Navigating Telemedicine Requirements for Licensing, Scope of Practice and Reimbursement

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1 Presenting a live 90-minute webinar with interactive Q&A Navigating Telemedicine Requirements for Licensing, Scope of Practice and Reimbursement Overcoming Multi-State Regulatory Hurdles for Providers and Facilities WEDNESDAY, DECEMBER 2, pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Nathaniel M. (Nate) Lacktman, Partner, Foley & Lardner, Tampa, Fla. Dr. Joseph P. McMenamin, Principal, McMenamin Law Offices, Richmond, Va. René Y. Quashie, Senior Counsel, Epstein Becker & Green, Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

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5 Telemedicine Requirements for Providers and Facilities: Overcoming Licensing, Scope of Practice and Reimbursement Hurdles Provider Licensure René Quashie, Esq December 2, Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com

7 Licensure and Telemedicine An Overview States, and specifically state medical boards, are responsible for regulating and monitoring the practices of health care professionals within their boundaries Licensure is the process by which states validate the credentials of health care professionals Licensure rules apply to all health care professionals, including those who practice telemedicine both within states and across different states Yet, state licensure rules traditionally have run counter to the practice of telemedicine, which transcends geographic boundaries Health care practitioners who practice telemedicine generally are subject to the licensure rules of: (1) the states in which their patients are physically located and (2) the states where they (the practitioners) are practicing 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 7

Licensure and Telemedicine An Overview When thinking about potential multi-state telemedicine arrangements, consider where the health care practitioners would need to be licensed: Some states

8 Licensure and Telemedicine An Overview When thinking about potential multi-state telemedicine arrangements, consider where the health care practitioners would need to be licensed: Some states explicitly address the issue (e.g., Tex. Occ. Code (a)) Some states indirectly address the issue, either by including the act of diagnosing or rendering treatment through electronic or other means as part of the practice of medicine (e.g., W. Va. Code (a)), or using broader language such as by any means or instrumentality to subject out-of-state practitioners to the state s medical licensing laws (e.g., Wis. Stat (9)(a)) Some states do not address the issue at all Various initiatives attempting to address telemedicine licensure issues 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 8

9 Licenses Available to Telehealth Providers Regular License Some states require telehealth providers to obtain the relevant professional license required by the state and to meet other related state-specific requirements such as payment of licensure fees and passage of professional examinations E.g., Alaska, Connecticut, Florida, Illinois, Massachusetts Special Telemedicine License Some states issue special licenses / certificates related to the provision of telehealth services, allowing out-of-state providers holding such licenses to render services provided certain conditions are met, such as not opening an office in the state Alabama, Louisiana, Minnesota, Montana, Nevada, New Mexico, Ohio, Tennessee, Texas, Wyoming License for Non-Physician Practitioners Full licensure generally required to provide telehealth services unless an exception applies Nurse Licensure Compact Not applicable to APRNs Other compacts under development 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 9

10 Special Telemedicine Licenses/Certificates Alabama A Few States Including: Alabama Louisiana Minnesota Montana New Mexico Ohio Tennessee Texas Applicant can obtain a special purpose license to practice medicine across state lines if : o Physician holds a full and unrestricted license to practice medicine in any state o Physician has had no previous disciplinary action or other action taken against the applicant Board may issue a certificate of qualification if it finds that the previous disciplinary action or other action does not indicate that the physician is a potential threat to the public o Physician completes and submits an application for certificate and pays $175 fee 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 10

11 Special Telemedicine Licenses Minnesota Applicants may obtain telemedicine registration if they satisfy the following conditions: o Physician is licensed without restriction to practice medicine in the state from which the physician provides telemedicine services o Physician has not had a license to practice medicine revoked or restricted in any state or jurisdiction; o Physician does not open an office in Minnesota, and does not meet with patients in the state o Physician annually registers with the board, on a form provided by the board Ohio Processing for the telemedicine certificate or the full certificate both take approximately 10 to 12 weeks 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 11

