The audio portion of the conference may be accessed via the telephone or by using your computers
speakers Please refer to the instructions emailed to registrants for additional information If you
have any questions please contact Customer Service at 1-800-926-7926 ext 10
Presenting a live 90-minute webinar with interactive QampA
Navigating Telemedicine Requirements for
Licensing Scope of Practice and Reimbursement Overcoming Multi-State Regulatory Hurdles for Healthcare Providers and Facilities
Todayrsquos faculty features
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
TUESDAY NOVEMBER 22 2016
Joseph P McMenamin Principal McMenamin Law Offices Richmond Va
Reneacute Y Quashie Member Cozen OConnor Washington DC
Richard K Rifenbark Partner Foley amp Lardner Los Angeles
Tips for Optimal Quality
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FOR LIVE EVENT ONLY
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participation in this webinar by completing and submitting the Attendance
AffirmationEvaluation after the webinar
A link to the Attendance AffirmationEvaluation will be in the thank you email
that you will receive immediately following the program
For additional information about continuing education call us at 1-800-926-7926
ext 35
FOR LIVE EVENT ONLY
Program Materials
If you have not printed the conference materials for this program please
complete the following steps
bull Click on the ^ symbol next to ldquoConference Materialsrdquo in the middle of the left-
hand column on your screen
bull Click on the tab labeled ldquoHandoutsrdquo that appears and there you will see a
PDF of the slides for todays program
bull Double click on the PDF and a separate page will open
bull Print the slides by clicking on the printer icon
FOR LIVE EVENT ONLY
copy2016 Foley amp Lardner LLP bull Attorney Advertising bull Prior results do not guarantee a similar outcome bull Models used are not clients but may be representative of clients bull 555 South Flower Street Suite 3500 Los Angeles CA 90071-2411 bull 2139724500
Rick Rifenbark
Telehealth Licensing amp
Scope of Practice Issues
5
213-972-4813
rrifenbarkfoleycom
wwwfoleycomtelemedicine
copy2016 Foley amp Lardner LLP
The Practice of Medicine
What is the practice of medicine minus Holding oneself out as a doctor to the public (ie
advertising it on an app)
minus Charging for the medical services
minus Making a medical consult
minus Issuing a diagnosis
minus Making treatment recommendations
minus Issuing orders (lab diagnostics)
minus Writing prescriptions
minus Performing treatmentssurgery
6
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
A physician offering care via telemedicine is subject to licensure rules of
The state in which the patient is physically located at the time of the consult
The state where the physician is locatedlicensed
Depending on the technology platform this could result in the physician practicing medicine in all states
7
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
Regarding medical practice rules it is generally accepted that the law that governs the consult is the state where the patient is located at the time of the consult
minus Some states explicitly address this in law or guidance
minus Some states indirectly address this by including diagnosing or rendering treatment through ldquoelectronic or other meansrdquo as part of the practice of medicine
minus Other states are silent
8
copy2016 Foley amp Lardner LLP
Select Physician Licensing Exceptions
Consultation
bullAllows unlicensed physician to practice medicine in peer to peer consultation with a physician licensed in the state
bullAvailable in most states but significant variances in scope
bullRequires state-by-state understanding
Bordering State
bullAllows practice of medicine by out-of-state physicians who are licensed in a bordering state
bullOnly a few states offer this
Special License or Registration
bullAbbreviated license or registration for telemedicine-only care
bullOffered in several states
Follow-Up Care
bullAllows physician to provide follow-up care to hisher patient (eg post-operation)
bullOnly a few states have this
Endorsement
bullPhysician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
9
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Tips for Optimal Quality
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FOR LIVE EVENT ONLY
Continuing Education Credits
In order for us to process your continuing education credit you must confirm your
participation in this webinar by completing and submitting the Attendance
AffirmationEvaluation after the webinar
A link to the Attendance AffirmationEvaluation will be in the thank you email
that you will receive immediately following the program
For additional information about continuing education call us at 1-800-926-7926
ext 35
FOR LIVE EVENT ONLY
Program Materials
If you have not printed the conference materials for this program please
complete the following steps
bull Click on the ^ symbol next to ldquoConference Materialsrdquo in the middle of the left-
hand column on your screen
bull Click on the tab labeled ldquoHandoutsrdquo that appears and there you will see a
PDF of the slides for todays program
bull Double click on the PDF and a separate page will open
bull Print the slides by clicking on the printer icon
FOR LIVE EVENT ONLY
copy2016 Foley amp Lardner LLP bull Attorney Advertising bull Prior results do not guarantee a similar outcome bull Models used are not clients but may be representative of clients bull 555 South Flower Street Suite 3500 Los Angeles CA 90071-2411 bull 2139724500
Rick Rifenbark
Telehealth Licensing amp
Scope of Practice Issues
5
213-972-4813
rrifenbarkfoleycom
wwwfoleycomtelemedicine
copy2016 Foley amp Lardner LLP
The Practice of Medicine
What is the practice of medicine minus Holding oneself out as a doctor to the public (ie
advertising it on an app)
minus Charging for the medical services
minus Making a medical consult
minus Issuing a diagnosis
minus Making treatment recommendations
minus Issuing orders (lab diagnostics)
minus Writing prescriptions
minus Performing treatmentssurgery
6
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
A physician offering care via telemedicine is subject to licensure rules of
The state in which the patient is physically located at the time of the consult
The state where the physician is locatedlicensed
Depending on the technology platform this could result in the physician practicing medicine in all states
7
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
Regarding medical practice rules it is generally accepted that the law that governs the consult is the state where the patient is located at the time of the consult
minus Some states explicitly address this in law or guidance
minus Some states indirectly address this by including diagnosing or rendering treatment through ldquoelectronic or other meansrdquo as part of the practice of medicine
minus Other states are silent
8
copy2016 Foley amp Lardner LLP
Select Physician Licensing Exceptions
Consultation
bullAllows unlicensed physician to practice medicine in peer to peer consultation with a physician licensed in the state
bullAvailable in most states but significant variances in scope
bullRequires state-by-state understanding
Bordering State
bullAllows practice of medicine by out-of-state physicians who are licensed in a bordering state
bullOnly a few states offer this
Special License or Registration
bullAbbreviated license or registration for telemedicine-only care
bullOffered in several states
Follow-Up Care
bullAllows physician to provide follow-up care to hisher patient (eg post-operation)
bullOnly a few states have this
Endorsement
bullPhysician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
9
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Continuing Education Credits
In order for us to process your continuing education credit you must confirm your
participation in this webinar by completing and submitting the Attendance
