Telemedicine Regulatory, Compliance, and Valuation

Considerations

Scott J. Geboy, Esq.

Attorney, Hall, Render, Killian, Heath & Lyman, P.C.

Ben Ulrich, CVA

Director, VMG Health, LLC

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Telemedicine Trends

• The uses of telemedicine to deliver care continues to expand

• The use of telemedicine in “traditional” care settings remains a slow process

• Various new and alternative care delivery models are evolving

– Telemedicine kiosks

– Direct to consumer

• As telemedicine become more mainstream and less of a “pilot,” valuation of

compensation amounts paid to physicians for coverage will grow

• Complex and innovative structure raise complex and new valuation questions

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Ongoing Emergence of Telehealth

– (Hospital and/or Provider) to Hospital

• Rural health/consultation

• Emergency departments

– Connectivity/transfer

– Tele-Stroke protocols

• ICU[No Product Endorsement on this and following slides]

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Ongoing Emergence of Telehealth

– Health care kiosks

• Employer onsite clinics

• Retail clinics[No Product endorsement]

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Ongoing Emergence of Telehealth

– Provider to Patient

– Remote medical device and/or PC integration

• Virtual care with enhanced capabilities

• Chronic care management

• Follow-up/readmission prevention

[No product endorsement]

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Types of Telehealth

Synchronous (Live Audio/Video/Plus)– real time, two-way interaction between a person (patient, caregiver, or provider) and a

provider using audiovisual telecommunications technology and other remote tools

Remote Monitoring– health and medical data collection from an individual in one location via electronic

communication technology, which is transmitted to a provider in a different location for

use in care and related support

Store and Forward– transmission of recorded health history (e.g., digital images such as x-rays and photos)

through a secure electronic communications system to a provider, usually a specialist,

who uses the information to service outside of a real-time or live interaction

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Complex Regulatory Framework

• State level

– 50 States -> (more than) 50 approaches• Physician licensure related limits: in-person requirements; prescribing limitations

• Health care operations regulation

– Competing Definitions – internal and external

– Reimbursement:

• 48 state Medicaid programs and DC reimburse for (certain) synchronous telehealth

services

• 12 state Medicaid programs offer some reimbursement for store-and-forward (in

addition to tele-radiology)

• 19 state Medicaid programs reimburse for (certain) remote patient monitoring

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Telemedicine: The Basics

Medicare

– No coverage for patients in urban areas

– Specific originating site (patient end) requirement and limited set of covered

services

– Each year, incremental coverage expansion can occur

• For 2016, CMS added Prolonged service inpatient CPT codes 99356 and

99357 and ESRD-related services 90963 through 90966.

• For 2017, additional ESRD codes (90967-90969), Advanced Care

Planning codes(99497-99498) , and certain critical care consultation

codes (G0508 and G0509).

• For complete list, see CMS Telehealth Factsheet, which is updated

yearly

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Flow of Services

Presenter

Originating Site

Patient

Medical Staff

Distant

Site

Provider

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Terminology

• Distant Site: where the provider/specialist is located when providing care or

consultation via telemedicine

• Originating Site: where the patient is located during the telemedicine encounter or

where the receiving professional is located during the telemedicine consultation

• Provider: the qualified professional performing services via telemedicine, within

privileges and scope of practice

• Presenter/telepresenter: the individual with clinical experience and telemedicine

technology training who is present at the Originating Site with the patient during

the telemedicine encounter

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A Snapshot for Medicare

Assumptions

• Patients located in a Critical Access Hospital (Rural)

• Advanced Practice Provider (APP) physically present in the CAH with the patients

• Distant site consulting physicians located in an affiliated hospital remote from the

CAH

• Services delivered are “on the list” of Medicare-covered telehealth

• Responsible practitioner of record with admitting privileges at the hospital and

within state law scope of practice is participating

• In many states, this may not be the APP

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Recently Clarified

• Starting January 1, 2017, Medicare POS code 02: “The location where health

services and health related services are provided or received, through a

telecommunication system.”