12 Telehealth Licensing Exceptions Endorsement Allows out-of-state licensed physicians to obtain in-state licenses based on their out-of-state credentials A state board accepts the license granted by another state with similar standards, e.g., Arizona (ARIZ. REV. STAT ), Florida (FLA. STAT ), and Ohio (OHIO. REV. CODE ANN ) Registration Allows out-of-state licensed physicians to register with in-state medical licensing boards, rather than obtaining an additional in-state license Reciprocity Specific agreements between state licensing boards to mutually recognize out-of-state licenses for the purpose of instate practice Usually exists between states that have similar medical licensing laws or that have agreed to harmonize their laws Bordering States Exception Permits, under certain circumstances, the instate practice of medicine by out-ofstate physicians who are licensed by bordering states Consultation Allows a physician who is not licensed in the state to practice medicine in consultation with a referring physician who is licensed in the state Available in many states but scope varies widely state to state Unclear whether applicable to routine, ongoing consultations with telemedicine providers 2015 Epstein Becker & Green, P.C. All Rights Reserved. 12

Telemedicine Licensing Exceptions Consultation Exception Delaware

where the out-of-state physician is incidentally called into Iowa

no more than 20 days in a year Maine - limited to consultation on

infrequent consultation regarding a special patient or patients

infrequent basis Texas - out-of-state medical specialist may

a Texas physician in the same medical specialty without obtaining

13 Telemedicine Licensing Exceptions Consultation Exception Delaware - limited to 12 consultations per year Iowa - limited to cases where the out-of-state physician is incidentally called into Iowa for consultation, defined as no more than 10 consecutive days and no more than 20 days in a year Maine - limited to consultation on an irregular basis Arizona - limited to actual single or infrequent consultation regarding a special patient or patients About 20 or so states only permit consultation if provide on an infrequent basis Texas - out-of-state medical specialist may provide episodic consultation via telemedicine per the request of a Texas physician in the same medical specialty without obtaining telemedicine licensure 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 13

14 Telemedicine Licensing Exceptions Consultation Exception Available in many states Allows a physician who is not licensed in the state to practice medicine in consultation with a referring physician who is licensed in the state Unclear whether the exception applies to routine, ongoing consultations with telemedicine providers Scope varies from state to state About 25 states allow consultation with limited restriction, including: California Florida Hawaii Illinois Louisiana New Jersey New York Pennsylvania 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 14

15 Telemedicine Licensing Exceptions Consultation Exception Limited restriction is defined to include one or more of the following: Consultation must be with an in-state physician; Consultation must be at the request of an in-state physician; Out-of-state physician may not open up an office to see patients/receive calls in the state; and In-state physician must maintain ultimate responsibility for the primary diagnosis and/or treatment of the patient California Out-of-state physician may not open an office in California, receive calls from California patients, give orders or hold ultimate responsibility for the care or primary diagnosis of California patients 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 15

Telemedicine Licensing Exceptions Consultation Exception Louisiana Informal consultation or second opinion allowed if a Louisiana physician maintains responsibility for the primary

Anything beyond this requires telemedicine licensure Oregon Telemedicine consultations by an out-of-state physician permitted provided he/she consults with an Oregon physician and

16 Telemedicine Licensing Exceptions Consultation Exception Louisiana Informal consultation or second opinion allowed if a Louisiana physician maintains responsibility for the primary diagnosis, testing and treatment of the patient. Anything beyond this requires telemedicine licensure Oregon Telemedicine consultations by an out-of-state physician permitted provided he/she consults with an Oregon physician and does not undertake primary responsibility for diagnosing or rendering treatment to the patient South Carolina Out-of-state physician may provide consultations and secondary diagnoses without a license, but providing a primary diagnosis requires a license 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 16

Telemedicine Licensing Exceptions Consultation Exception A very small number of states severely limit consultation Michigan - consultation by an out-of-state physician only permitted in exceptional

17 Telemedicine Licensing Exceptions Consultation Exception A very small number of states severely limit consultation Michigan - consultation by an out-of-state physician only permitted in exceptional circumstances (which does not appear to be defined) Rhode Island - has a general consultation exception, but it appears that out-of-state physicians must obtain a Rhode Island license before providing telemedicine services in the state (even if they are just providing consultation) 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 17

