NextGen Healthcare: An Auxiliary Test Product and Missing Shipped Functions

The NextGen Healthcare fraud settlement required the electronic health records vendor to pay $31 million to resolve allegations of certification fraud and kickbacks for customer recommendations. The government alleged that NextGen passed certification testing with help from a temporary product, then shipped software missing functions clinicians needed to record patient information and hand care to another provider. For someone who worked on the test build, supported the released software or used it in a clinic, the difference between what passed and what shipped is the heart of this case.

The Department of Justice announced the civil settlement on July 14, 2023. A nurse practitioner and a registered nurse who used NextGen’s software within the South Carolina Department of Corrections brought the whistleblower case. The government joined it for settlement, alleging that NextGen’s representations caused providers to claim Medicare and Medicaid incentive payments for software that lacked the required capabilities.

What Does It Mean to Have a Certified EHR?

A certified EHR has passed testing for specified clinical functions, and its developer must ensure those functions work in clinical use. In NextGen’s case, the disputed capabilities belonged to the 2014 Edition standards, and the government’s allegation was that the test product concealed what the released product could not do.

The Office of the National Coordinator for Health Information Technology established the certification program. Authorized independent organizations tested the software and issued certifications. The Centers for Medicare and Medicaid Services administered the incentive programs that made certification commercially valuable: eligible providers could receive federal payments for using certified technology and meeting meaningful-use requirements. Individual practitioners could qualify for up to $43,720 over five years from Medicare or up to $63,750 over six years from Medicaid.

The vendor made representations about the product. The customer relied on them when making an annual attestation for payment. In its complaint, the government explained that developers had to disclose external software components needed to perform the certified functions. Test scripts were supplied in advance, while the developer remained responsible for the full capabilities it claimed.

The payment incentive also shaped the market. The Vassar College thesis A Panacea or a Problem? Electronic Health Records and the Complicated Politics of Its Stakeholder Network puts it sharply:

That distinction gives the NextGen allegations their practical force. A provider needed working clinical functions behind the certification it relied on for payment.

The programs have since changed. As CMS explains, Medicare’s hospital Promoting Interoperability Program continues, while similar requirements for clinicians moved into the Merit-based Incentive Payment System. The Medicaid incentive program ended in 2021. Developers also face continuing obligations to maintain certification, including requirements for interoperability and real-world testing.

The Auxiliary KBM Built for Certification Testing

The government alleged that NextGen built required functions into a temporary Knowledge Based Model, or KBM, rather than into the EHR it submitted for certification. The KBM was a separate collection of templates that interacted with the core software. The temporary testing version and the later KBM released to customers were different products.

According to the complaint, NextGen leadership pressed employees to obtain certification before competitors while the software remained under development. Changes could be made faster in the templates than in the core EHR. But developers allegedly copied code across hundreds of templates instead of drawing on central data tables, multiplying errors and making updates and quality assurance impracticable.

The complaint says top executives recognized that the architecture would keep producing problems until the platform was replaced. The alleged shortcut reached beyond the certification demonstration into how the product would be maintained.

The complaint describes a temporary KBM designated for meaningful-use testing, with functions built specifically to get the EHR through the certification test. Its account includes the employees’ own description:

The government alleged that NextGen did not disclose the KBM on the testing questionnaire, even though it asked about additional software used in testing. NextGen’s position internally, according to the complaint, was that it was submitting the EHR for certification, not the KBM that supplied the missing functions.

We see a certification process turned on its head: the extra software allegedly supplied the capabilities needed to pass, yet disappeared from the description of what was being certified. The customer was buying the capability, not a successful performance of the test script.

The complaint also quotes a NextGen manager who wrote, “It was always hacked to pass.” It alleges that NextGen did not retain the temporary KBM after testing, preventing the government from determining its exact role. Employees later expressed concern that customers might report missing functions to ONC, according to the complaint. Yet NextGen allegedly went on to tell users that the EHR was complete.

The Shipped Versions and Their Missing Functions

The government alleged that versions 5.8.0.77, 5.8.1, 5.8.2 and 5.8.3 lacked required capabilities. Its detailed account of the original version describes three groups of functions that matter in an ordinary clinical record.

Problem Lists and Family History in SNOMED CT

The EHR allegedly lacked the functionality to record certain problem-list and family-history data in SNOMED CT, the standardized clinical vocabulary required for those functions. Common terminology lets different providers and systems communicate about the same patient information.

The complaint alleges that NextGen put the coding functionality into the KBM to pass testing and omitted it from the certified EHR. The later KBM 8.3 allegedly failed to supply a reliable solution: codes could be missing, wrong or drawn from an entirely different vocabulary. A clinical description appearing on a screen and the required code accompanying that description are different parts of the record. The allegation reaches the data another system would have to understand.

Transition-of-Care and Referral Summaries

The government alleged that the original EHR could not create the required referral summaries, and that NextGen used the temporary KBM to make it appear capable during testing. The certification required transition-of-care and referral summaries in the standardized CCDA format.

The problem allegedly continued when customers used the later KBM with the EHR. The complaint describes wrong information being pulled into the plan-of-care portion of a summary. It also describes users who could not generate an accurate CCDA even after obtaining the additional software.

