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Telemedicine/Telehealth: Update on Regulatory Issues

February 5, 2020/in Health Law/by Scott Chase

This article was originally printed in Dallas County Medical Society’s Dallas Medical Journal, November 2019.

This article will focus on updates to regulatory issues that could impact a physician’s practice of telemedicine or any other provider’s practice of telehealth.

The terms ‘telemedicine’ and ‘telehealth’ are often used interchangeably, but there is a growing difference. Telemedicine can be defined as a healthcare service delivered by a licensed physician (or someone having delegated authority from that physician) to a patient using telecommunications or information technology. Telehealth, in contrast, is usually a health care service using telecommunications or information technology by a general health professional. For example, receiving health consultations remotely regarding dietary issues or exercise regimens would be considered telehealth.

Changes in Medicare Reimbursement

Medicare has evolved, and is still evolving, in its approach to reimbursement for telehealth and telemedicine services. Centers for Medicare & Medicaid services (CMS) has been busy in this area and the following are some highlights of recent changes.

CMS is making changes to add additional originating sites and geographic exemptions for the treatment of end-stage renal disease and acute stroke. As it does every year, CMS also considered new codes for inclusion in its list of services eligible to be delivered through telehealth, and have added G0513 and G0514, both codes related to prolonged preventive services. CMS also added new codes (99453, 99454, and 99457) for remote physiologic monitoring, as well as a new code (99491) for chronic care management.
The agency is also experimenting with a program that would reimburse providers using Mobile Integrated Heath (MIH) services to reduce unnecessary emergency room visits.
CMS also released its finalized 2019 Physician Fee Schedule containing many changes for Medicare. Among the changes, the proposed rule not only expands telehealth reimbursement, but communicates a new interpretation by CMS of the applicability of its statutory requirements for reimbursement of telehealth. Telehealth-delivered services under Medicare limits the use of telehealth to certain services, providers, technology (mainly live video) and patient locations (e.g., certain types of healthcare facilities in rural areas). The new rule expresses CMS’s belief that their obligations to impose those restrictions only apply to “the kinds of professional services explicitly enumerated in the statutory provisions, like professional consultation, office visits, and office psychiatry services.” Certain other kinds of services that are furnished remotely using communications technology are not considered “Medicare telehealth services” and, thus, are not subject to the restrictions. This includes interactions between a medical professional with a patient via remote communication technology. Thus, CMS has finalized reimbursement for virtual check-ins, remote evaluation of pre-recorded patient information and inter-professional internet consultation, which CMS believes fall outside the scope of Medicare telehealth services. All of these services have restrictions and physicians are strongly encouraged to analyze these restrictions carefully.
CMS has also taken action for Medicare Advantage plans:
- In a recent announcement about changes to the telehealth rules, it said, “Historically, Medicare Advantage plans have been able to offer more telehealth services, compared to Original Medicare, as part of their supplemental benefits.” CMS added that it will be more likely that plans will offer the additional telehealth benefits outside of supplemental benefits, whether they live in rural or urban areas.
- In January, CMS updated its Value-Based Insurance Design (VBID) model of care, introduced in 2017, to give providers treating people on Medicare Advantage plans more leeway in using telehealth in place of in-person checkups.

Federal Enforcement Actions in Telemedicine/Telehealth

As telemedicine becomes more common, it has, unfortunately, attracted some shady characters looking for physicians to participate in illegal reimbursement schemes. Several recent indictments and guilty pleas show that federal prosecutors are looking closely at fraudulent billing for telemedicine services. To quote from a case involving an order of bogus genetic tests via telemedicine, the Department of Justice said:

“Often, the test results were not provided to the beneficiaries or were worthless to their actual doctors. Some of the defendants allegedly controlled a telemarketing network that lured hundreds of thousands of elderly and/or disabled patients into a criminal scheme that affected victims nationwide. The defendants allegedly paid doctors to prescribe CGx testing, either without any patient interaction or with only a brief telephonic conversation [emphasis added] with patients they had never met or seen.”

In another case, the Justice Department’s Criminal Division described a conspiracy as “exploiting telemedicine technology [emphasis added] meant to help elderly and disable patients in need of health care.”

All these cases reinforce the fact that “medical necessity” is still required for any medical treatment and show that kickbacks and bribes are not lawful in telemedicine, just as they are illegal in all other facets of medical practice.