18 FSMB Interstate Medical Licensure Compact Designed to facilitate physician licensure portability and the practice of interstate telemedicine services ( Would create an additional licensure pathway through which physicians could obtain expedited licensure in Compact-participating states Intended to complement existing licensing and regulatory authority of state medical boards Conceptually similar to the Nurse Licensure Compact ( Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 18

19 Efforts to Streamline Licensure: FSMB Interstate Medical Licensure Compact Intended to complement existing licensing and regulatory authority of state medical boards To date, 11 states have enacted legislation to join Compact: AL, IA, ID, IL, MN, MT, NV, SD, UT, WV, WY Designed to facilitate physician licensure portability and the practice of interstate telemedicine services Conceptually similar to the Nurse Licensure Compact ( g/nlc.htm) Would create an additional licensure pathway through which physicians could obtain expedited licensure in Compact-participating states Legislation pending in 10 additional states: IA, IL, MD, MI, NE, NV, OK, RI, TX, VA 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 19

Legislative Status Enacted Introduced No Status 2015

21 Licensure Non-Physicians Nurse Licensure Compact Allows a nurse (RN and LPN/VN) to have one compact license in the nurse s primary state of residence (the home state) and to practice in other compact states (remote states) Nurse must follow the nurse practice act of each state Nurse could be subject to the discipline process in the states of practice Permits practice (physically and telephonically/electronically) across state lines in Compact states ƒadvanced practice registered nurses not included in this compact APRN Compact (National Council of State Boards of Nursing) 2015 Epstein Becker & Green, P.C. All Rights Reserved. ebglaw.com 21

Telemedicine Practice Guidelines and Reimbursement Opportunities Nathaniel M. Lacktman 813.

23 Telemedicine Practice Guidelines and Reimbursement Opportunities Nathaniel M. Lacktman (tel) Foley & Lardner LLP Attorney Advertising Prior results do not guarantee a similar outcome Models used are not clients but may be representative of clients 321 N. Clark Street, Suite 2800, Chicago, IL

24 Overview Practice Guidelines Consults Diagnosis Treatment recommendations Remote prescribing Reimbursement Opportunities Medicare Medicaid Commercial reimbursement 2015 Foley & Lardner LLP 24

25 Telemedicine Practice Guidelines 2015 Foley & Lardner LLP 25

26 Telemedicine Practice Guidelines 2015 Foley & Lardner LLP 26

27 Telemedicine Practice Guidelines Direct-to-Patient vs. Established Telemedicine Practice Consults Diagnosis Treatment recommendations Remote prescribing Second Opinions 2015 Foley & Lardner LLP 27

28 Telemedicine Practice Guidelines Establish valid doctor-patient relationship In-person exam required? Modality of communication? Consent? Disclosures? Recordkeeping? 2015 Foley & Lardner LLP 28

29 Telemedicine Practice Guidelines Remote prescribing Not just State Board of Medicine rules. Pharmacy, DEA, FDA In-person exam What if pre-existing doctor-patient relationship? Online interface for form-based submission? Exceptions for in-facility prescribing? Controlled substances Refills 2015 Foley & Lardner LLP 29

30 Telemedicine Sources of Revenue Government FFS (Medicare, Medicaid) Medicare Advantage, Medicaid MCOs Commercial Health Plans Employer Self-Funded Plans Employer Pay (OOP) Institutions, Providers Patient Self-Pay/Cash Cost Savings and Cost Avoidance 2015 Foley & Lardner LLP 30

31 Telemedicine Reimbursement Medicare Coverage Reimburses for Telehealth Services when the originating site (patient location) is in a HPSA or a county outside a Metropolitan Statistical Area (MSA). Originating site must be a medical facility and not the patient's home (e.g., practitioners' offices, hospital, and rural health clinics). Only covers face-to-face, interactive video consultation services where the patient is present. (S&F in AK and HI). Limited set of covered services Foley & Lardner LLP 31