• CMS alerted providers that the furnishing of Medicare telehealth services are

subject to the same non-discrimination laws as other services, including effective

communication: 81 F.R. 46179

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Telehealth for Medicare Beneficiaries in Non-

Covered Settings• Section 1848 of the Social Security Act requires enrolled providers to submit

reassigned claims to Medicare: the “mandatory claims submission” rule

• “Opt-out” practitioners, who fully “opt-out” of Medicare, need not submit claims

• Opt-out periods 2 years long, with no exceptions

• Opt-out practitioners may still enroll under 855O, for ordered items and drugs to be

covered by Medicare

• Can an enrolled provider use an ABN?

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Telehealth for Medicare Beneficiaries in Non-

Covered Settings• No current CMS guidance on topic

• In 2015, Noridian included the following Q&A on its website, which has since been

removed:

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Telemedicine Credentialing

• 2008: Credentialing by proxy called into question by MIPPA

• MIPPA revoked TJC’s unique statutory deeming status and required TJC to

periodically reapply for deeming authority

• 2009: TJC revised standards consistent with CoPs

• 2010: CMS Proposed Regulations released; did not go as far as original TJC

credentialing by proxy

• May 2011: CMS reversed course and allowed credentialing by proxy, now better

called “reliance credentialing”

• 2011 and 2012: TJC realigned standards with CMS, but retains some differences

• Must the originating site be TJC accredited?

• Some telemed EPs noted as risk areas

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Telemedicine Credentialing

Medicare Conditions of Participation

Relying on a Distant Site Hospital

• Written agreement between hospitals

• Agreement specifies responsibility of distant site to meet credentialing/privileging

CoPs

• Agreement specifies distant site furnishes contracted service to hospital in a

manner that permits receiving hospital to comply with CoPs for contracted services

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Telemedicine Credentialing

Medicare Conditions of Participation (Continued)

Relying on a Distant Site Hospital

• Distant site must be Medicare-participating hospital

• Provider is privileged at distant site, which provides current list of Provider's

privileges

• Provider holds a license issued or recognized by the state of receiving hospital

• Receiving hospital conducts and shares internal reviews of Provider's performance

with distant site hospital (at a minimum, all adverse events and complaints)

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Telemedicine Credentialing

Medicare Conditions of Participation (Continued)

Relying on a Distant Site Telemedicine Entity

• Similar to the above, and hospital’s governing body must ensure, through written

agreement, that the telemedicine entity's credentialing/privileging process and

standards meet medical staff and governing body standards of CoPs

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Telemedicine Credentialing

• The Joint Commission

• Aligned with the Medicare CoPs, but some differences

• HFAP and DNV

• Largely identical to CoP requirements

• But what about state law?

• Most state hospital licensure laws still do not affirmatively adopt the

reliance credentialing approach

• It was addressed in the comprehensive California telehealth legislation by

adopting the CMS rules into state law

• Risk management assessment if state law silent

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Telehealth DocumentsRelevant documents may include:

• IT Services/License Agreement

– Vendor terms of use

– Vendor privacy policy

– Vendor click through

• Clinical Services Provider

– Clinical services agreement

– Clinical services provider website

– Privacy policy

– Notice of privacy practices

– Consent to treatment

– HIPAA notice

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Telehealth Documents

• Hospital website

– Terms of use

– Privacy policy

– Consent to treatment

– HIPAA notice

• Joint Marketing Agreement

• Third Party Payor Agreement

• Medical Staff Bylaws

• Delegated Credentialing Agreement

• Medical Malpractice Policies

• Advanced Beneficiary Notice

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Additional legal considerations• Stark (Where are the financial relationships? Do we have an exception?)

• Anti-Kickback (watch for technology fee structures that could be viewed as

incentivizing referrals in a particular direction)

• HIPAA (Who is responsible for obtaining consent, what is the scope of use of PHI,

when will it be shared, do we have an OHCA and are consents to use PHI valid?)