Federal Safe Harbors for Telemedicine Ventures

There are two Anti-Kickback Statute safe harbors particularly relevant to telemedicine: (1) when a provider receives free electronic prescribing technology or training; and, (2) when a provider receives free electronic health records software, information technology, or training. Thus, adherence to one of these safe harbors could, in theory, potentially reduce or eliminate associated kickback risks. In addition to regulatory considerations, the American Medical Association (AMA) emphasizes certain ethical consideration, including that:

All physicians who participate in telemedicine have an ethical responsibility to disclose to the patient any financial or other interests in connection to the application or service;
All physicians inform patients about the limitations of the service;
Physicians advise about follow-up care if needed; and,
Physicians encourage patients to inform their primary care provider about the online consultation.

Are Digital Health Devices “Telemedicine” or “Telehealth”?

There have been concerns that some interactions between digital health devices and healthcare providers could be construed as practicing “telehealth” or “telemedicine.” These concerns include the necessity of obtaining FDA approval for some devices that could be construed as a “medical device.” The FDA recently released six guidance documents as part of the agency’s continued focus on updating the regulatory stance on software and other digital health products as a medical device. The updated guidance documents reflect the need for a more flexible, risk-based approach to regulation that accommodates a rapidly evolving technological landscape.

The 21^st Century Cures Act, enacted in December 2016, amended the definition of “medical device” to exclude five distinct categories of software or digital health products – e.g., “off-the-shelf” devices or some “clinical decision support” devices — from the definition of “medical device.” These changes will take away some of the regulatory restrictions on bringing digital health devices to market and should make telehealth more convenient to physicians and patients.

All of these changes should provide more clarity about how to practice telemedicine and, as to the litigation, how not to practice telemedicine.

Scott Chase, JD, has practiced health law, corporate law, and intellectual property law for more than 40 years. Mr. Chase is Board Certified in Health Law by the Texas Board of Legal Specialization. Mr. Chase is a partner at Farrow-Gillespie Heat Witter, LLP. His primary practice focus is business transactions for physicians and healthcare facilities, as well as healthcare regulatory issues, such as the Affordable Care Act, HIPAA and peer review. Mr. Chase handles general corporate matters and trademark/copyright issues for physicians and also for a variety of non-healthcare clients.

The Physician Payments Sunshine Act

August 22, 2018/in Health Law/by Scott Chase

The Physician Payments Sunshine Act (“PPSA”) requires medical product manufacturers of drugs, devices, biologics, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program to annually disclose to the Centers for Medicare and Medicaid Services (“CMS”) any payments or transfers of value made to physicians or teaching hospitals. The PPSA is designed to increase transparency around the financial relationships between physicians and manufacturers by requiring manufacturers to report to CMS in three broad categories of payments or transfers of value:

(A) payments for meals, travel reimbursement, and consulting fees

(B) ownership and investment interests in manufacturers held by physicians and their immediate family members

(C) research payments, including any payment made for participation in preclinical research, clinical trials, or other product development activities

While these categories cover a wide range of relationships, certain transactions and transfers are exempt from disclosure. Manufacturers are not required to report on any payments under $10 (unless those individual payments total more than $100 annually), on educational materials intended solely for patients, or on product samples. After undergoing a verification process, any data reported under the three categories listed above, will be published annually in a publicly searchable database.

These reports inform patients of any incentive their physician may have for recommending a certain medical device or drug and allows them to make an informed decision on whether to follow the physician’s recommendation or not.

In addition, the PPSA imposes penalties for failure to comply with these reporting requirements. For each payment that a manufacturer or GPO fails to report, a penalty of $1,000 to $10,000 may be applied. The maximum annual penalty for failure to report is $150,000. However, the penalties are more severe in cases where the manufacturer or GPO knowingly fails to report, in which case the penalties range from $10,000-$100,000 per payment, up to a maximum penalty of $1 million. Individual physicians are not required to report, but physicians are encouraged to monitor the manufacturers’ reports for inaccuracies.

The PPSA is not the only federal statute that governs financial relationships between physicians and medical product manufacturers but it is unique in that it creates a report of such relationships.

In order to determine if a payment made by a manufacturer to a physician needs to be reported in compliance with the PPSA, please consult a healthcare attorney.