32 Telemedicine Reimbursement Medicaid Coverage 48 states offer some form of Medicaid reimbursement for telemedicine or telehealth services Generally live video Minority of states cover store & forward or remote monitoring 2015 Foley & Lardner LLP 32

33 Telemedicine Commercial Insurance Laws Arizona Georgia Michigan New Mexico Virginia Arkansas Hawaii Minnesota New York Washington California Indiana Mississippi Oklahoma Colorado Kentucky Missouri Oregon Connecticut Louisiana Montana Tennessee DC Maine Nevada Texas Delaware Maryland New Hampshire Vermont 2015 Foley & Lardner LLP 33

34 Telemedicine Commercial Statutes Credit: ATA s State Telemedicine Policy Center (July, 2015) 2015 Foley & Lardner LLP 34

35 35 TELEMEDICINE: RIDE THE WAVE Or Get Lost at Sea OR GET LOST AT SEA 35

36 Speaker Contact Nathaniel Lacktman Foley & Lardner LLP News & Resources DigitalHealth 2015 Foley & Lardner LLP 36

37 Telemedicine Resources Statutes Regulations/Admin code Board Guidance and Policy Statements CMS Handbooks Medicaid Handbooks and Policies Enforcement Trends ATA and FSMB Policies/Standards 2015 Foley & Lardner LLP 37

38 Telemedicine: Business Issues Strafford Webinar 2 December 2015 Joseph P. McMenamin, M.D., J.D. McMenamin Law Offices joe.mcmenamin@venebio.com

39 Outline A. Corporate practice of medicine B. Fee splitting C. Anti-Kickback Statute and Self-Referral 39

40 Corporate Practice of Medicine ( CPM ): Policy Considerations Tension: Corporate focus: achieve and increase profits Profession s focus: patient care Concern: If corporations get involved in the practice of medicine and control physicians' compensation, that could harm patient care So, prevent unlicensed persons from interfering with or influencing MD's judgment 40

41 Policy Considerations, 2 Corporate employment of a licensed professional is prohibited because such a relationship [T]ends to the commercialization and debasement of [the] profession Barton v. Codington Country, 2 N.W. 2d 337, 343 (S.D. 1942) Undermines MD-patient relationship and MD s exercise of independent medical judgment in the sole interest of the patient. Garcia v. Texas State Bd. of Med. Exam rs, 384 F. Supp. 434, 437 (W.D. Tex. 1974) Lets corporate entities not licensed and so not subject to the same professional standards or regulatory control as licensed entities intrude into medical practice See, e.g., State v. Boren, 219 P.2d 566, (Wash. 1950); Funk Jewelry Co. v. State ex rel. La Prade, 50 P.2d 945, (Ariz. 1935) 41

42 Policy, 3 Dangers of lay control over professional judgment, the division of the physician's loyalty between his patient and his profit-making employer, and the commercialization of the profession. Berlin v. Sarah Bush Lincoln Health Ctr., 688 N.E.2d 106 (Ill. 1997). 42

43 History of the CPM Doctrine MDs fought control by nonprofessional organizations Prevent formation of corporations offering medical services Discourage quackery Early 20 th C: AMA got state legislatures to adopt CPM laws Advent of large private and governmental health insurance programs: attempts to rein in costs defeated AMA s efforts to resist external controls End-20 th C: most states ignored or repealed the laws, or enacted laws enabling managed care plans to structure themselves as corporations 43

44 CPM Enforcement: Cal., Tex., Ohio, Col., Ia., Ill., N.Y., N.J. Corporation may not practice medicine or employ MD to provide professional medical services Licensee to make business" or "management" decisions; control practice Own patient records, including content determination Select, hire/fire (as it relates to clinical competency) MDs, allied staff, medical assistants Set parameters under which MD will contract with payers Decide coding and billing procedures Select medical equipment and supplies 44

