With recent advances in technology, telemedicine offers a powerful tool to improve access to treatment and decrease the cost of care. At the same time, the deployment of telemedicine technology and equipment by providers who could potentially receive referrals as a result raises issues under the federal anti-kickback statute. The OIG has periodically looked into telemedicine affiliation arrangements and addressed these issues through the advisory opinion process. In 1998, 1999, and 2004, the OIG addressed telemedicine issues (Advisory Opinion Nos. 98-18, 99-14, and 04-07). On September 6, 2011, the OIG published its fourth and most recent opinion regarding a telemedicine arrangement in Advisory Opinion No. 11-12. In all four opinions, the OIG concluded that it would not impose sanctions against the arrangements and provided guidance that will be useful in structuring telemedicine affiliations. The following summarizes the earlier opinions and then discusses the most recent opinion.
The Prior Telemedicine Advisory Opinions
The first telemedicine opinion by the OIG addressed a proposed arrangement between an ophthalmologist and an optometrist. Under the arrangement, the ophthalmologist would sublease imaging equipment to the optometrist, and provide telemedicine consultations for the optometrist’s patients. The optometrist would pay fair market value monthly rent for the equipment but would not pay the ophthalmologist for the telemedicine consultations. Similarly, neither the ophthalmologist nor the optometrist would charge the patient for the telemedicine consultation. If the patient required ophthalmology services, the optometrist could refer the patient to the ophthalmologist, or the patient could select any other ophthalmologist. The optometrist would not advertise the availability of the telemedicine consultations.
The OIG concluded that although the arrangement could violate the anti-kickback statute if the requisite intent to induce referrals were present, the OIG would not seek to impose sanctions. The OIG determined that the lease would fit within the equipment rental anti-kickback safe harbor. The OIG further observed that the telemedicine consultations would have minimal value to the optometrist because he would not charge for the telemedicine consultations nor would he advertise them. The OIG also determined that any value conferred on the ophthalmologist would not induce referrals back to the optometrist, since the patient was free to see any ophthalmologist.
The following year, in Advisory Opinion 99-14, the OIG addressed a proposal by a health system that operated a telemedicine network pursuant to a federal telemedicine grant. The health system wanted to continue to develop, operate, administer, and fund the network once the grants expired. The OIG determined that the proposed arrangement potentially provided a benefit to the physicians receiving telemedicine services in the form of subsidized line charges, free equipment, and additional opportunities to earn fees. However, the OIG concluded that the relatively small remuneration was outweighed by the fact that the arrangement furthered congressional intent to promote telemedicine networks in rural areas, and by the benefits actually received by the community. These benefits included improved access to essential health care services and decreased health care costs in rural areas.
In 2004, Advisory Opinion No. 04-07 analyzed a proposed arrangement between a health system and school-based clinics in low-income rural areas. Nurses at the school health centers would conduct screening tests, and then health system physicians would provide telemedicine consultations, if needed, at no charge to the school or the students. If a student required a referral to a physician, the student would be sent to his or her primary care provider or be given a list of primary care providers in the student’s community. The OIG determined that the arrangement created the potential for referrals to the health system from the school and the consulting practitioners, and self-referrals by the patients, but concluded that no sanctions would be imposed. The OIG determined that the provision of non-reimbursable screening services that were not tied to reimbursable services would not violate the federal prohibition on inducements.
The New Opinion
The newest advisory opinion is characteristic of past OIG telemedicine opinions in concluding that, although the arrangement could violate the anti-kickback statute if the requisite intent to induce referrals were present, the OIG would not impose sanctions because of the low risk posed by the arrangement and its benefits for patients.
The opinion addressed a proposed telemedicine arrangement wherein a health system’s stroke center and its neurology stroke specialists would provide neuro emergency clinical protocols and immediate telemedicine consultations to participating community hospitals. The health system would also provide, at its own expense, hardware and software to each participating hospital’s emergency department. This telemedicine technology would support real-time Web consultations for stroke treatment required by patients at the participating hospitals. The participating hospitals would, at their own expense, maintain the technology, maintain a CT scanner that could scan images to the stroke center’s neurologists, and facilitate medical staff credentialing of those neurologists so they could exercise consulting privileges at the participating hospitals. In addition to providing the technology, the stroke center would, at its own expense, ensure that neurosurgeons and intensivists would be available to accept emergency transfers.