AffirmationEvaluation after the webinar
A link to the Attendance AffirmationEvaluation will be in the thank you email
that you will receive immediately following the program
For additional information about continuing education call us at 1-800-926-7926
ext 35
FOR LIVE EVENT ONLY
Program Materials
If you have not printed the conference materials for this program please
complete the following steps
bull Click on the ^ symbol next to ldquoConference Materialsrdquo in the middle of the left-
hand column on your screen
bull Click on the tab labeled ldquoHandoutsrdquo that appears and there you will see a
PDF of the slides for todays program
bull Double click on the PDF and a separate page will open
bull Print the slides by clicking on the printer icon
FOR LIVE EVENT ONLY
copy2016 Foley amp Lardner LLP bull Attorney Advertising bull Prior results do not guarantee a similar outcome bull Models used are not clients but may be representative of clients bull 555 South Flower Street Suite 3500 Los Angeles CA 90071-2411 bull 2139724500
Rick Rifenbark
Telehealth Licensing amp
Scope of Practice Issues
5
213-972-4813
rrifenbarkfoleycom
wwwfoleycomtelemedicine
copy2016 Foley amp Lardner LLP
The Practice of Medicine
What is the practice of medicine minus Holding oneself out as a doctor to the public (ie
advertising it on an app)
minus Charging for the medical services
minus Making a medical consult
minus Issuing a diagnosis
minus Making treatment recommendations
minus Issuing orders (lab diagnostics)
minus Writing prescriptions
minus Performing treatmentssurgery
6
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
A physician offering care via telemedicine is subject to licensure rules of
The state in which the patient is physically located at the time of the consult
The state where the physician is locatedlicensed
Depending on the technology platform this could result in the physician practicing medicine in all states
7
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
Regarding medical practice rules it is generally accepted that the law that governs the consult is the state where the patient is located at the time of the consult
minus Some states explicitly address this in law or guidance
minus Some states indirectly address this by including diagnosing or rendering treatment through ldquoelectronic or other meansrdquo as part of the practice of medicine
minus Other states are silent
8
copy2016 Foley amp Lardner LLP
Select Physician Licensing Exceptions
Consultation
bullAllows unlicensed physician to practice medicine in peer to peer consultation with a physician licensed in the state
bullAvailable in most states but significant variances in scope
bullRequires state-by-state understanding
Bordering State
bullAllows practice of medicine by out-of-state physicians who are licensed in a bordering state
bullOnly a few states offer this
Special License or Registration
bullAbbreviated license or registration for telemedicine-only care
bullOffered in several states
Follow-Up Care
bullAllows physician to provide follow-up care to hisher patient (eg post-operation)
bullOnly a few states have this
Endorsement
bullPhysician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
9
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Program Materials
If you have not printed the conference materials for this program please
complete the following steps
bull Click on the ^ symbol next to ldquoConference Materialsrdquo in the middle of the left-
hand column on your screen
bull Click on the tab labeled ldquoHandoutsrdquo that appears and there you will see a
PDF of the slides for todays program
bull Double click on the PDF and a separate page will open
bull Print the slides by clicking on the printer icon
FOR LIVE EVENT ONLY
copy2016 Foley amp Lardner LLP bull Attorney Advertising bull Prior results do not guarantee a similar outcome bull Models used are not clients but may be representative of clients bull 555 South Flower Street Suite 3500 Los Angeles CA 90071-2411 bull 2139724500
Rick Rifenbark
Telehealth Licensing amp
Scope of Practice Issues
5
213-972-4813
rrifenbarkfoleycom
wwwfoleycomtelemedicine
copy2016 Foley amp Lardner LLP
The Practice of Medicine
What is the practice of medicine minus Holding oneself out as a doctor to the public (ie
advertising it on an app)
minus Charging for the medical services
minus Making a medical consult
minus Issuing a diagnosis
minus Making treatment recommendations
minus Issuing orders (lab diagnostics)
minus Writing prescriptions
minus Performing treatmentssurgery
6
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
A physician offering care via telemedicine is subject to licensure rules of
The state in which the patient is physically located at the time of the consult
The state where the physician is locatedlicensed
Depending on the technology platform this could result in the physician practicing medicine in all states
7
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
Regarding medical practice rules it is generally accepted that the law that governs the consult is the state where the patient is located at the time of the consult
minus Some states explicitly address this in law or guidance
minus Some states indirectly address this by including diagnosing or rendering treatment through ldquoelectronic or other meansrdquo as part of the practice of medicine
minus Other states are silent
8
copy2016 Foley amp Lardner LLP
Select Physician Licensing Exceptions
Consultation
bullAllows unlicensed physician to practice medicine in peer to peer consultation with a physician licensed in the state
bullAvailable in most states but significant variances in scope
bullRequires state-by-state understanding
Bordering State
bullAllows practice of medicine by out-of-state physicians who are licensed in a bordering state
bullOnly a few states offer this
Special License or Registration
bullAbbreviated license or registration for telemedicine-only care
bullOffered in several states
Follow-Up Care
bullAllows physician to provide follow-up care to hisher patient (eg post-operation)
bullOnly a few states have this
Endorsement
bullPhysician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
9
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP bull Attorney Advertising bull Prior results do not guarantee a similar outcome bull Models used are not clients but may be representative of clients bull 555 South Flower Street Suite 3500 Los Angeles CA 90071-2411 bull 2139724500
Rick Rifenbark
Telehealth Licensing amp
Scope of Practice Issues
5
213-972-4813
rrifenbarkfoleycom
wwwfoleycomtelemedicine
copy2016 Foley amp Lardner LLP
The Practice of Medicine
What is the practice of medicine minus Holding oneself out as a doctor to the public (ie
advertising it on an app)
minus Charging for the medical services
minus Making a medical consult
minus Issuing a diagnosis
minus Making treatment recommendations
minus Issuing orders (lab diagnostics)
minus Writing prescriptions
minus Performing treatmentssurgery
6
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
A physician offering care via telemedicine is subject to licensure rules of
The state in which the patient is physically located at the time of the consult
The state where the physician is locatedlicensed
Depending on the technology platform this could result in the physician practicing medicine in all states
7
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
Regarding medical practice rules it is generally accepted that the law that governs the consult is the state where the patient is located at the time of the consult
minus Some states explicitly address this in law or guidance
minus Some states indirectly address this by including diagnosing or rendering treatment through ldquoelectronic or other meansrdquo as part of the practice of medicine
minus Other states are silent
8
copy2016 Foley amp Lardner LLP
Select Physician Licensing Exceptions
Consultation