45 California Medical Practice Act, Business and Professions Code "Any person who practices or attempts to practice, or who holds himself or herself out as practicing...[medicine] without having at the time of so doing a valid, unrevoked, or unsuspended certificate...is guilty of a public offense "Corporations and other artificial entities shall have no professional rights, privileges, or powers Mere potential for control may suffice for violation See Marik v. Superior Court, 191 Cal. App. 3d 1136 (Cal. Ct. App. 1987) 45

46 Prohibited in California Non-physicians owning or operating a business that offers patient evaluation, dx, care and/or treatment MD(s) operating a practice as an LLC, LLP, or a general corporation Management service organizations arranging for, advertising, or providing medical services rather than providing administrative staff and services only Non-MD exercising controls over practice, even where MDs own and operate the business MD acting as "medical director" when he does not own the practice See, 65 Op.Atty.Gn. 223, and 11 Op.Atty.Gen

47 Unauthorized Practice (Cal. Examples) Selecting diagnostic tests for a particular problem Determining the need for referrals to, or consultation with, another physician Responsibility for ultimate overall care of patient, including treatment options Determining how many patients a physician must see in a given period of time or how many hours a physician must work See also Staley v. Bd. of Medical Examiners, 109 Cal.App.2d 1 47

48 Characteristic Prohibitions Practice of medicine without a license Sharing of fees between licensed and unlicensed individuals or business entities Ownership of medical practices Employment of professionals by Nonprofessionals Business entities 48

49 Characteristic Requirements Licensed physicians to own and operate entities that provide medical services Management fees stated within management services agreements set at fair market value 49

50 Exceptions Certain corporate employers OK (NY, NJ, Col., Ill.) Hospitals NY hospitals and other licensed facilities may employ MDs to render medical services to hospital s patients. People v. John H. Woodbury Dermatological Inst., 192 N.Y. 454 (N.Y. 1908). HMOs. Md. Code Ann. Health-Gen Professional corporations Med school, as part of its mission to promote medical science and instruction. Albany Med. Coll. v. McShane, 104 A.D.2d 119 (N.Y. App. Div. 1984); aff d 489 N.E.2d 1278 (N.Y. 1985) School health programs. N.Y. Educ. Law 901 et seq. Partnerships, PCs, professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively. N.Y. Educ. Law

51 Where the Hospital Exception N/A California: Cal. Bus. Prof. Code Sec But see Opn. Cal. Atty. Gen for exceptions Iowa: Iowa Statutes Sec Iowa hospitals may employ pathologists and radiologists Texas: Tex. Occ. Code Sec Texas public hospitals and California teaching hospitals may employ physicians 51

52 Application of CPM Doctrine to Telemedicine Telephysicians may not share compensation for patient services with other providers, in-state or out-of-state Enforcement: State AG or medical board Physicians may not be employed except by an entity composed of physicians only to provide telemedicine services Prohibitions vary state to state May hinder practices wishing to operate on nationally Rx: organize the practice as a physician-only LLC, LLP, etc. Some states: non-mds may provide management services 52

53 Management Services Agreements Company does management functions for practice Day-to-day administrative functions Non-professional operations Bookkeeping, budgeting, supply purchasing, HR Company incurs all practice costs except physicians compensation, benefits, malpractice premiums FMV must dictate management fees O/w, practice gains inequitable surplus income after the deduction for management fees By charging sub-fmv fees, management company may be able to improperly influence how MDs provide care 53

54 Complying with CPM Law Determine if the applicable state is subject to doctrine If so, examine statutes, regulations, common law Consider each state's exceptions Management services agreement Consider hiring 3d-party expert to opine on whether agreement reflects FMV 54

55 Outline A. Corporate practice of medicine B. Fee splitting C. Anti-Kickback Statute and self-referral 55

56 1997 Balanced Budget Act Required Fee Splitting Medicare reimbursement has always been limited 1997 BBA: 100% of Medicare payment went to the remote, consulting practitioner Consultant (remote site) had to pass 25% of the payment to referring practitioner (originating site) Accounting problems: full amount was reported to IRS as income to the consultant, even though for one-fourth of the payment he was but a conduit 56