Author Scott Chase is a health law and corporate attorney at Farrow-Gillespie Heath Witter LLP. Scott has been named to the lists of Best Lawyers in America, Texas Super Lawyers, and Best Lawyers in Dallas in every year for more than a decade.

Tahlia Clement is a clerk at FGHW. Ms. Clement is a 2019 candidate for a Juris Doctor at SMU Dedman School of Law, where she is the Editor-in-Chief for SMU’s Science and Technology Law Review. She holds a B.A. in journalism and mass communications from Arizona State University.

The 5 Most Important Decisions in a Physician Employment Agreement

February 6, 2018/in Corporate Law, Health Law/by Scott Chase

Over the years, physician employment agreements have become very standardized. However, there are several provisions in such agreements that the to-be-employed physician must review carefully with his/her attorney. The following is a brief summary of what I consider to be the 5 most important provisions for a physician to understand and negotiate with the employer.

1. Compensation

First and foremost, the compensation needs to be clearly written and understood. Many compensation models are based on “Work Relative Value Units (WRVUs),” which are calculated by independent third parties and can be a trap for the unwary. For example, the calculation of WRVUs can change from year to year and the employment contract usually provides for the current WRVU value to be the compensation model. What happens if the WRVU value decreases substantially in a given year? Answer: The physician’s pay could decrease substantially as well. Careful negotiation of the compensation provision could ameliorate that occurrence.

Additionally, compensation usually includes employee benefits, e.g., vacation, health insurance, and those can sometimes be negotiated as well. Attention should also be paid to the reimbursement of expenses such as CME, credentialing fees and professional society fees.

2. Non-Compete

Texas has a statute specifically addressing physician non-competes, i.e., restrictions on where and when a physician can practice his/her specialty after termination of the employment agreement. However, the statute does not mandate the time period, extent of the restricted area, or the exact type of physician actions that would constitute a violation of the non-compete. Furthermore,
certain termination circumstances could be negotiated that would render the non-compete unenforceable or inapplicable. Thus, the non-compete should be negotiated in that it provides ample opportunities to advocate for favorable terms on the physician’s behalf.

3. Outside Activities

Most physician employment agreements require the employed physician to work full-time and often provide that any outside fees earned, e.g., expert witness fees, belong to the practice. However, many physicians have pre-existing consulting arrangements, charitable activities or other professional endeavors that should be excepted from the restrictions on outside activities and ownership of fees. Again, this is a provision that can and should be negotiated.

4. Working Facilities and Staff

An employed physician needs adequate facilities, equipment, supplies and staff to fulfill his/her responsibilities. Yet, most employment agreements do not contain a provision that requires the employer to provide those items.

The adequacy of staff could also affect compensation. Consider a scenario in which the employed physician is on a bonus system that relies on collections of his bills by the practice. The contract should contain a provision that the employer will have adequate billing and collection services.

5. Liability Insurance

The employment agreement will generally contain a provision for the employee/doctor to purchase “tail” insurance in case the agreement is terminated. Tail coverage can be a substantial cost and, thus, the contract should be written to ensure the employee is not responsible for that coverage in all circumstances, e.g., in case of termination for cause by the physician. This provision is also one that can and should be negotiated.

Physician employment contracts are one of the most important financial undertakings in a doctor’s life. While tedious, provisions should be reviewed, understood, and negotiated to the fullest. The entire contract should be carefully reviewed but the above items should receive the most attention.

Scott Chase has practiced health law, corporate law, and intellectual property law for over 35 years. Mr. Chase is Board Certified in Health Law by the Texas Board of Legal Specialization.

Scott’s primary practice focus is business transactions for physicians and healthcare facilities, as well as healthcare regulatory issues such as the Affordable Care Act, HIPAA and peer review. Mr. Chase handles general corporate matters and trademark/copyright issues for physicians and also for a variety of non-healthcare clients.

Health Law | Farrow-Gillespie & Heath LLP | Dallas Texas

Physician “Anti-Kickback” Statute

January 17, 2016/in Health Law/by Jennifer Snow

Physicians and health care other providers face numerous prohibitions against self-referrals and against making referrals in exchange for remuneration. The federal Anti-Kickback Statute is a criminal law that prohibits the knowing and willful payment of remuneration in exchange for referrals of services payable by federal health programs, which include health care services for Medicare or Medicaid patients. The law prohibits any person from offering, paying, soliciting, or receiving anything of value—whether it is money or something less obvious, such as free product, tickets, hotel vouchers, speaking fees, or lowered rent payments. This law creates restrictions on virtually all business dealings involving physicians, including dealings with landlords, drug companies, device manufacturers, physical therapy clinics, hospitals, or other physicians.

