Athenahealth: A Trip to the Masters, a Fee for the Referral

In the Athenahealth kickback settlement, the company agreed to pay $18.25 million to resolve allegations that it used luxury trips, customer referral fees and payments to departing competitors to sell electronic health records software. The government’s complaint described a sales operation that valued a physician’s introduction, an executive’s attendance and an exiting vendor’s customer list. If you worked in EHR sales, customer relations or data migration, the arrangements behind those transactions may be familiar.

Athenahealth, based in Watertown, Massachusetts, sold its cloud-based athenaClinicals platform separately or within athenaOne, a suite that also included billing and patient engagement products. The Justice Department’s January 28, 2021 announcement described three alleged kickback programs: Concierge Events, Client Lead Generation and Conversion Deals. The government said the resulting sales caused healthcare providers to submit false claims for federal EHR incentive payments.

Concierge Events Put the Biggest Prospects at the Masters

Concierge Events allegedly rewarded people who could influence an EHR purchase or a decision to keep Athenahealth’s software. The settlement covers the program from June 2014 through March 2019.

According to the government’s complaint, the company graded these events by the value of the prospective deal. The most valuable prospects qualified for multiday trips with travel and accommodations. Lower-value prospects received premium tickets or private suites at shorter events. For the Masters, invitations went to senior executives or decision makers on larger deals.

The complaint describes free airfare, private car service and luxury homes for Masters guests. Before 2018, the Masters events allegedly had no structured educational component, and invitees could bring spouses or other guests. Kentucky Derby attendees allegedly received airfare, private residences and access to a luxury suite at Churchill Downs.

The most revealing explanation came from inside the company. The complaint quoted a senior vice president’s email about how the spending was justified:

We see the sales calculation in that parenthesis. The bigger deal justified the bigger outing. In the government’s account, the company tracked wins and losses among practices that attended the Masters and credited other events with producing sales.

The complaint also alleged that Athenahealth’s own policies prohibited lavish gifts and gifts intended to influence a particular deal. Some invitees told the company they could not accept because the trips lacked a legitimate business or educational purpose. Those alleged objections matter as much as the amenities: they put the company’s event spending beside its own rules and the concerns customers raised with it.

Client Lead Generation Put a Price on the Referral

The Client Lead Generation program allegedly paid existing Athenahealth customers for bringing in new practices, with compensation tied to the business referred. The agreement covers these arrangements from January 2014 through September 2020.

The complaint describes a payment at the meeting stage and another when a prospect became a customer. Athenahealth allegedly paid a referring client $200 for each meeting with a prospective client. If an ambulatory practice signed up, the referring customer received $3,000 per doctor for the first ten physicians, $1,000 per doctor for the next ten, and $750 per doctor beyond the first twenty.

That formula is more revealing than the phrase referral fee. The government’s allegation was that compensation followed the size of the new practice, regardless of how much time, if any, the existing customer spent speaking or meeting with the prospect. A customer reference became a source of revenue measured in physicians converted.

The government also alleged that Athenahealth knew about the eClinicalWorks settlement and recognized similarities between that company’s referral program and its own. The complaint says Athenahealth changed its program’s name to Introductions in 2018. The substance allegedly stayed the same: payments still followed the value and volume of referrals.

A new name. The same sales formula.

The government alleged that the program generated more than 2,000 leads and business with at least 750 new practices.

CareCloud provides a close parallel. In its account of that company’s customer-reference program, the Justice Department alleged that customers received credits, cash bonuses and percentage success payments for referrals. Their agreements also prohibited negative information about CareCloud, while prospects allegedly learned neither that the reference was paid nor that criticism was barred. The common problem is a recommendation carrying a financial incentive the prospective buyer cannot see.

Conversion Deals and the Value of an Exiting Vendor’s Customers

Conversion Deals allegedly paid health information technology companies that were discontinuing products to recommend Athenahealth to their customers. The settlement dates the agreements from January 2014 through October 2017. Compensation depended on the number and value of customers who converted.

The complaint’s largest example was SOAPware, which sold an inexpensive outpatient EHR platform. In October 2017, Athenahealth allegedly contracted with SOAPware to act as its sales and marketing agent and paid it according to the business converted. The government described a confidentiality agreement alongside that arrangement:

For a practice facing the loss of its existing system, its vendor’s recommendation carried an undisclosed commercial interest, according to the complaint. The company advising customers where to go next allegedly earned money when they chose Athenahealth. The government said SOAPware’s dual role confused customers about why it was recommending the replacement.