bullAllows unlicensed physician to practice medicine in peer to peer consultation with a physician licensed in the state
bullAvailable in most states but significant variances in scope
bullRequires state-by-state understanding
Bordering State
bullAllows practice of medicine by out-of-state physicians who are licensed in a bordering state
bullOnly a few states offer this
Special License or Registration
bullAbbreviated license or registration for telemedicine-only care
bullOffered in several states
Follow-Up Care
bullAllows physician to provide follow-up care to hisher patient (eg post-operation)
bullOnly a few states have this
Endorsement
bullPhysician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
9
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
The Practice of Medicine
What is the practice of medicine minus Holding oneself out as a doctor to the public (ie
advertising it on an app)
minus Charging for the medical services
minus Making a medical consult
minus Issuing a diagnosis
minus Making treatment recommendations
minus Issuing orders (lab diagnostics)
minus Writing prescriptions
minus Performing treatmentssurgery
6
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
A physician offering care via telemedicine is subject to licensure rules of
The state in which the patient is physically located at the time of the consult
The state where the physician is locatedlicensed
Depending on the technology platform this could result in the physician practicing medicine in all states
7
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
Regarding medical practice rules it is generally accepted that the law that governs the consult is the state where the patient is located at the time of the consult
minus Some states explicitly address this in law or guidance
minus Some states indirectly address this by including diagnosing or rendering treatment through ldquoelectronic or other meansrdquo as part of the practice of medicine
minus Other states are silent
8
copy2016 Foley amp Lardner LLP
Select Physician Licensing Exceptions
Consultation
bullAllows unlicensed physician to practice medicine in peer to peer consultation with a physician licensed in the state
bullAvailable in most states but significant variances in scope
bullRequires state-by-state understanding
Bordering State
bullAllows practice of medicine by out-of-state physicians who are licensed in a bordering state
bullOnly a few states offer this
Special License or Registration
bullAbbreviated license or registration for telemedicine-only care
bullOffered in several states
Follow-Up Care
bullAllows physician to provide follow-up care to hisher patient (eg post-operation)
bullOnly a few states have this
Endorsement
bullPhysician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
9
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
A physician offering care via telemedicine is subject to licensure rules of
The state in which the patient is physically located at the time of the consult
The state where the physician is locatedlicensed
Depending on the technology platform this could result in the physician practicing medicine in all states
7
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
Regarding medical practice rules it is generally accepted that the law that governs the consult is the state where the patient is located at the time of the consult
minus Some states explicitly address this in law or guidance
minus Some states indirectly address this by including diagnosing or rendering treatment through ldquoelectronic or other meansrdquo as part of the practice of medicine
minus Other states are silent
8
copy2016 Foley amp Lardner LLP
Select Physician Licensing Exceptions
Consultation
bullAllows unlicensed physician to practice medicine in peer to peer consultation with a physician licensed in the state
bullAvailable in most states but significant variances in scope
bullRequires state-by-state understanding
Bordering State
bullAllows practice of medicine by out-of-state physicians who are licensed in a bordering state
bullOnly a few states offer this
Special License or Registration
bullAbbreviated license or registration for telemedicine-only care
bullOffered in several states
Follow-Up Care
bullAllows physician to provide follow-up care to hisher patient (eg post-operation)
bullOnly a few states have this
Endorsement
bullPhysician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
9
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Telemedicine and Licensing
Regarding medical practice rules it is generally accepted that the law that governs the consult is the state where the patient is located at the time of the consult
minus Some states explicitly address this in law or guidance
minus Some states indirectly address this by including diagnosing or rendering treatment through ldquoelectronic or other meansrdquo as part of the practice of medicine
minus Other states are silent
8
copy2016 Foley amp Lardner LLP
Select Physician Licensing Exceptions
Consultation
bullAllows unlicensed physician to practice medicine in peer to peer consultation with a physician licensed in the state
bullAvailable in most states but significant variances in scope
bullRequires state-by-state understanding
Bordering State
bullAllows practice of medicine by out-of-state physicians who are licensed in a bordering state
bullOnly a few states offer this
Special License or Registration
bullAbbreviated license or registration for telemedicine-only care
bullOffered in several states
Follow-Up Care
bullAllows physician to provide follow-up care to hisher patient (eg post-operation)
bullOnly a few states have this
Endorsement
bullPhysician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
9
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Select Physician Licensing Exceptions
Consultation
bullAllows unlicensed physician to practice medicine in peer to peer consultation with a physician licensed in the state
bullAvailable in most states but significant variances in scope
bullRequires state-by-state understanding
Bordering State
bullAllows practice of medicine by out-of-state physicians who are licensed in a bordering state
bullOnly a few states offer this
Special License or Registration
bullAbbreviated license or registration for telemedicine-only care
bullOffered in several states
Follow-Up Care
bullAllows physician to provide follow-up care to hisher patient (eg post-operation)
bullOnly a few states have this
Endorsement
bullPhysician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
9
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Consultation Exception
Allows unlicensed physician to practice medicine in peer-to-peer consultation with a physician licensed in the state
Peer-to-peer local physician retains ultimate authority over treatment and diagnosis
Example Arizona minus ldquoThis [licensing statute] does not apply tohellip (1) A doctor
of medicine residing in another jurisdiction who is authorized to practice medicine in that jurisdiction if the doctor engages in actual single or infrequent consultation with a doctor of medicine licensed in this state and if the consultation regards a specific patient or patientsrdquo Ariz Rev Stat sect 32-1421
10
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Consultation Exception
Significant variances regarding
minus Frequency of consults
minus Primary vs secondary diagnosis
minus Free vs for compensation
minus Contractual arrangement or regular contacts
minus In-state office or location to meet
11
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Bordering State Exception
Allows practice of medicine by out-of-state physicians who are licensed in a bordering state
Example Maryland minus ldquoSubject to the rules regulations and orders of the Board
the following individuals may practice medicine without a licensehellip A physician who resides in and is authorized to practice medicine by any state adjoining this State and whose practice extends into this State if (i) The physician does not have an office or other
