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
Scott J. Geboy, Esq.Hall, Render, Killian, Heath & Lyman, P.C.
111 E. Kilbourn Avenue, Suite 1300
Milwaukee, WI 53202
(414) 721-0451
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