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Fierce Exclusive: As telemedicine grows, so do underlying fraud and abuse considerations

Although most telemedicine arrangements are exempt from Stark Law, changes in reimbursement could elevate kickback concerns
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Navigating kickbacks and fair market value

Generally, the same legal principles that govern to face-to-face encounters also apply to telemedicine encounters, particularly as it relates to Stark Law and anti-kickback statutes.

Because telemedicine is not reimbursed by Medicare or Medicaid, except in limited circumstances, Stark Law would only apply if a telemedicine provider is referring other reimbursable designated health services. Once those referrals are initiated, providers will need to review Stark exemptions.

"The telehealth arrangement can be a financial arrangement between those two parties, but it would be analyzed in the same way that you would analyze a financial relationship between two parties that didn't involve telehealth," Kung says. "If it was just a physician renting space from a hospital, you would look at in in the same type of way."

Fair market value is another key consideration that pertains to telehealth, and it's an issue that has been on the radar of the Office of Inspector General (OIG). Like other services, financial agreements with telehealth providers must reflect fair market value, particularly if the provider is making referrals. For example, entities that provide free telemedicine equipment could trigger a red flag if they are getting additional reimbursed referrals as a result.   

Reimbursement changes will alter fraud and abuse risks

Increasingly, private insurers are covering telemedicine services, in some cases because state law requires them to do so. Twenty-nine states and the District of Columbia have state parity laws that require insurers to cover telemedicine services the same as in-person encounters, according to the American Telemedicine Association. Some insurers, such as UnitedHealth, are providing broader coverage by partnering with apps such as Doctor on Demand, NowClinic and Amwell.

In these instances, both payers and providers also need to consider specific state anti-kickback laws that can run the gamut in terms of the exemptions that are included.

Medicare covers telehealth services in very limited circumstances, but Kung says that fraud and abuse considerations will only become more important as the government considers ways to provide more comprehensive coverage. Since 1998, the OIG has issued four Advisory Opinions about telehealth services, all of which have been favorable to telehealth arrangements. The latest one, which was released in 2011, noted that the proposed arrangement to provide telemedicine stroke services "is unlikely to result in increased costs to the federal healthcare programs" since "few--if any--of the consultations… would be billable to Medicare."

"One of the safeguards common in three out of the four [Advisory Opinions] was that the telehealth service were not currently reimbursable by a federal healthcare program," Kung says. "That at least indicates the OIG's position may change if the reimbursement structure changes."

Since federal reimbursement is limited, many current telemedicine arrangements are safeguarded, Kung adds. Once that service is reimbursable, fraud and abuse laws will play a larger role in those agreements.

"I would say parties that are using telehealth shouldn't be ignoring fraud and abuse laws now," Kung says. "They should be looking at it now even though reimbursement is somewhat limited, both at the federal level and at the state level."