Practice Fusion to Pay $145 Million In Fines To Resolve Kickback Investigations

Practice Fusion, a San Francisco-based EHR vendor with a controversy-rich history, has agreed to pay $145 million to settle allegations that it engaged in a kickback scheme designed to increase opioid prescriptions and issues with their meaningful use EHR certification. Practice Fusion is now owned by Allscripts, which acquired it in 2018. This had been hinted at in Allscripts SEC filings last year, but now it’s official.

As part of its settlement with the US Department of Justice, the company admitted that it solicited and was given kickbacks from a “major opioid company” in exchange for using its EHR system to encourage physician prescribing of opioid pain meds. According to allegations by the US Department of Justice, Practice Fusion asked for payment of nearly $1 million from an unnamed opioid company to create a clinical decision support alert designed to cause doctors to prescribe more extended-release opioids. The DoJ doesn’t name the pharma in question, but this Twitter thread shows an opioid decision support campaign presentation at the 2017 AMIA conference that mentions OxyContin maker Purdue Pharma.

Apparently didn’t stop there though. In addition to payments from the opioid maker, Practice Fusion received kickbacks from other pharmaceutical companies in exchange for adding CDS alerts encouraging them to prescribe more of the companies’ products.

The DOJ says that in exchange for “sponsorship” payments, Practice Fusion allowed pharmas to help design CDS alerts, in ways that included selecting guidelines used to develop the alerts and setting criteria that determined whether providers got alerts. Also, in some cases, the vendor let the drug makers draft the language used in the alert itself. The agency reported that between 2014 and 2019, providers using the Practice Fusion system wrote many prescriptions in response to the pharma-influenced CDS alerts.

To address the criminal prosecution charges lodged against it, the company will pay more than $26 million in criminal fines and forfeiture. Meanwhile, in separate civil settlements, the vendor has agreed to pay roughly $118.6 million to the federal government and states to resolve related kickback allegations and also claims that it caused users to submit false Meaningful Use claims by misrepresenting the capabilities of its EHR system.

These numbers are particularly interesting in light of the $155 million eCW settlement for falsely obtaining its EHR certification and the $57 million Greenway fine over false EHR certification and anti-kickback allegations. eCW has faced a number of other lawsuits since. It will be interesting to see if these Practice Fusion fines result in more lawsuits for them and the opioid manufacturers. I’m not sure of the legal merits, but considering the number of opioid-related deaths taking place, I’d be surprised if someone doesn’t try.

Were the critics right?

These disclosures are probably not much of a surprise for Practice Fusion’s critics, many of them health IT observers who questioned the company’s ethics virtually from day one including this story on Practice Fusion violating physician’s trust which started many of the deeper investigations into Practice Fusion.

From its founding in 2005, Practice Fusion had its share of doubters, most of whom raised questions about its business model, under which doctors got a free EHR system in exchange for being presented with advertisements. The doubters argued that such ads, which I believe were served up in context based on physician activity, could unduly influence physician prescribing habits.

For a long time, co-founder and CEO Ryan Howard was the enfant terrible of the EHR world, but his success eventually quieted down the critics. (Howard, who was pushed out of Practice Fusion in 2015, now heads a remote monitoring startup called 100plus, formerly known as iBeat.) In response to this latest news, Ryan Howard said on Twitter that “[Practice Fusion] *never* ran CDS for opioids during my tenure.”

Over time, Practice Fusion raised over $157 million in funding and made a lot of noise, appearing to put to rest the notion that its business model was inherently flawed. However, the ethics questions dogging the company flared up again in 2016, when the company settled FTC charges that it mislead consumers as part of a campaign to gather reviews for its doctors.

Even so, it kept up at least the appearance of success. In 2018, when it was acquired by Allscripts, Practice Fusion reported having 30,000 ambulatory practices on board caring for 5 million patients. It’s worth remembering, however, that despite having raised $157 million, the vendor sold out to Allscripts for $100 million. Rumors had it that Practice Fusion had offers at $250 million. It seems that the final $100 million purchase price took into account this now realized $145 million penalty.

A month after Allscripts announced the acquisition, it quietly replaced Practice Fusion’s ad-supported EHR model to one based on paid subscriptions.

Now, two years later, the worst fears of those criticizing the free EHR model seem to have been realized. While the actions Practice Fusion admitted to don’t seem 100% related to its ad-supported approach, there are those who would argue that shaky ethics are shaky ethics, and that it’s little surprise the vendor eventually acted as it did. Given what Practice Fusion admitted to doing, it certainly seems that the skeptics had a point.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

3 Comments

  • This is a great summary of some of what happened at Practice Fusion. We will never hear the full story of what led to a slippery slope of actions that can never be justified. Will we ever hear the names of those involved in these decisions? Probably not unless a civil trial can get to the emails and documents.

  • Probably not. I still remember you telling me one time that not all EHR certifications are equal and there were a lot of them that didn’t pass muster. We’ve seen that come out in a big way. No doubt there are still others hiding.

  • We’d learn a lot more if former CEO Ryan Howard decided to dish, but it seems unlikely that he will.

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