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EHR developer NextGen settles false claims and kickback allegations with $31 million settlment

by John R. Fischer, Senior Reporter | July 19, 2023
Business Affairs
EHR developer NextGen will pay the U.S. governement $31 million to settle false claims and kickback allegations that it misrepresented the functionality of its EHR software.
Electronic health record developer NextGen will pay $31 million to settle allegations that it misrepresented the functionality of its EHR software and provided forms of compensation in exchange for sales and referrals of its products.

According to the complaint, United States ex rel. Markowitz et al. v. NextGen Healthcare Inc., NextGen violated the HHS’s Office of the National Coordinator’s 2014 Edition certification criteria by using a temporary version of a separate software product called Knowledge Based Model that could only perform the certification test scripts, allegedly hiding that the actual solution lacked the required functionality, including the ability to record vital sign data, translate information into essential medical terms, and write up complete clinical summaries.

If true, this means that the software prevented healthcare providers from meeting requirements specified under the Medicare and Medicaid EHR Incentive Program. Created by the American Recovery and Reinvestment Act of 2009, the program encourages providers to adopt and demonstrate “meaningful use” of their EHR solutions by meeting certain requirements, in exchange for incentive payments made by the U.S. Department of Health and Human Services.

“Medical providers must be able to rely on electronic health records systems to correctly document and process important health data for continuity of patient care,” said special agent in charge Maureen Dixon for the HHS, Office of the Inspector General, in a statement.

Additionally, the government accused the company of violating the Anti-Kickback Statute by providing credits, often worth as much as $10,000, to customers who made recommendations that resulted in a sale, as well as tickets to sporting events and entertainment to induce purchases and referrals. The Statute prohibits offering or paying, directly or indirectly, any remuneration in exchange for referrals of items or services covered under Medicare, Medicaid, and other federally funded programs.

In the settlement, NextGen denied the allegations.

The complaint was filed under the qui tam (“whistleblower”) provision of the False Claims Act by registered nurse Toby Markowitz and nurse practitioner Elizabeth Ringold, within the South Carolina Department of Corrections, who used NextGen’s software. Under the terms of the settlement, both will receive $5,580,000.

The case was filed in the U.S. District Court for the District of Vermont.

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