The alleged advantage extended beyond the recommendation. Athenahealth obtained customer lists and could contact SOAPware clients before competing EHR vendors knew SOAPware planned to discontinue its offering. Athenahealth and SOAPware also worked on a way to migrate client data to athenaClinicals before the shutdown announcement. Customers choosing other platforms reported significant difficulty moving their data. The complaint says more than 100 SOAPware clients referred under the deal converted to Athenahealth.

That is a combination: an early introduction, a paid recommendation and a prepared route for the records. An honest competing vendor would be trying to win the same practice after Athenahealth allegedly had both access and migration work underway. The practice’s choice involved getting its patient records into the replacement system as well as choosing the software itself.

Exporting records and making them usable in another system are separate problems. A proprietary export format can leave a competing system unable to read the data. A migration arrangement can therefore influence which replacement is practical for a customer.

The 2022 Vassar College thesis A Panacea or a Problem? Electronic Health Records and the Complicated Politics of Its Stakeholder Network describes EHR adoption as a costly contractual commitment that offers little opportunity to try the system first. It discusses training demands and disruption to clinical work, and argues that strict contracts and the cost of switching weaken vendors’ incentive to address users’ frustrations. That analysis helps explain the value of the migration advantage alleged here.

What Is the EHR Incentive Program?

The Medicare and Medicaid EHR Incentive Programs paid eligible healthcare providers to adopt and demonstrate meaningful use of certified electronic health records technology. Those payments supplied the federal-money connection in the Athenahealth case.

The government’s complaint explains that providers attested to using certified EHR technology and meeting program requirements. For physicians and certain other clinicians, the Merit-based Incentive Payment System later replaced the Medicare EHR Incentive Program. Certified EHR use remained part of how their Medicare payment adjustments were assessed. In the government’s account, Athenahealth customers used its software to qualify for incentives or avoid payment reductions.

The alleged chain ran from the vendor’s inducement, through the customer’s purchase and use of the product, to a claim for federal money. The United States alleged that the sales programs violated the Anti-Kickback Statute and caused false claims under the False Claims Act. The government said Medicare and Medicaid paid millions of dollars in incentive payments that were not payable because they resulted from the alleged kickbacks.

The public investment was meant to encourage useful technology in health care. The Vassar thesis argues that financial incentives drove adoption faster than useful integration into clinical work. Its distinction is sharp:

We want that public investment to follow the needs of the practice and its patients. The alleged sales incentives rewarded something else: influence over the purchasing decision.

What the Athenahealth Settlement Resolved

The government joined the whistleblower cases on the kickback allegations. The U.S. Attorney’s Office for the District of Massachusetts and the Justice Department’s Civil Division handled the case. The Department of Health and Human Services Office of Inspector General, the FBI Boston Division and the U.S. Postal Service Office of Inspector General, Northeast Area Field Office joined the announcement.

The whistleblowers brought different views of the business. One worked in business development and sales for an Athenahealth competitor. The other two operated a home-healthcare service that was an Athenahealth client.

The settlement agreement accompanying the announcement states that Athenahealth had discontinued all three programs.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

In the Athenahealth case, the whistleblowers shared in the recovery through agreements with the government and between themselves. Speak with our whistleblower experts about how your knowledge of an EHR sales arrangement could support a case and a reward.

What If I Have Information About Fraudulent EHR Purchases or Programs?

Your knowledge of how an EHR sale actually happened may connect the commercial arrangement to the resulting federal claims. We assess that connection with you, whether your view comes from the vendor, a customer or a competing business.

The product, sales and customer-facing teams may understand different pieces. An employee familiar with migration work may recognize an advantage that an expense report cannot explain. Someone familiar with referral payments may understand why a recommendation changed. We bring those business facts into the case assessment without expecting you to arrive with the whole picture.

You Know How the Sale Was Won

If you saw event spending, referral compensation or a customer migration steer an EHR purchase, speak with our whistleblower experts about how the sale was won. We build your EHR kickback whistleblower case around your knowledge of the business, bring in EHR fraud whistleblower lawyers who understand vendor kickbacks, and stay beside you through the pursuit of a recovery.