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Telehealth and the law: What hospital executives should know about kickback and false claims rules

The federal Anti-Kickback Statute and the Stark Law have some strict requirements for compliance, and providers would do well to take note.

Jeff Lagasse, Associate Editor

Want to connect with your physician but unable to drive? Feeling immobile or isolated in a remote rural location? The emergence of telehealth has given rise to the possibility of connecting with healthcare providers remotely, but there's one snag for those who wish to offer it as a service: the law.

At the federal level, the Anti-Kickback Statute poses a substantial risk to parties entering into telehealth arrangements, due to its wide reach, as well as its tie to the federal False Claims Act. The statute prohibits the offering, paying, soliciting or receiving anything of value for referrals of business pertaining to healthcare.

A violation of the Anti-Kickback Statute, or AKS, can result in significant civil penalties. That can include $11,000 to $22,000 in per claim penalties, not to mention treble damages and potential exclusion from participation in federal healthcare programs.

The AKS is a criminal statute and, as such, convicted violators face potential jail time.

"At the federal level, providers that enter into arrangements with physicians also should be aware of the Stark Law, which prohibits physicians from referring certain services to an entity with which they have a compensation arrangement or ownership interest, unless an exception is met," said Douglas Grimm, a health law partner at Arent Fox. "While the Stark Law is a civil statute, so violators will not go to jail, they can nevertheless face significant financial penalties, including in certain instances False Claims Act penalties."

The AKS can come into play in any arrangement in which something of value -- remuneration -- is provided by one party to a telehealth arrangement where there might be referrals of federal healthcare program patients between the parties.

When the arrangement involves a financial relationship between a physician and certain entities billing Medicare and Medicaid, the Stark Law may also be implicated.

"An example of a telehealth arrangement that could implicate both laws would be an arrangement where a hospital engages a physician to provide on-call telestroke services where the hospital provides the equipment to the physician and pays the physician an hourly rate for his or her services," said Grimm.

"In this instance," he continued, "we would closely examine the terms of the arrangement, including the terms related to the provision of the equipment, to determine whether either law was potentially violated and, if so, how the parties could structure their arrangement to fit within the requirements of each law. We also would determine whether any similar state law was implicated and, if so, whether there were any requirements in addition to the federal requirements that we would need to consider when structuring a compliant arrangement."

Both the AKS and the Stark Law have what are referred to, respectively, as "safe harbors" or "exceptions." These protect certain arrangements that might otherwise violate these laws. Because of the nature of the Stark Law in particular, all of an exception's requirements must be met, or else the law has been violated.

An example: An entity can enter into a bona fide employment arrangement with a physician in which the entity pays compensation to the physician if the amount of the compensation is consistent with fair market value -- not determined in a way that takes into account the volume or value of any referrals by the physician to said entity.

If the compensation isn't at fair market value, the Stark Law is violated, regardless of the reason for for exceeding the fair market value compensation level.

The AKS is a little more forgiving, said Grimm. The AKS has safe harbors that protect arrangements in which all of the safe harbor's requirements have been met, but unlike the Stark Lww, failing to meet all those requirements doesn't necessarily mean the law has been violated.

"In cases where an arrangement does not squarely fit into a particular safe harbor, we as healthcare attorneys must assess whether there is any nexus between the remuneration and referrals to determine the level of risk presented by the arrangement," said Grimm. "To help navigate both the federal and state laws, we recommend that parties interested in entering into telehealth arrangements engage experienced healthcare counsel to help them structure their arrangement in a compliant manner."

Healthcare is a highly regulated industry on both a state and federal level. And for those who may be new to the industry, the limitations of the laws in question can be surprising, since they limit interactions that are common in other industries.

It's important for anyone contemplating a telehealth arrangement to understand the laws governing the healthcare industry so they can ensure their compliance.

"Engaging experienced counsel at the start of the process can help ensure the parties are meeting their business objectives, but doing so in a compliant manner that can help mitigate risk of future regulatory actions based on a failure to comply with the law," said Grimm.

Grimm will share these thoughts and much more at the upcoming HIMSS19 conference in a session titled "Telemedicine Fraud and Abuse Under the Microscope," scheduled for Thursday, February 14 from 11:30 a.m. to 12:30 p.m. in room W304E.

Twitter: @JELagasse

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