Telemedicine and Digital Health Companies Will Benefit from Newly-Proposed Fraud and Abuse Waivers

28 October 2019 Health Care Law Today Blog
Author(s): Nathaniel M. Lacktman

The OIG recently released proposed revisions to the Anti-Kickback Statute (AKS) and Civil Monetary Penalties (CMP) Law. Several of these changes, if finalized, will directly benefit companies offering telemedicine and digital health items or services, remote patient monitoring (RPM), and Chronic Care Management (CCM) services. The key changes relevant to such digital health issues are summarized below.

Incentives for Patient Engagement and Preventative Tools, Items, and Services

The AKS and CMP Law inhibit the effectiveness and widespread use of certain patient engagement and support tools, a challenge familiar to the telemedicine and digital health industry. OIG has issued advisory opinions approving certain digital health arrangements where patients receive free technology, but this proposal would codify that practice as an established exception. Companies should welcome the OIG’s new AKS safe harbor for patient engagement tools and support.

Currently, the proposed safe harbor is limited to tools and support provided within the context of a value based enterprise (VBE), but the OIG is seeking public comment on whether it should extend this safe harbor to services outside VBEs.  For example, pharmaceutical manufacturers, distributors, durable medical equipment, orthotics and supplies (DMEPOS) suppliers and laboratories are not included in VBEs, and they may certainly want to offer meaningful patient support technology to the patients they serve.

CCM and RPM companies should be particularly interested in the “monitoring tools” included in the definition of patient engagement tools and support.  This definition would include more than mere clinically-based tools, such as social determinant tools and support.  Such social determinant tools are often used by virtual care companies who seek to deliver a more holistic approach to patient health and wellness. The definition is as follows:

“in-kind, preventive item, good, or service, or an in-kind items, goods, or services such as health-related technology, patient health-related monitoring tools and services, or supports and services designed to identify and address a patient’s social determinants of health.”

OIG intentionally did not define “preventive,” in order to allow for continual evolvement and innovation in clinical care technology and approaches. The determination whether or not an item or service is “preventive” requires a clinician’s professional judgment. If a question arises regarding applicability of this safe harbor to any given item or service, clinicians must be able to articulate why the item or service is “preventive” in nature.

In addition, the tool must have a direct connection to the coordination and management of patient care, and cannot include gift cards, cash, and any cash equivalent.  OIG is seeking public comment as to whether it should change “direct connection” to a “reasonable connection,” and if OIG should include gifts cards, cash, etc. within the scope of the safe harbor.

As we expected, these digital health tools cannot be used for marketing/patient recruitment.  They must be medically necessary and recommended by the patient’s licensed health care practitioner.  The tools must also advance one of several enumerated goals (e.g., care plan or drug regimen adherence, disease state management, outcome improvement and/or patient safety). As an example of such tools, the OIG specifically cited wearable monitoring devices, such as a smart watch or tracker that collects and transmits data.

Waivers of Patient Co-Payments for CCM and RPM Services

The proposed patient engagement safe harbor would not allow routine waivers of patient cost-sharing amounts. The government has long prohibited such waivers. However, OIG is open to consider a limited waiver of patient cost-sharing only for CCM and RPM services. This is due to the opinion that sometimes the expense to collect co-pays for these monthly services can exceed the actual amounts collected from beneficiaries. Thus, the OIG is seeking public comment on whether or not it should create a safe harbor to allow waivers of cost sharing for CCM and RPM services. Should any such safe harbor be finalized, the OIG predicts it will be similar in form to the patient engagement safe harbor.

Safe Harbor for End Stage Renal Disease Telehealth Technology

As part of the Bipartisan Budget Act of 2018, Medicare allowed beneficiaries to elect to receive certain End Stage Renal Disease (ESRD) support services via telemedicine in their home and created a statutory exception to the definition of remuneration under the CMP law for telehealth technologies used in connection with such ESRD services. The OIG has now proposed a regulation further interpreting this statutory exception.

The proposed regulation aligns the definition of “telehealth technologies” with Medicare’s existing definition, which requires the use of an interactive audio-visual telecommunication system. For purposes of this ESRD safe harbor, OIG stated that smartphones allowing for two-way interactive communication through secure, video conference applications are included in the definition (i.e., they are not considered merely a “telephone”).

The proposed regulation applies the following requirements to the telehealth technology, some of which were already contained in the statutory exception:

  1. Must be furnished by a provider or dialysis facility currently providing the in-home dialysis or other ESRD services. The OIG reasons that the provision of technology by non-treating providers can raise the risk of patient steering.
  2. Must not be advertised and solicited. The OIG provides no additional insight as to meaning of these terms other than they should be interpreted consistent with common health care industry usage.
  3. Contribute substantially to the ESRD telehealth services
    1. Not of excessive value, (i.e. if a $300 smart phone can achieve the necessary purpose, a $600 smartphone should not be provided); and
    2. Not duplicative of technology already available to the patient.
  4. Providers may not bill Federal health care programs for the telehealth technologies or otherwise shift the costs to such programs.

The OIG remains concerned that such safe harbors can improperly influence a patient’s choice of ESRD provider (e.g., patients would select those providers who offer the most incentives).  Thus, OIG is seeking public comment on whether or not it should add more safeguards to the safe harbor (e.g., requiring the provider to retain ownership in any hardware and to retrieve it when it is no longer needed by the patient, limiting any non-telehealth related benefit of the technology to one with de minimus value).  And yet, the OIG is simultaneously seeking comments if it should further expand this exception to include suppliers in addition to ESRD providers and renal dialysis facilities. Such expanded definition likely better aligns with Congress’ legislative intent behind the BBA goals to expand patient access to in-home ESRD care.

While this exception is limited to technologies provided to in-home ESRD patients, the OIG noted that arrangements involving the provision of a broader scope of telehealth technologies may still be protected under other safe harbors or the newly-proposed safe harbor for patient engagement and support.

How to Submit Comments on the Proposed Rule

Providers, technology companies, and entrepreneurs interested in telehealth should consider submitting comments to the proposed rule anonymously or for attribution– via electronic submission at this link. Alternatively, commenters may submit comments by regular, express, or overnight mail to: Office of Inspector General, Department of Health and Human Services, Attention: OIG-0936-AA10-P, Room 5521, Cohen Building, 330 Independence Avenue SW, Washington, DC 20201.  Be sure to submit all comments before December 31, 2019. If submitting via mail, please be sure to allow time for OIG to receive comments before the closing date.


The OIG proposed a number of exciting, patient-oriented opportunities to expand virtual care and digital health services for Medicare beneficiaries, particularly for CCM, RPM, and telehealth services.  Interested companies and industry advocates should use this opportunity to make their voice heard by submitting public comments. We will continue to monitor OIG for any rule changes or guidance that affect or improve telemedicine and digital health opportunities.

Want to learn more?

Join us for a deeper discussion of state and federal telehealth laws during A Reflection on the State of the States Report - Pain and Progress at the American Telemedicine Association’s EDGE19 Policy conference in Washington, DC November 20-22, 2019. Learn more and register for the conference here.

For more information on telemedicine, telehealth, virtual care, remote patient monitoring, digital health, and other health innovations, including the team, publications, and representative experience, visit Foley’s Telemedicine & Digital Health Industry Team.

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