57 BIPA, 42 USC 1395m, Pub. L , 223(m)(2)(c) Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, 42 U.S.C. 1395m Consultant receives entire Medicare payment in "an amount equal to the amount that the physician or practitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications system. Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service Referring physician's site may also receive a "facility fee Originally $20 Now 80% of the lesser of the actual charge or $

58 Minn. Stat The board may refuse to grant registration to perform interstate telemedicine services against any physician. The following conduct is prohibited and is grounds for disciplinary action: (p) Fee splitting, including without limitation: (2) dividing fees with another physician or a professional corporation, unless the division is in proportion to the services provided and the responsibility assumed by each professional and the physician has disclosed the terms of the division 58

59 Vine Street Clinic v. HealthLink, 856 N.E.2d 422, 426 (Ill. 2006) Through Ks with MDs and payors, D created networks to be available to members of plans HCPs agreed to serve members at a discount HealthLink processed claims; sent them to payors for benefit determination and payment Each MD had to pay an administrative fee equal to 5% of the amount allowed in HealthLink's rate schedule for services provided to members by the physician. Later, charged fixed flat fee based on the specialty and volume of HealthLink claims submitted MDs sought refunds: alleged improper fee-splitting 59

60 Vine Street Clinic v. HealthLink, 2 Ill. Medical Practice Act, 225 Ill. Comp. Stat. 60/22 lets Dept. of Professional Regulation discipline MDs who divide with anyone other than physicians with whom the licensee practices... any fee for any professional services not actually and personally rendered. Intermediate appellate court: Both percentage fee and flat fee were for referral of patients Fee requirement violated the Act and public policy Illinois Supreme Court: Upheld prohibition on percentage-based fee BUT flat fee OK: not based or linked to revenue, gross receipts or billings collected but on the volume and complexity of the administrative services provided; if doctors revenue increased, would not increase automatically Therefore, no fee-sharing 60

61 Outline A. Corporate practice of medicine B. Fee splitting C. Anti-Kickback Statute and Self-Referral 61

62 42 U.S.C. 1320a-7b: Medicare/Medicaid Pt Protection Act (AKS) Criminal statute: makes unlawful any arrangement where 1 purpose is to offer, solicit, or pay anything of value in return for a referral for treatment or services provided to Medicare, Medicaid, and state program patients Mens rea: intent Safe harbors: narrow, but provide immunity from prosecution 42 C.F.R Violations: Fine $25,000, imprisonment 5 years, or both 62

63 History Enacted 1972: Misdemeanor to solicit, offer, or receive any kickback or bribe in connection with furnishing covered goods or services or referring a patient to a provider of those services 1977: Congress Prohibited solicitation or receipt of any remuneration (including any kickback, bribe, or rebate) in return for referrals Prohibited offer or payment of such remuneration to induce referrals Made violation of the statutes a felony 1980:Congress added knowing and willful requirement 1987: Congress combined Medicare and Medicaid statutes into one; authorized OIG to exclude individuals and entities that violated the statutes from Medicare and Medicaid 63

64 United States v. Greber, 760 F.2d 68 (3rd Cir. 1985) Doc convicted of Medicare fraud for paying illegal remuneration to other physicians in return for referring patients to his company, Cardio-Med, Inc., for diagnostic services Cardio-Med provided cardiac monitoring. Data were stored in a device while the patient was wearing it, later uploaded to a computer, and interpreted by Doc at Cardio-Med 64

65 United States v. Polin, 194 F.3d 863 (7th Cir. 1999) MD convicted of Medicare fraud for paying illegal remuneration to a cardiac device sales rep in return for referring patients to MD s cardiac pacemaker monitoring company Court: monitoring services could be performed by the monitoring physician while in direct contact with the patient or remotely using appropriate technology 65