The arrangement also contained an exclusivity provision, which required the participating hospitals to obtain permission from the health system to enter into other telemedicine agreements during the contract period. This provision was in recognition of the health system’s investment of time and capital in the telemedicine program. This exclusivity requirement would not: (i) restrict a participating hospital’s emergency or attending physician from consulting by phone or in-person with any stroke specialist of his or her choice; (ii) require either party or any physician on its medical staff to refer patients to the other party; or (iii) restrict the freedom of a patient or the patient’s physician to request a transfer to a stroke center other than the health system’s stroke center. Further, no compensation for referrals or additional remuneration would be given to the participating hospital’s physicians under the agreement. The stroke center and participating hospitals also would be able to use each other’s trademarks for marketing purposes.
The OIG began its analysis by determining that the arrangement did not fit squarely into any of the anti-kickback safe harbors. The OIG then focused on five aspects of the arrangement that adequately reduced the risk of prohibited kickbacks. First, the proposed arrangement would be unlikely to produce referrals. Although the proposed arrangement contained an exclusivity provision, the provision only required the health system’s prior approval before using other neuro telemedicine services during the term of the agreement. The exclusivity requirement would not restrict a participating hospital from consulting any other stroke specialist, nor would it restrict the patient’s freedom to request a transfer to a different stroke center. Furthermore, participating hospital physicians would not receive any additional compensation from the hospital or the stroke center for using the telemedicine program. Therefore, none of the participating hospitals or physicians would be required or encouraged to refer patients to the stroke center. In fact, the program’s purpose would be to decrease the number of stroke patient transfers to the stroke center because, with its support, the patients could be managed at the participating hospital. Thus, the proposed program would not induce or reward referrals of federal health care business.
Second, the proposed arrangement would start out only between the stroke center and hospitals with which it had a preexisting clinical affiliation. Even if resources permit the program to expand to non-affiliated hospitals, neither the volume nor value of referrals would be a condition of program participation. As stated in the facts presented by the health system to the OIG, the program expansion would be based on access to care considerations, such as the location of the non-affiliated hospital, the proximity of other stroke programs, and the density of the local population.
Third, the primary beneficiaries of the proposed arrangement would be the stroke patients. The opinion notes that the participating hospitals and the stroke center might benefit from the arrangement, but the OIG highlighted the fact that the proposed arrangement improved patients’ access to care, and was actually likely to reduce the number of transfers to the stroke center.
Fourth, although the arrangement would afford the health system and the participating hospitals the opportunity to engage in marketing activities using each other’s marks, neither the health system nor any participating hospital would be required to engage in such activities, and each party would be responsible for the costs associated with its own marketing activities.
Fifth, the proposed arrangement would be unlikely to increase costs to federal health programs. Very few of the telemedicine consultations would be billable to Medicare and, since the purpose of the program is to reduce transfers, the arrangement also would decrease the federal health program costs associated with transfers. It also might reduce disability due to stroke.
The OIG’s latest telemedicine opinion provides further support for the development of collaborative telemedicine affiliations that enhance access to care. Properly structured in compliance with the guidelines articulated in the four advisory opinions issued thus far, such arrangements should not create substantial risks under the anti-kickback statute. Among other things, such arrangements should not require patients to use, or be referred to, the telemedicine provider for any follow-up care that may be needed.
It is also important to remember that these advisory opinions are limited to compliance with the anti-kickback statute, and do not address the other legal concerns that arise in connection with telemedicine arrangements. For example, providers should be aware of the need to maintain standards of care in order to limit liability exposure when engaging in the practice of telemedicine. Telemedicine also raises patient confidentiality, privacy, and medical records issues. Individual state laws with respect to each of these elements should be reviewed carefully in the context of each proposed arrangement.
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your Foley attorney or the following:
J. Mark Waxman