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Groupons for Health Care Services: No-Brainer or Legal Minefield?

Posted on March 9th, 2011 by Admin

Groupon logo.

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We've all bought Groupons for a wide variety of goods and services -- dinner at a new restaurant, a periodical subscription, clothing, a hot air balloon ride -- but most of us have not bought a Groupon for health care services.

Thus far, the health care offerings via Groupon seem to be limited mostly to cosmetic, dental, chiropractic and acupuncture services; in short, to services that are often excluded from traditional health care insurance coverage.  In an age of on-line communications and marketing of health care services, it is natural to ask whether Groupon can work for other health care services, and in fact I was asked just that last week by American Medical News.  The answer: it depends.

Since health care services are heavily regulated at the state and federal level, and since health care insurance companies add another layer of restrictions in their contractual language with health care providers, there are legal issues that have to be examined before deciding to go with Groupon, LivingSocial or other similar services, in addition to the business issues at hand.  The latter include:  Is the cost a worthwhile investment in marketing and brand awareness?  Do I need a loss leader to bring new folks in the door and/or to cover some fixed costs at slow times of the day or of the week?  Is this the most cost-effective way to achieve my business goals?

There are a number of legal issues, and their resolution will depend, in part, on where you are situated, since many of the relevant rules are state laws, which vary.  For example:

  • Groupon collects 50% of the price of the groupon as its fee; is that illegal fee-splitting under applicable state law?
  • Is the 50% fee an illegal kickback in exchange for a referral?  Are you subject to federal laws in this area in addition to any state laws?
  • Do provider agreements with third party payors prohibit the offering of discounts to plan subscribers?  (If you can get over the first two issues, you may need to screen out folks who are insured by carriers who limit your ability to discount or risk being in default under an agreement with your biggest customer.)

In short, you need to keep in mind that the use of popular social media tools in the health care space may trigger issues for health care providers far beyond the realms of HIPAA,  privacy and medical practice issues, the legal bogeymen we tend to focus on when thinking about health care social media.

David Harlow (@healthblawg) is Principal of The Harlow Group LLC, a health care law and consulting firm based near Boston, Mass. He is a member of the External Advisory Board for the Mayo Clinic Center for Social Media.

Tags: Groupon, LivingSocial

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