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March 14, 2011

David Harlow quoted in AMA American Medical News story on daily deal websites

Groupon, LivingSocial and other daily deal websites are being used by health care providers -- though thus far mostly by those that are not covered by traditional commercial or governmental health insurance (e.g., dental, chiropractic, acupuncture services).  Read the American Medical News story on Groupon, where I was quoted, and please take a look at my blog post on the subject as well -- at the Mayo Clinic Center for Social Media blog -- entitled: Groupons for Health Care Services: No-Brainer or Legal Minefield?  In that post, I observed:

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.)

There is at least one more issue to consider, as well:  State laws on gift certificates and their requirements touching on expiration dates.  Two lawsuits filed in the last week or so -- one against Groupon, and one against LivingSocial -- allege that the relatively short life of the daily deal violates state gift certificate laws.  The plaintiffs' lawyers would like to see these cases certified as class actions.

Bottom line: With the proliferation of high-deductible health plans, and FSAs, HSAs and the like, the general public is becoming more price sensitive in paying for health care services; while health care providers need to become more creative in order to address this issue, they must also remember that they are subject to a tangled web of regulations above and beyond other consumer-facing businesses.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting


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