department backgrounds. Our team members include:

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If you have concerns about patient leads, HIPAA compliance, the need for Business Associate Agreement protection, or how to lawfully generate healthcare leads to laboratories, pharmacies, hospital, surgery centers, and other facilities, give us a call. We are available to discuss your questions in a free and confidential consultation.

Some Important Definitions: Qualified v. Unqualified Leads

In essence, we must distinguish between so-called “qualified” and “unqualified” leads. In this context, an unqualified lead consists of very basic patient information such as the name, address, and the phone number of a prospective patient’s interest in talking to representatives about certain future services or products relating to their health. By contrast, a qualified lead is more detailed and typically includes specific information about the prospective patient such as the patient’s basic information plus his or her insurance coverage, diagnoses of illness and disability, prior medical condition, current medical needs, and other PHI.  

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Joe Brown

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Amanda Marshall

Former U.S. Attorney

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Aaron L. Wiley

Former Federal Prosecutor

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Roger Bach

Former Special Agent (OIG)

Michael Koslow

Former Supervisory Special Agent (FBI)

Chris Quick

Former Special Agent (FBI & IRS-CI)

Ray Yuen

Former Supervisory Special Agent (FBI)

The Law Applicable to Qualified Leads

The difference between a qualified and an unqualified (“raw”) lead is more than semantics. Note that there are other statutes not addressed that may apply to this situation.

• Under 42 U.S.C. 1320a-7b(b), which is often referred to as the federal anti-kickback statute, it is unlawful for a person or an entity to knowingly and willfully offer or pay any remuneration to induce a person to refer an individual for the furnishing are arranging for the furnishings of any item or service for which payment may be made under a federal healthcare program (like Medicare). 
• Under the Health Insurance Portability and Accountability Act of 1996, located at 42 U.S.C. 1320d and related regulations contained in 45 C.F.R. 164.103 (commonly referred to as HIPAA laws), the use or disclosure of protected health information that is not explicitly and specifically permitted or required by HIPAA, is unlawful. The law defines PHI to include information that is created or received by a healthcare provider that relates to the past, present, or future physical or mental health or condition of an individual, the provision of healthcare to an individual, or the past, present, or future payment for the provision of healthcare to an individual—that explicitly identifies the patient or contains such identifiable information that makes it reasonably possible to identify the patient (e.g. social security number, specific address etc.).
• Under 42 U.S.C. 1395m(a)(17), sometimes referred to as the Medicare anti-solicitation statute, an individual or business is prohibited from contacting a Medicare beneficiary by telephone concerning the furnishing of a covered item unless the beneficiary has given written permission for being contacted and the contacting agency is reaching out to the beneficiary only about an item that the company has already provided to the beneficiary for the individual reaching out has provided at least one covered item to the beneficiaries during the 15 months immediately preceding the telephone conversation. We include this statute but point out that a covered item per 42 U.S.C. 1395m(a)(13) is defined as a durable medical equipment.

Guidance for Healthcare Business Owners

Assuming an informed, written permission exists, the differences between a qualified and an unqualified lead are as follows: the purchase of an unqualified lead, while not safe, is unlikely to be prosecuted by the government in particular if the transmission of information complied with HIPAA. Qualified leads, containing specific information about the patient, are typically construed as a referral and may violate the anti-kickback statute as the government would see the payment for a referral violative of the anti-kickback statute. Criminal prosecutions in the past for the payment of qualified leads have confirmed this analysis.

One way to address compliance in the context of buying qualified leads for Medicare patients, again, assuming prior written consent, is through the so-called “Personal Services and Management Contracts Safe Harbor” as a recognized exception to the federal anti-kickback statute, see 42 C.F.R. 1001.952(d). The key requirements of this safe harbor are as follows. The compensation must be fixed in advance for one year, the compensation must reflect fair market value, and the compensation must not take into account the volumes of referrals.

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