regularly appointed place in this State to meet patients and
(ii) The same privileges are extended to licensed physicians of this State by the adjoining staterdquo Md Health Occ Code sect 14-302
12
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Special Telehealth License
Abbreviated license or registration for telemedicine-only care provided to residents in the state
Nine states have special telehealth licenses Example Minnesota
minus ldquo(a) A physician not licensed to practice medicine in this state may provide medical services to a patient located in this state through interstate telemedicine if the following conditions are met (1) the physician is licensed without restriction to practice medicine in the
state from which the physician provides telemedicine services (2) the physician has not had a license to practice medicine revoked or
restricted in any state or jurisdiction (3) the physician does not open an office in this state does not meet with
patients in this state and does not receive calls in this state from patients and
(4) the physician annually registers with the board on a form provided by the boardrdquo Minn Stat Ann sect 147032
13
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Follow-Up Care Exception
Allows physician to provide follow-up care to hisher patient (eg post-operation)
Example Indiana
minus ldquoIn addition to the exceptions described in section 2 [IC 25-225-1-2] of this chapter a nonresident physician who is located outside Indiana does not practice medicine or osteopathy in Indiana by providing hellip treatment services to a patient in Indiana following medical care originally provided to the patient while outside Indianardquo Ind Code Ann sect 25-225-1-11
14
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Endorsement
Physician licensed in another state can more quickly obtain in-state license based on the out-of-state credentials
Example New Mexico minus ldquoThe board may grant a license by endorsement to an applicant
who (1) has graduated from an accredited United States or Canadian medical school (2) is board certified in a specialty recognized by the American board of medical specialties (3) has been a licensed physician in the United States or Canada and has practiced medicine in the United States or Canada immediately preceding the application for at least three years (4) holds an unrestricted license in another state or Canada and (5) was not the subject of a disciplinary action in a state or provincerdquo NM Stat Ann sect 61-6-13
15
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Licensing Compacts
Interstate Medical License Compact
Nurse Licensure Compact and APRN Compact
Psychology Interjurisdictional Compact
Physical Therapy Licensure Compact
16
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Interstate Medical License Compact
Additional licensure approach for physicians in Compact-participating states
Physician licensure portability and practice of cross-border services
Complements existing licensing and regulatory authority of state medical boards
Eighteen states have joined the Compact (as of November 2016)
17
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Nurse Licensure Compact
Permits nurses to practice in own state as well as other Compact states
If a Compact state is the primary state of residence the license automatically becomes a Compactmultistate license
25 states have adopted the Nurse Licensure Compact to date
APRN Compact also approved May 4 2015 by National Council for State Boards of Nursing
18
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Psychology Interjurisdictional Compact
Approved by the Association of State and Provincial Psychology Boards in February 2015
Goal is to facilitate telehealth and temporary in-person face-to-face practice of psychology across state lines
Becomes operative when seven states adopt the Compact
19
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Physical Therapy Licensure Compact
Developed by the Federation of State Boards of Physical Therapy
10 states must adopt the physical therapy licensure compact for it to become effective
To date at least four states have adopted the Compact
20
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Adopted in 2014
Provides guidance to state medical boards regarding telemedicine
Covers various topics including minus Physician licensure
minus Establishment of physician-patient relationship
minus Evaluation and treatment of patient
minus Informed consent
minus Continuity of care
21
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Federation of State Medical Boards
Telemedicine Policy
Covers various topics including
minus Referrals for emergency services
minus Medical records
minus Privacy and security
minus Disclosures and functionality of online services
minus Prescribing
22
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Telehealth Informed Consent
Approximately 29 states require informed consent for telehealth services
Example California
ldquoPrior to the delivery of health care via telehealth the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health The consent shall be documentedrdquo Cal Bus amp Prof Code 22905(b)
23
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Telehealth Malpractice Considerations
Tort liability for telehealth is rooted in negligence
Providers should adhere to the same standard of care in telehealth settings as they would when delivering care in person
Less is known of telehealth lawsuits than is known about those arising in an in-person setting because only a fraction of the total malpractice claims involve telehealth
24
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Telemedicine Credentialing
CMS Conditions of Participation for Hospitals minus A hospital is required to have a credentialing and
privileging process for physicians and practitioners providing services to the hospitalrsquos patients including those who provide services via telehealth
minus CMS permits the hospital receiving the telehealth services to rely on the privileging and credentialing decisions made by the hospital or entity providing the telehealth services provided certain requirements are met
minus A hospital must have a written agreement in place with the distant-site hospitaltelehealth entity
minus 42 CFR 48212(a)(8) (a)(9)
25
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
copy2016 Foley amp Lardner LLP
Speaker Information
Rick Rifenbark Foley amp Lardner LLP
213-972-4813
rrifenbarkfoleycom
Special thanks to
Nathaniel Lacktman Foley amp Lardner LLP
813-225-4127
nlacktmanfoleycom
wwwfoleycomnlacktman
26
News amp Resources wwwfoleycomtelemedicine
wwwhealthcarelawtodaycom
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
NAVIGATING TELEMEDICINE REQUIREMENTS FOR LICENSING SCOPE OF
PRACTICE AND REIMBURSEMENT
THE REIMBURSEMENT LANDSCAPE
Reneacute Quashie Esq
Partner
Cozen OrsquoConnor
rquashiecozencom
202-912-4884
27
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
OverviewBackground
28
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Terms amp Definitions
American Telemedicine Association
Telemedicine The use of medical information
exchanged from one site to another via electronic
communications to improve patients health status
Medicaid
Telemedicine The use of telecommunications and information technology to provide access to health assessment diagnosis
intervention consultation supervision and information
across distance
Medicare
Telehealth Two-way real-time interactive communications between originating site and
distant site physicians to deliver health services
Maryland
Telemedicine Practice of medicine from a distance in which intervention
and treatment decisions and recommendations are based on
clinical data documents and information transmitted through
telecommunications systems
World Health Organization (WHO)
Telemedicine Delivery of health care services at a distance using information and communication