• Delegation

– Determine degree of delegation/indemnification

– Contemplate exchange of QAPI

– Administrative remedies and consistency with medical staff bylaws

• Licensure (certification needed for out-of-state providers)

• Malpractice Insurance (Are you covered?)

• Does State law require prior in-person visit before prescribing? Follow—up in person

visit?

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Telehealth – What Is the Deal?

Understanding the Deal

– Why are we doing the deal? What is our goal?

– What are the clinical services?

– What “type” of telehealth are we using?

– What is the IT solution? Equipment? Software?

– What is the Billing arrangement? What reimbursement is available?

– What are the risks and how are they being allocated?

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Understanding the Deal

Why are we doing it?

– Are we the Originating Site or the Distant Site?

– Expanding the reach of services?

– Bringing expertise to rural and physician shortage areas?

– Creating cost savings?

– Reaching patients in their home?

– Staying competitive with alternative care providers?

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Valuing the Deal

Fair Market Valuation & Telemedicine

– Telemedicine arrangements are not immune from compliance

concerns

– In many cases, we are talking about Hospital to Hospital and/or

Hospital to Physician relationships

– Risk of under/over payment or under/over charging at rates outside of

FMV could result in compliance issues

– Understanding the trends & coverage care models is key

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What is the Market? Trends in Telemedicine

1. Usage

– Per the ATA, over half of all US hospitals currently use some form of

telemedicine. There are 200 telemedicine networks with 3,500 networks.

2. Expanded Reimbursement Opportunities

– Both private and governmental payors are continuing to expand

reimbursement.

– Almost every state Medicaid plan covers some telehealth services, per

the ATA.

– Federal legislative action

3. Expanded ACO Usage

– With cost-reduction/shared savings driving reimbursement, telemedicine

adoption should continue to increase

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What is the Market? Trends in Telemedicine

4. International Telemedicine

– More and more hospitals, providers, and institutions are spreading

overseas via telemedicine

– Motives: Philanthropy, Research, Expansion

5. Employer or Retail Tele-Clinics

– Employers leveraging telemedicine as a cost-effective pathway to

providing care for their employees

– Retail clinics (Wallgreens, CVS) & kiosk based care

– Large scale telemedicine vendor relationships (Teladoc, MDLIVE, etc.)

tailored to employers

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What is the Market? Strategies with Telemedicine

Access to care

– Elimination of geographic barriers

– Address physician shortages

– Convenience for the patient (i.e. 24/7 access)

– School health & employer based programs

Leveraging provider resources

– Reduce emergency department stress

– Reduce “covering” provider utilization

– Additional distribution channel for professional services

– Network cost reduction

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What is the Market? Challenges with Telemedicine

Adoption within the provider community

– Medical Board Licensure – state by state

– Use of providers who are not a part of a local medical community

– Inefficient use of service (lack of process)

Technology

– HIPAA & data security issues

– Troubleshooting & connectivity requirements

– New school versus old school

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Telemedicine Specialties

Hospitals generally utilize telemedicine in support of the following clinical specialties:

• Acute Care –

• Stroke

• Inpatient & ED Neurology

• Critical Care

• Inpatient & ED Psychiatry

• Outpatient Coverage –

• Primary Care / Pediatrics

• Behavioral Health

• Cardiology

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Telemedicine Providers

Who is providing the care?

– Physicians/Practices (Direct Coverage)

– Hospitals (Network Coverage)

– Telemedicine Vendors (Consumer Facing Model)

Key variables in these relationships

– Who is providing the technology, connectivity, software?

– Who will retain any professional billings?

– What are the coverage requirements and obligations on the provider?

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Telemedicine Providers

Direct/Network Coverage Model

– Health systems are leveraging telemedicine to connect physicians to provide

support to patients in need

– Generally, specialists are supporting emergency room physicians or other

primary care delivery channels using staffing companies, large physician

groups or telemedicine vendors.

– When providers (e.g. specialists) are contracting with other providers (e.g.

internists), the parties involved must consider the multitude of complex

compliance issues associated with these payments.