Anti-kickback violations must be knowing and willful for criminal liability to attach; successful prosecution can lead to fines of up to $25,000 per violation and prison time. Further, any doctor who submits false Medicare or Medicaid claims, whether knowingly or with reckless disregard for their truth or falsity, also faces civil liability under the False Claims Act.

The parameters of anti-kickback law include specific carve-outs that allow medical providers to enter mutually-beneficial transactions with impunity. These carve-outs are known as “safe harbors” and are detailed and complex. To avoid potential violations, health care providers should review all transactions carefully with the aid of experienced counsel.

What is the Stark Law?

January 21, 2015/in Health Law/by Scott Chase

Federal Stark law applies alongside anti-kickback law to create strict civil penalties for any physician who makes a “self-referral.” Specifically, the law bars a physician from referring a Medicare or Medicaid patient to receive any designated health care service from any person or entity with which the physician has a financial relationship. This relationship could be an ownership interest, investment interest, or structure compensation agreement.

Unlike anti-kickback laws, Stark is a strict-liability statute, meaning that any violation, whether intentional or not, leads to liability.

The parameters of the Stark law include specific carve-outs that allow medical providers to enter mutually-beneficial transactions with impunity. These carve-outs are known as “safe harbors” and are detailed and complex. To avoid potential violations, health care providers should review all transactions carefully with the aid of experienced counsel.

Scott Chase | Farrow-Gillespie & Heath LLP | Dallas, TX

Corporate Practice of Medicine

January 21, 2015/in Health Law/by Scott Chase

Texas law generally prohibits the practice of medicine by any corporation, entity, or non-physician individual. The “corporate practice of medicine” doctrine forbids a physician from entering into an agreement with a non-physician under which the non-physician would in any way control the physician’s medical practice. Based on this doctrine, non-physician individuals and entities generally cannot employ physicians.

There are, of course, exceptions to this general rule. For example, a nonprofit certified by the Texas Medical Board under Section 162.001(b) of the Texas Occupations Code– often called a “5.01(a) corporation” after the section of the Texas Medical Practice Act under which they were originally formed—may employ a physician if certain requirements are met. The directors of such a corporation must all be licensed by the Texas State Board of Medical Examiners and must retain the sole authority to direct all medical, professional, and ethical aspects of the practice of medicine within the corporation. Additional requirements must be met in case of any non-physician members of the corporation. Further, a 5.01(a) corporation, like any Texas non-profit corporation, may not pay dividends to its members, so any profits must be paid through management agreements or as compensation.

In 2011, the Texas Legislature enacted laws designed to allow specific types of hospitals and hospital districts to hire physicians and to allow physicians to form certain ownership-sharing agreements with physician assistants. Critical access hospitals, sole community hospitals, and hospitals in counties of 50,000 or fewer people may now employ physicians if certain protections are in place. Physicians may also form corporations, partnerships, professional associations, and professional limited liability companies together with physician assistants, provided that statutory ownership and control requirements are met.

Health Law | Farrow-Gillespie & Heath LLP

Physician Non-competition Agreements

January 21, 2015/in Health Law/by Jennifer Snow

Many people erroneously believe that non-competes are not enforceable against physicians in Texas. To the contrary, non-competes that are ancillary to or part of otherwise enforceable contracts generally are enforceable, provided that they meet certain statutory requirements. For example, these covenants must contain reasonable limitations as to time, geographical area, and scope of activity to be restrained. They also must not deny a doctor access to his patient list, must provide access to medical records upon patient authorization, and must provide for a buy-out of the covenant at a reasonable price. A physician may not be prohibited by a non-compete provision from providing continuing care to a patient during the course of an acute illness.

In addition to imposing an undesirable non-competition clause, a poorly reviewed employment contract can expose a doctor to many other unanticipated risks as well, including call coverage and payback obligations.

For more information on review and negotiation of physician employment contracts, please contact board-certified health care law attorney Scott Chase.

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