technologies for the exchange of valid information for diagnosis
treatment prevention research and continuing education
Center for Connected Health Policy
Telehealth Collection of means or methods for enhancing health care public health and health education delivery and support
using telecommunications technologies
29
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Benefits of Telehealth
30
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Telehealth and US Health Care Landscape
The US health care landscape is transitioning from fee-for-service to pay-for-performance (eg outcomes quality)
Increased use of integrated delivery models such as Accountable Care Organizations bundled payments medical homes and readmissions reduction initiatives
Growing consumer demand for in-home care modalities
Telehealth viewed as an efficient and cost-effective care delivery vehicle
Availability accessibility and ubiquity of telehealth technologies
31
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
bull 365 million population by 2030
bull 65 and over 19 of population 2030
Increasing Aging Population
bull Shortfall of 130000 physicians by 2025
bull Similar shortages for nurses Fewer Physicians
bull Driven by increased patient costs and post-acute care strategies designed to reduce readmissions
Payment for Value Outcomes
Ubiquity of Telehealth Technology
Use of Telehealth Outside the US
Other Telehealth Drivers
32
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Patient Trends
Anthem
bull 74 of US consumers indicated that they would use telehealth services (and the number is expected to grow)
Cisco
bull 76 of patients choosing access to care over human interaction with their care provider
bull 70 are comfortable communicating with doctors via text email video instead of seeing them in person
Telehealth amp eHealth Journal
Study
bull 75 of respondents said they would not use telehealth unless it was covered by their insurance
33
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Stakeholders Affecting Adoption (Advisory Board)
34
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
2016-2020 Trends
Impact of International
Telehealth
Rise of Virtual Medical Centers
Sophisticated Technology
bull Wearables
bull Medical device innovation (like the physioglove)
bull EHR integration and analytics
bull Expansion of EHR-integrated applications
Emergence of Remote
Specialist Care
35
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Projections
36
Increased movement away from conventional reimbursement models
Growing health plan demand
Growing consumer demand
Growing large employer demand
Telemedicine becoming the standard of care
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare
37
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Coverage and Reimbursement ndash Medicare
Limited Coverage
Beneficiaries must be present and encounters must involve interactive audio and video
telecommunications providing real-time communication
between the practitioner and the beneficiary
Beneficiaries must be seen at certain identified originating sites (eg hospitals physiciansrsquo offices FQHCs)
bull In very rural counties
Encounters may be performed at distant sites only by certain identified
practitioners (eg physicians NPs PAs)
Only certain CPT codes reimbursed
Medicare beneficiaries are responsible for co-
insurance and deductible payments
38
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Overview
Last meaningful expansion in 2001
Mostly for rural beneficiaries
Limited number of services covered
Live interactive audiovideo (no coverage for asynchronous store-and-forward communication in most cases)
Only $14 million paid out for telehealth services (2014)
bull $615 billion paid out for all Medicare programsservices
39
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Definition
Interactive audio and video
telecommunications system that permits real-
time communication between beneficiary and
distant site provider
Asynchronous ldquostore and forwardrdquo technology is
permitted only in Federal telemedicine
demonstration programs in Alaska or Hawaii
40
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Coverage for Professional Fees
Beneficiary must present in an
ldquooriginating siterdquo located in
Rural HPSA located outside an MSA or in a rural census tract or
County outside of a Metropolitan
Statistical Area
Beneficiary can also present at an entity participating in a
federal telemedicine demonstration project in
Alaska and Hawaii
Demonstration projects can use asynchronous communication
Interactive live audio and video telecommunications
provided in real-time communication between the practitioner and beneficiary
41
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Coverage for Professional Fees
bull Beneficiary must present at one of the following ldquooriginating sitesrdquo1
bull If beneficiary does not present at one of these sites no Medicare
coverage for telehealth 1Even though the beneficiary is at these sites there is no requirement that a billing professional be in attendance
with the beneficiary unless it is medically necessary as determined by the practitioner at the distant site Note that a
beneficiaryrsquos home cannot be an originating site
Physicianrsquos office Critical access hospital
Hospital Skilled nursing facility
Hospital-basedcritical access
hospital-based renal dialysis
center
Rural health clinic
Federally Qualified Health
Center
Community mental health
center
42
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Coverage for Professional Fees
bull Professional services must be performed at a distant site by only one of the following billing professionals1
bull There is no location requirement for the distant site (where the practitioner delivering the service is located at the time the service is provided via a telecommunications system)
Physician Nurse midwife
Clinical psychologist Clinical social worker
Registered dietitian or nutritional
professional
Physician assistant
Clinical nurse specialist Nurse practitioner
43
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Coverage for Professional
Fees
bull ESRD related services
bull Individual and group kidney disease education
bull Smoking cessation
bull Individual psychotherapy
bull Psychiatric diagnostic interview examination
bull Depression screening
bull High-intensity behavioral counseling to prevent sexually transmitted infection
bull Intensive behavioral therapy for cardiovascular disease
bull Annual wellness visit
Only certain CPT
codes are
covered
44
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Coverage for Professional Fees
2017 Physician
Fee Schedule
bull End-stage renal disease related services for dialysis less than a full month of service per day (90967-90970)
bull Advance care planning including the explanation and discussion of advance directives by the physician or other qualified health care professional (99497-99498)
bull Critical care consultation services remotely to critically ill patients (GTTT1-GTTT2)
45
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Payment for Telehealth Services
Distant site practitioners are paid under the Medicare Physician Fee Schedule for covered telehealth services
Practitioners must use the appropriate code for the professional service along with the telehealth modifier GT (ldquovia interactive audio and video telecommunications systemsrdquo)
bull GT modifier certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished
bull For ESRD-related services GT modifier certifies that one visit per month was furnished ldquohands onrdquo to examine the vascular access site
46
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Coverage for Facility Fees
Originating sites are paid an originating site facility fee for telehealth services
Separately billable Part B payment
47
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Telehealth Benefit Will Be Difficult
to Expand