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Direct Coverage Model

Model #1: Hospital needing Specialty Coverage

– Patient presents at the Rural Hospital originating site.

– Connects with Specialty Physician via telemedicine

Rural

HospitalTelemedicine

Specialty

Physicians

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Network Coverage Model

Model #2: Central Hospital with Specialty Coverage Provides to Spoke

Facilities

– Spoke facility patients connect with Hub facility physicians via telemedicine

Central

Hub

Facility

Technology

Physician

Coverage

Telemedicine

Telemedicine

Telemedicine

Spoke

Spoke

Spoke

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Telemedicine Providers

Consumer Facing Model

– Examples: Teladoc, MDLIVE, American Well

– Telemedicine-specific vendors leveraging their software, staffing, and IT

management capabilities to provide direct care to patients. Generally a direct

fee patient to vendor.

– Hospitals/systems could contract with these vendors for care provided within a

defined market

– Vital to consider the reimbursement potential & relative IT expense/software

licensing associated with these vendors

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Consumer Facing Model

Model #3: Central Hospital/System Contracts with Larger Vendor for full suite

of platform, software, and physician coverage for a given market.

Health

SystemTelemedicine

Telemed.

Vendor

In-Market Patient

Population

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Valuation Considerations

Hospitals and Telemedicine – FMV/CR

– Assess the commercial reasonableness of the arrangement

• Precursor to determining FMV

• Assess the “business case” for the arrangement absent the volume or

value of referrals

– Vital to document in advance the business purpose with questions like:

• Why are you buying or selling telemedicine services?

• Are there any realistic alternatives? How do they compare

financially/operationally?

– Assess the fair market value of the arrangement

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Valuation Considerations

- Fair Market Value (“FMV”) – the ONLY premise of value to meet the Anti-Kickback

Statute and Private Inurement Regulations

• Both for-profit and not-for-profit health care providers that accept payments from

government programs (Medicare / Medicaid) must ensure that exchanges

between them and other providers are at FMV.

- FMV Definitions

• IRS Revenue Ruling 59-60: The amount at which property would change hands

between a willing seller and a willing buyer when neither is acting under

compulsion and when both have reasonable knowledge of the relevant facts.

• Stark: similar to IRS but expanded to include General Market Value, which is the

compensation that would be included in a service agreement as the result of bona

fide bargaining between well-informed parties to the agreement who are not

otherwise in a position to generate business for the other party.

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Valuation Considerations

FMV/CR Process Overview

1. What ‘commercially reasonable’ services will be provided and how parties will be compensated

2. Valuation should match the agreement - may require several valuations for one agreement

(physician services component, equipment leasing, spoke charging)

3. Establish a compliant and consistent process for establishing FMV

• For physician services - reference to multiple objective published salary surveys remains a

prudent practice for evaluating FMV

• Consider regulatory guidance and OIG opinions (98-18, 99-14, 04-07, 11-12)

• Methods that won’t hold up

– Physician’s “going rate” does not constitute FMV documentation.

– Opportunity costs should not be relied upon as the sole FMV methodology

– What hospital next door is paying – extra caution

4. Consistent and thorough valuation process is key

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Valuation Methodologies

- Cost Approach Value

Value of the professional services rendered + cost of physician availability

(similar to on-call assessments)

Value drivers –

Considerations for potential professional reimbursement

Expectation for utilization/volume

Case acuity

Telephonic burden

Coverage hours period and response requirements

- Income Approach – lack of direct revenue associated with a physician’s availability

- Market Approach – telemedicine survey & market compensation rates

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Questions?

Ben Ulrich, CVAVMG Health

2515 McKinney Avenue, Suite 1500

Dallas, TX 75214

(972) 616-7798

benu@vmghealth.com

Scott J. Geboy, Esq.Hall, Render, Killian, Heath & Lyman, P.C.

111 E. Kilbourn Avenue, Suite 1300

Milwaukee, WI 53202

(414) 721-0451

sgeboy@hallrender.com