66 AKS: Proving a Violation Government must show: (1) that the defendant knowingly and willfully solicited or received remuneration, directly or indirectly, overtly or covertly (2) that in return, the D referred individuals to a person or entity for furnishing or arranging the furnishing of services; (3) that payment for the individuals' services was made in whole or in part under a Federal health care program. US v. Patel, 12 CR 491-5, 2014 WL (N.D. Ill. 2014) Kickback need not be made from the federal funds United States v. Ruttenberg, 625 F.2d 173, 176 (7 th Cir. 1980) Payment to one in control of federal funds, that is one in a position to open up or control a source of income, is all that is required. Bethune Plaza, Inc. v. State Dep t of Pub. Aid, 90 Ill. App. 3d 1133, 1139, 414 N.E. 2d 183, 188 (1980), citing Ruttenberg 66

67 AKS Analysis Does the provider have any remunerative relationship between itself and persons or entities in a position to generate Federal health care program business for the for the provider directly or indirectly? Could one purpose of the remuneration be to induce or reward the referral or recommendation of business payable in whole or in part by a Federal health care program? 67

68 AKS Analysis: Additional Considerations Does the arrangement or practice: Have potential to interfere with, or skew, clinical decision-making? Have potential to increase costs to Federal health care programs? Have potential to increase the risk of overutilization or inappropriate utilization? Raise patient safety or quality of care concerns? 68

69 Safe Harbors - Equipment rental - Personal services and management contracts - Electronic prescribing items and services - Electronic health records items and services - Investment interests - Space rental - Sale of practice - Referral services - Warranties - Discounts - Employment relationships - Waiver of beneficiary s co-insurance, deductible - Group purchasing organizations 69

70 Safe Harbors - Increased coverage or reduced cost sharing under a risk-basis or prepaid plan - Price reduction agreements with health plans - Practitioner recruitment - Obstetrical malpractice insurance subsidies - Investments in group practices - Cooperative hospital service organizations - ASCs - Referral arrangements for specialty services - Price reductions for eligible managed care organizations - Price reductions offered by contractors with substantial financial risk to managed care organizations - Ambulance replenishing - Health centers 70

71 AKS Safe Harbors Must analyze any telemedicine arrangement from each party s perspective and what benefits either party may receive in return for inducing referrals Safe harbor is remuneration-specific and does not globally protect an arrangement 71

72 AKS and Telestroke: Advisory Opinion No Proposal: emergency protocols and TM consults with stroke neurologists for community hospitals: Neuro emergency telemedicine hardware, software: audio-visual Neuro emergency clinical consults 24/7/365 Acceptance of neuro emergency transfers Neuro emergency protocols, training, and medical education Participating hospitals Not to participate in any other neuro emergency telemedicine service without system s prior OK for length of agreement; 2y anticipated Marketing: Grant system a limited license to use participating hospitals trademarks and service marks OIG: Deal could potentially generate illegal remuneration under federal AKS But no sanctions because safe guards suffice to reduce risk of improper payments for referrals 72

73 No : Safeguards System unlikely to generate many referrals: Neither participating hospitals nor their MDs required or encouraged to refer to system No additional compensation for EP Initially, participation offered only to hospitals the system already had a clinical affiliation with Both participating hospitals and system might benefit from deal, but primary beneficiaries would be patients who could be treated at the participating hospitals EDs Deal would afford system and hospitals opportunity to engage in marketing using each other s marks, but Neither would be required to engage in marketing Each party would pay its own marketing costs Unlikely to result in increased costs: System certified that few, if any, consults would be billable to Medicare 73

74 AKS and Grant-Supported Rural TM Network: Op Federal grant supported a rural TM network Possible fraud exposure upon expiration Given clear Congressional intent that network support continue beyond grant s term, system s ongoing financial support of equipment provided to rural HCPs OK Still, any HCP that stood to profit from the TM network should share the appropriate costs borne by the health system to maintain the TM infrastructure 99 Op. Off. Inspector Gen. 14 (1999) 74

75 Ad Services Facilitating Telemedicine: Advis. Op Party requesting opinion certified that it would comply with the Health on the Net Foundation Code of Conduct Entailed ensuring that the visitor-web site relationship support, and not replace, the patient-physician relationship. Through the use of identifying words, design, or placement, advertiser to make clear that it provides commercial advertising Disclaimer: that the inclusion of such ads does not constitute a guarantee, endorsement, or recommendation of the products, services, or companies appearing in such ads or accessible through such hyperlinks. May help: leave the design of ads up to advertising docs Goal: Make clear to reader that site is providing no medical advice, nor is it in some special position to do so 75