HHS not persuaded by clinical efficacy of telehealth for many indications bullMost covered CPT codes involve counseling mentalbehavioral health consultation
Bias towards keeping
telehealth benefit only available for
rural beneficiaries in areas with shortage of health care
professionals
Need for telehealth in urban contexts not fully
understood
Fear of increased costs to
Medicare program
with expansion
of telehealth
benefit
Privacy and security
concerns
Many studies have
been inconclusive
regarding efficiency
cost savings
preventable hospitalizations from the
use of telehealth services
48
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Opportunities for Medicare Telehealth Expansion
Significant telehealth coverage in other
government programs (ie Veterans Administration
Medicaid)
Increased coverage of telehealth data
monitoring approved by health care reform
initiatives (ie CMMI)
Promoted for use in Medicare Shared
Savings Program even though coverage is
limited to the narrow Medicare fee-for-
service coverage rules for telehealth
Focus on preventing rehospitalizations forcing CMS to look at treatment modality alternatives
49
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Opportunities for Medicare Telehealth Expansion
Number of newer private studies showing the
efficiency cost-saving potential of
telehealth
Many telehealth initiatives underway with private health plans
bull Potential to yield persuasive cost and other data
Potentially covered by Medicare
Advantage
50
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicare Developments
Various Congressional bills
MACRA
bull Merit-Based Incentive Payment Systems (MIPS)
bull Alternative Payment Model (APM)
bull 5 annual payment bonus for physicians who participate in APMs
bull Exempts physicians from participating in MIPS
bull Telemedicine and RPM APMs may cover (even if those services not reimbursed under traditional Medicare)
51
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicaid
52
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Coverage and Reimbursement ndash Medicaid
States have the option flexibility to determine whether to
cover telemedicine services and what types of
services to cover
To date 48 states and
DC provide at least some coverage of
and reimb for telemedicine
services
States not required to submit a
separate SPA for coverage of or reimb
for telemedicine services if
they reimburse for telemedicine services in
the same way amount they do for face-to-face services
visits consultations
States are responsible for ensuring access and
covering face-to-face
visits examinations
by ldquorecognizedrdquo practitioners providers in those parts of the state
where telemedicine services are not available
53
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicaid Overview
States and DC Medicaid programs cover telemedicine in some form
bull The most predominantly reimbursed form of telehealth is live video
with almost every state offering some type of live video reimbursement in their Medicaid program
States specify list of sites that can serve as an originating site for a telehealth encounter
States and DC do not specify the type of healthcare provider allowed to provide telemedicine as a condition of payment
States cover store and forward services
States cover remote patient monitoring
States reimburse a transmission facility fee
States require informed consent
54
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicaid Coverage
55
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicaid Managed Care
In 2014 the OIG issued a report evaluating the adequacy of access to care for enrollees in managed care
The Report found
bull 35 of providers were not located at the location listed on the plan
bull 8 of providers were at the location but were not participating in the plan
bull 8 of providers were not accepting new patients
bull Primary care providers were less likely to offer appointments than specialists
bull Specialists tend to have longer waits
bull Median wait time among providers who offered appointments 2 weeks
bull Over frac14 of providers had wait times of more than 1 month
bull 10 of providers had wait times of longer than 2 months
56
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Medicaid Managed Care
Federal regulations from April 2016 overhauled Medicaid
managed care requirements
States required to develop and make publicly available time and
distance network adequacy standards for primary care and several specialties behavioral
health and dental care hospital care
Includes factors states should consider in setting standards
including the use of telemedicine e-visits andor other evolving and innovative
technological solutions
57
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Private Payers
58
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Coverage and Reimbursement ndash
Private Payers
Many leading private insurers
provide coverage and reimbursement for telemedicine services although these policies
vary
bull Private pay ldquopioneersrdquo include
bull Blue Cross Blue Shield
bull CIGNA
bull United Healthcare
A growing number of states (almost 35 states and DC) have or are in the process of enacting so-called
ldquoparityrdquo laws
bull Generally require health insurers to cover and provide reimbursement for services provided via telemedicine ldquoin a comparable mannerrdquo to how the payer would for the same services provided in person
bull Over 30 states and counting (eg CA GA HI MD MI OR VA)
59
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Parity Laws - Definitions
State parity laws also define ldquotelehealthrdquo and
ldquotelemedicinerdquo
Maryland Parity Law Telemedicine Use of interactive
audio video or other telecommunications or electronic
technology by a provider to deliver health care services at a site other than the site at which the patient is
located
DC Parity Law
Telehealth Use of interactive audio video or other electronic media used for the purpose of
diagnosis consultation or treatment
Virginia Parity Law Telemedicine Use of electronic technology or media including
interactive audio or video for the purpose of diagnosing or treating a
patient or consulting with other health care providers regarding a patients
diagnosis or treatment
60
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Federal Legislative Efforts
61
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Telehealth Federal Legislative Efforts
CONNECT for Health Act (S2484)
Gives providers flexibility to
experiment with telehealth in alternative
payment models (ie MACRA)
Makes telehealth a basic benefit
under Medicare Advantage
Telehealth Enhancement
Act (HR 2066)
Would promote and expand the application of
telehealth under the Medicare and
other federal health care programs
Medicare Telehealth
Parity Act (HR 2948)
Expands Medicare telehealth
coverage in three phases
62
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Telemedicine Business
Issues Strafford Webinar
November 22 2016
Joseph P McMenamin MD JD
McMenamin Law Offices
8049214856
mcmenaminmedicalawfirmcom
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Disclaimers The views offered are my own and not necessarily
those of any client of McMenamin Law Offices or of my
consultancy MDJD LLC
The information presented is intended to be
educational but is not intended to nor does it create an
attorney-client relationship between me and anyone
else
ldquoMDrdquo here means ldquophysicianrdquo including DOs
64
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
65
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Corporate Practice of Medicine
(ldquoCPMrdquo) Policy Considerations
Tension
Corporate focus achieve and increase profits
Professionrsquos 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 MDs judgment
66
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Policy Considerations 2
Corporate employment of a licensed professional is prohibited because such a relationship