The government’s allegation concerns whether the software could produce the required handoff document with the right information in it.

Vital Signs and Body Mass Index

The original version allegedly could not perform most of the required vital-sign tasks when it was tested or when it reached users. Those tasks included recording, changing and accessing height, weight and blood pressure, and automatically calculating and displaying body mass index.

According to the complaint, moving functionality into the later KBM still left serious defects. NextGen internally noted badly miscalculated BMI and erroneous percentile conversions for young children.

How the Certification Reached Provider Attestations

The government alleged that NextGen carried the original certification problem into later releases through inherited certification. According to the complaint, the company represented that changes had not adversely affected certified capabilities, allowing later versions to gain certification without new testing, even though they allegedly shared the missing functions.

The complaint also describes a bind of NextGen’s own making. Users needed KBM 8.3 for functions missing from the core EHR, but NextGen allegedly could not publicly explain that dependence after concealing the KBM during testing. It instead represented the EHR as complete.

The resulting payment allegation covered Medicare reporting periods from 2014 through 2016 and Medicaid reporting periods from 2014 through 2017. The government said users relied on NextGen’s certification representations and unknowingly made false attestations that they were eligible for incentive payments.

That is how the vendor’s decisions allegedly reached taxpayer money. The representation traveled from the certification process into the product’s sale and then into a provider’s claim for payment.

Greenway Health’s 2019 settlement provides a close certification parallel. The government alleged that Greenway modified its test-run software to make Prime Suite appear capable of using the required clinical vocabulary. It also alleged that an earlier version incorrectly calculated the share of office visits for which users distributed clinical summaries, and that Greenway left the error in place so users would receive incentive payments. In both cases, the government’s account connects an internal product decision to a customer’s payment representation. NextGen’s distinctive allegation is the hidden auxiliary product: a separate set of templates helped demonstrate functions the core EHR allegedly lacked.

Customer References With a Financial Stake in the Sale

NextGen’s Premiere Reference Program allegedly rewarded existing customers for recommendations that produced new sales. The complaint says references received credits usually worth 2 percent of the ensuing sale, capped at $10,000, and received them only if the prospective customer bought within a few months of the visit.

The government alleged that the amount bore no relation to the cost of hosting a site visit. Customers could use the credits for NextGen software licenses, maintenance and other services. Payment depended on the sale. That is a very different incentive from reimbursing the work of hosting a visitor.

Under the reference agreement, members allegedly had to provide a favorable showcase. The complaint says NextGen selected site-visit hosts partly for their satisfaction with the product or the enthusiasm of the reference they would give. Members allegedly often received additional services or faster technical support than customers outside the program.

A buyer visiting a reference site could therefore be seeing a customer with both a financial reason to recommend NextGen and preferential treatment from the vendor. According to the government, NextGen did not disclose that the reference would be compensated if the visit led to a purchase. What appeared to be independent customer experience allegedly served as an extension of the salesforce.

The complaint puts payments through the formal reference and referral programs at approximately $1 million between January 2011 and July 2017. That alleged outlay was small beside the settlement covering both the certification and kickback allegations. The complaint separately alleges free tablets offered to decision-makers for listening to a sales pitch, along with meals, sporting-event tickets and entertainment for references and customers threatening to leave.

The government alleged that these inducements violated the Anti-Kickback Statute and caused customers to submit incentive-payment claims connected to the purchases.

The same concern appeared in CareCloud’s 2021 settlement. Its settlement agreement described allegations that paid participants in an earlier version of the Champions Program signed agreements barring negative information about the EHR. Prospective buyers allegedly knew neither about the compensation nor about the contractual limits on what references could say.

These reference programs matter because a customer can seem to offer the view beyond the sales demonstration. A hidden sales incentive, coupled with restrictions on that customer’s account, changes what the buyer is hearing. We want to know who arranged the visit, what the reference was promised and what the buyer was told.

Who Received Money From the NextGen Settlement?

NextGen’s settlement agreement designated $15.5 million of the recovery as restitution to the United States. It separately required NextGen to pay $1.2 million for the whistleblowers’ attorneys’ fees, expenses and costs.

The Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Vermont obtained the resolution. The Department of Health and Human Services’ Office of Counsel to the Inspector General and OIG Office of Investigations provided investigative support and assistance.

Can a Whistleblower Report EHR Fraud?

A customer-side clinician can bring an EHR whistleblower case, as the nurse practitioner and registered nurse in the NextGen matter did. Their roles put daily use of the software into a case about the representations made by its developer.

An engineer may understand how a temporary template supplied a function during testing. An implementation employee may know which additional product a customer needed. A clinician may recognize the missing terminology, inaccurate summary or faulty calculation described in the complaint. A commercial employee may know how a reference credit depended on a sale. Those are different views of the product and payment chain, and connecting them is the work we do with whistleblowers.

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 NextGen case, the announced award was nearly $5.6 million for the two health care professionals who brought the case from the customer side of the software business.

You Know What the Software Actually Did

If you saw the gap between a certification demonstration and the software delivered to customers, or knew what a reference was paid to say, speak to one of our whistleblower experts about what you saw. We work alongside you to build your strongest EHR whistleblower case, bring in healthcare fraud whistleblower lawyers who understand software certification and referral payments, and stay your partners through the case.