76 Potential AKS Safe Harbors 1994: OIG special fraud alert re: clinical lab services If clinical labs provide free computers or fax machines to MDs, could be illegal remuneration unless MD (1) Used the equipment exclusively to coordinate lab services (2) Equipment was integral to MD s use of lab s services OIG, SFA, 59 Fed. Reg. 65,372, 65,377 (Dec. 19, 1994) MD access to hospital TM equipment could implicate AKS unless hospital takes precautions to make sure equipment and services are used for hospital patients only Charge MD FMV for any additional use MD receives free electronic prescribing technology or training 42 CFR (x) Free EHR software, information technology or training 42 CFR (y) 76

77 Telemedicine Equipment Leases: Medical Staff Incidental Benefit? (i) Written lease signed by the parties (ii) Lease specifies the equipment covered (iii) Lease provides lessee with use of equipment for periodic intervals, not full-time for lease term For the intervals, lease specifies schedule, length, rent (iv) Term is for at least 1 year (v) Aggregate rent set in advance, c/w FMV Not influenced by volume or value of any referrals 42 CFR Section (c) OIG Advisory Opinion No (optometrist) 77

78 Provision of Subsidized or Free Equipment By virtue of their interconnectedness, telemedicine partners may be incentivized to refer to each other Is subsidy of system s capital or operating costs intended to lock in a referral stream to the host? Risk: proportional to the extent that Host bears most of the cost Remote MD access to host results in referrals, and viceversa 78

79 Outline A. Corporate practice of medicine B. Fee splitting C. Anti-Kickback Statute and Self-Referral 79

80 Self-Referral: Stark, 42 U.S.C. 1395nn For designated health services reimbursable by Medicare, MD may not refer Medicare beneficiaries to an entity MD has a financial interest in Prohibition is narrower in its scope than AKS, but it is a strict liability offense does NOT require intent Complying with Stark exception protects MD 42 C.F.R Financial interest : Though it provides numerous exceptions, definition includes almost any arrangement in which a physician receives something of value from an entity he refers to 42 C.F.R

81 Stark and Telemedicine Federal restrictions: not major concern; apply only when the payor is a federal health care program Medicare and Medicaid cover telemedicine services to but a limited extent State regulations: many apply regardless of payor Telemedicine provider may need to structure its business model accordingly May have to refrain from offering participating MDs equity or other financial incentives that induce referrals 81

82 Caution Under Stark Free telemedicine equipment or services Volume discounts Per-click payments or ads on physician websites JVs with telemedicine tech, monitoring, or networking companies Telemedicine network to facilitate patient consultations: MD may wish to be financially independent Practitioner could invest in a comprehensive hospital or health system; not a discrete telemedicine subsection of that hospital or health system 82

83 Caution Under Stark MD may invest in Well-capitalized telemedicine services company or One that provides or manufactures telemedicine technology 42 U.S.C. 1395nn(d)(3) (2002). Riskier: telemedicine start-ups 83

84 Telemedicine Self-Referral Exceptions Free e-prescribing technology or training or free EHR software, IT or training (through 2021) Hospitals may fund up to 85% of docs EHR costs 42 CFR (v), (w) Community-wide health information systems For patients served by community providers, MDs may refer Medicare patients to entities MD has received IT equipment or services from that allow MD access to and sharing of EHR, if certain conditions are met 42 CFR (u) Referrals to a rural provider MD has a financial interest in Rural provider: any entity that furnishes at least 75% of the DHS that it furnishes to residents of a rural area 42 CFR (c)(1); 1395nn(d)(2) 84

85 Questions? Comments? Joseph P. McMenamin, MD, JD McMenamin Law Offices, PLLC

Retail Clinics in Healthcare: Overcoming Complex Legal Challenges

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