Legal: Mind the threshold

Q. Can I pay a lead generation company for leads?
 - 
Thursday, January 25, 2018

A.  Yes, but the appropriate payment terms will depend on the nature of the leads.

When reviewing any lead generation arrangement, a key regulatory issue is whether the arrangement complies with the federal Anti-Kickback Statute (AKS). The AKS prohibits a person from soliciting, receiving, offering, or paying anything of value in return for, or in order to induce referrals or the arrangement of referrals of individuals covered by a federal health care program (FHCP).

In light of this, a threshold issue for an arrangement involving payment to a lead generation company is whether the information gathered and distributed about potential customers constitutes a “referral” for purposes of the AKS or simply a raw lead. An individual’s name and contact information constitute a raw lead. On the other hand, when additional qualifying information is gathered about an individual, it is possible for that bundle of information to cross the line from a raw lead to a referral. No single one or combination of data points will convert a raw lead into a referral. But each additional item of information gathered increases the likelihood of turning a raw lead into a referral.

If you are dealing with raw leads, the AKS is not implicated, and you can pay the lead generation company per lead. But if you are dealing with referrals, the AKS is implicated, and you should pay the lead generation company a fixed annual fee representing the fair market value of the services required to generate those referrals in accordance with the safe harbor to the AKS for personal services and management contracts.

Todd Moody is a healthcare attorney with Brown & Fortunato. Reach him at tomood@bf-law.com.