ldquo[T]ends to the commercialization and debasement of [the] professionrdquo Barton v Codington Country 2 NW 2d 337 343 (SD 1942)
Undermines MD-patient relationship and MDrsquos exercise of independent medical judgment in the sole interest of the patient Garcia v Texas State Bd of Med Examrsquors 384 F Supp 434 437 (WD 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 eg State v Boren 219 P2d 566 568-69 (Wash 1950) Funk Jewelry Co v State ex rel La Prade 50 P2d 945 945-47 (Ariz 1935)
67
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Policy 3 Dangers of lay control over professional judgment division
of MDrsquos loyalty between patient and profit-making employer
and commercialization of profession Berlin v Sarah Bush
Lincoln Health Ctr 688 NE2d 106 (Ill 1997)
But see Carter-Shields v Alton Health Inst 201 Ill 2d 441 777
NE2d 948 2002 Ill LEXIS 622 268 Ill Dec 25 19 IER Cas
(BNA) 139 147 Lab Cas (CCH) P59660 (Ill 2002)(FPrsquos
employment agreement with non-licensed not-for-profit non-
hospital corporation violated prohibition against corporate
practice and was therefore void from its inception so its
restrictive covenant was unenforceable)
68
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
History of the CPM Doctrine MDs fought control by nonprofessional organizations
Prevent formation of corporations offering medical services
Discourage quackery
Early 20th C AMA got state legislatures to adopt CPM laws
Advent of large private and governmental health insurance
programs attempts to rein in costs defeated AMArsquos efforts to
resist external controls
End-20th C most states ignored or repealed the laws or
enacted laws enabling managed care plans to structure
themselves as corporations
69
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
CPM Enforcement Cal Tex
Ohio Col Ia Ill NY NJ
Corporation may not practice medicine or employ MD to provide professional medical services
Licensee to make ldquobusiness or management decisions control practice
Own patient records including content determination
Select hirefire (as it relates to clinical competency) MDs allied staff medical assistants
Set contract parameters between MD and payers
Decide coding and billing procedures
Select medical equipment and supplies
70
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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 certificateis guilty of a public offenserdquo
sect 2052
Corporations and other artificial entities shall have no
professional rights privileges or powersrdquo sect 2400
Mere potential for control may suffice for violation
See Marik v Superior Court 191 Cal App 3d 1136 (Cal Ct
App 1987)
71
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Prohibited in California Non-physicians owning or operating a business that
offers patient evaluation dx care andor 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
Non-owner MD acting as medical directorrdquo
See 65 OpAttyGen 223 4-7-82 and 11 OpAttyGen 236
72
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Unauthorized Practice
(Cal Examples)
Selecting diagnostic tests for a particular problem
Determining need for consults with another MD
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 Board of Medical Examiners 109 Cal App 2d 1 240 P2d 61 1952 Cal App LEXIS 1790 (Cal App 1952)
73
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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
74
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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
75
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Exceptions Certain corporate employers OK (NY NJ Col Ill)
Hospitals
NY hospitals and other licensed facilities may employ MDs to render medical services to hospitalrsquos patients People v John H Woodbury Dermatological Inst 192 NY 454 (NY 1908)
HMOs Md Code Ann Health-Gen sect 19-704
Professional corporations
Med school as part of its mission to promote medical science and instruction Albany Med Coll v McShane 104 AD2d 119 (NY App Div 1984) affrsquod 489 NE2d 1278 (NY 1985)
School health programs NY Educ Law sectsect 901 et seq
Partnerships PCs professional service LLCs and registered LLPs comprising physicians and certain other licensed professionals exclusively NY Educ Law sect 6531
76
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Where the Hospital Exception
NA California Cal Bus Prof Code Sec 2052
But see Op Cal Atty Gen 8-803 for exceptions (narcotic programs public hospitals)
Iowa Iowa Statutes Sec 1481
Iowa hospitals may employ pathologists and radiologists
Texas Tex Health amp Safety Code Stat 311062
Texas public hospitals and California teaching hospitals
may employ physicians
77
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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
MDs may not be employedmdashexcept by an entity comprising
MDs onlymdashto provide telemedicine services
Prohibitions vary state to state
May hinder practices wishing to operate nationally
Rx organize the practice as a physician-only LLC LLP etc
Some states non-MDs may provide management services
78
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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 physiciansrsquo
compensation benefits malpractice premiums
FMV must dictate management fees
Ow 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 79
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Complying with CPM Law Determine if the doctrine applies in relevant state
If so examine statutes regulations common law
Consider each states exceptions
Management services agreement
Consider hiring 3d-party expert to opine on whether
agreement reflects FMV
80
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and self-referral
81
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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
82
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
BIPA 42 USC 1395m Pub L
106-554 sect 223(m)(2)(c) Medicare Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 42 USC sect 1395m
Consultant receives entire Medicare payment in an amount equal to the amount thathellippractitioner would have been paid under Medicare had the service been furnished without the use of a telecommunications systemrdquo
Referring physician could bill Medicare for any services he provided to the patient on day of telehealth service
Referring physicians site may also receive a facility feerdquo Originally $20
Now 80 of the lesser of the actual charge or $2493
83
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Minn Stat sect 147091 The boardhellipmay refuse to grant registration to perform
interstate telemedicine serviceshellipagainst any physician The following conduct is prohibited and is grounds for disciplinary actionhellip
(p) Fee splitting including without limitation
hellip
(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 divisionhellip
84
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Vine Street Clinic v HealthLink
856 NE2d 422 426 (Ill 2006) Through Ks with MDs and payors D created networks to
be ldquoavailable to members ofhellipplansrdquo
HCPs agreed to serve members at a discount
HealthLink processed claims sent them to payors ldquofor
benefit determination and paymentrdquo
Each MD had to pay ldquoan administrative fee equal to 5 of
the amount allowed in HealthLinks rate schedule for services
provided to members by the physicianrdquo
Later charged fixed flat fee based on the specialty and
volume of HealthLink claims submitted
MDs sought refunds alleged improper fee-splitting
85
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Vine Street Clinic v HealthLink 2 Ill Medical Practice Act 225 Ill Comp Stat 6022 lets Dept of Professional
Regulation discipline MDs who divide ldquowith anyone other than physicians with whom the licensee practices any feehellipfor any professional services not actually and personally renderedrdquo
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 ldquonot based or linked to revenue gross receipts or billings collectedrdquo but ldquoon the volume and complexity of the administrative services providedrdquo if doctorslsquorevenue increased would not increase automatically
Therefore no fee-sharing
86
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
87
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
42 USC 1320a-7b
MedicareMedicaid 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 CFR sect 1001952
Violations Fine le$25000 imprisonment le5 years or both
88
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
History Enacted 1972 Misdemeanor to solicit offer or receive ldquoany
kickback or bribe in connection withrdquo furnishing covered goods or services or referring a patient to a provider
1977 Congress
Prohibited solicitation or receipt of ldquoany remuneration (including any kickback bribe or rebate)rdquo in return for referrals
Prohibited offer or payment of remuneration to induce referrals
Made violation of the statutes a felony
1980Congress added knowing and willful requirement
1987 Congress combined Medicare and Medicaid statutes into one
Authorized OIG to exclude from Medicare and Medicaid individuals and entities that violated the statutes
89
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
United States v Greber
760 F2d 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
uploaded to a computer and interpreted by MD at
Cardio-Med
90
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
United States v Polin
194 F3d 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 MDrsquos 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
91
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
AKS Proving a Violation Government must show
ldquo(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 programrdquo
US v Patel 12 CR 491-5 2014 WL 642199 (ND Ill 2014)
Kickback need not be made from the federal funds United States v Ruttenberg 625 F2d 173 176 (7th Cir 1980)
Sufficient payment ldquoto one in control of federal funds ie one in a position to open up or control a source of incomerdquo Bethune Plaza Inc v State Deprsquot of Pub Aid 90 Ill App 3d 1133
1139 414 NE 2d 183 188 (1980) citing Ruttenberg
92
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
AKS Analysis Does provider have any remunerative relationship
between itself and persons or entities in a position to generate Federal health care program business 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
93
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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 risk of overutilization or inappropriate utilization
Raise patient safety or quality of care concerns
94
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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 beneficiaryrsquos co-insurance deductible
- Group purchasing organizations
95
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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
96
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
AKS Safe Harbors Must analyze any telemedicine arrangement from each
partyrsquos 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
97
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
AKS and Telestroke
Advisory Opinion No 11-12
Proposal emergency protocols and TM consults with stroke neurologists for community hospitals
Telemedicine hardware software audio-visual
Clinical consults 247365
Acceptance of transfers
Protocols training and medical education
Participating hospitals
Not to participate in any other neuro emergency telemedicine service without systemrsquos prior OK for length of agreement 2y anticipated
Marketing Grant system a limited license to use participating hospitalsrsquo trademarks and service marks
OIG
Deal could potentially generate illegal remuneration under federal AKS
But no sanctions because safeguards suffice to reduce risk of improper payments for referrals
98
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
No 11-12 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 hospitalsrsquoEDs
Deal would afford system and hospitals opportunity to engage in marketing using each otherrsquos 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
What if Medicare coverage expands 99
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
AKS and Grant-Supported
Rural TM Network Op 99-14 Federal grant supported a rural TM network
Possible fraud exposure upon expiration
Given clear Congressional intent that network support continue beyond grantrsquos term systemrsquos 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)
100
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Ad Services Facilitating
Telemedicine Advis Op 02-12 Party requesting opinion ldquocertified that it would comply with the
Health on the Net Foundation Code of Conducthelliprdquo
Entailed ensuring ldquothat the visitor-web site relationship support and not replace the patient-physician relationshiprdquo
ldquoThrough the use of identifying words design or placementrdquo advertiser to make clear that it provides commercial advertising
Disclaimer ldquohellipthat 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 hyperlinksrdquo
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
101
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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 MDrsquos use of labrsquos services
OIG SFA 59 Fed Reg 65372 65377 (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
bull MD receives free electronic prescribing technology or training
bull 42 CFR sect 1001952(x)
Free EHR software information technology or training
42 CFR sect 1001952 (y)
102
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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 cw FMV
Not influenced by volume or value of any referrals
42 CFR Section 1001952(c)
OIG Advisory Opinion No 98-18 (optometrist) 103
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Provision of Subsidized
or Free Equipment
By virtue of their interconnectedness telemedicine
partners may be incentivized to refer to each other
Is subsidy of systemrsquos 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 vice-
versa
104
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Outline A Corporate practice of medicine
B Fee splitting
C Anti-Kickback Statute and Self-Referral
105
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Self-Referral Stark
42 USC sect 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 offensemdashdoes NOT require intent
Complying with Stark exception protects MD
42 CFR sectsect 411355 ndash 411357
357 held invalid in Council for Urological Interests v Burwell 790 F3d 212 (DC Cir 2015)(MD owner leasing equipment to hospital to which he refers cases using equipment) but amended made retroactively effective 3716
ldquoFinancial interestrdquo 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 CFR sectsect 411354-411357
106
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
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
107
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Caution Under Stark Free telemedicine equipment or services
Volume discounts
ldquoPer-clickrdquo payments or ads on physician websites
Joint ventures 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
108
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Caution Under Stark MD may invest in
Well-capitalized telemedicine services company or
One that provides or manufactures telemedicine
technology
42 USC sect 1395nn(d)(3) (2002)
Riskier telemedicine start-ups
109
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
110
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 docsrsquo EHR costs 42 CFR sect 411357(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 sect 411357(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 sect 411356(c)(1) sect 1395nn(d)(2)
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111
Questions Comments Joseph P McMenamin MD JD
McMenamin Law Offices PLLC
8049214856
mcmenaminmedicalawfirmcom
111