The Office of Inspector General (“OIG”) of the U.S. Department of Health and Human Services issued Advisory Opinion No. 18-03 in support of an arrangement where a federally qualified health center look-alike (the “Provider”) would donate free information technology-related equipment and services to a county health clinic (the “County Clinic”) to facilitate telemedicine encounters with the County Clinic’s patients (the “Proposed Arrangement”).  The OIG concluded that although the Proposed Arrangement could potentially generate prohibited remuneration under the federal Anti-Kickback Statute (“AKS”) and Civil Monetary Penalties Law (“CMPL”) with the requisite intent to induce or reward referrals of federal health care programs, the OIG would exercise its discretion and not sanction the Provider or the County Clinic (collectively the “Requestors”).

The OIG’s analysis and conclusion of the Proposed Arrangement provides new insight into the government’s position on these type of donations that facilitate telemedicine encounters.  Specifically, how the government views these type of donations with the continued expansion of coverage and reimbursement of telemedicine services under federal health care programs.  The Advisory Opinion indicates support for the development of collaborative telemedicine affiliations and that the potential remuneration from the future referrals can be outweighed by the access to health care services and benefits actually received by rural or remote communities.

Proposed Arrangement

The County Clinic is a division of the County Department of Health that furnishes certain confidential sexually transmitted infection testing, treatment and counseling. The Provider has an existing referral relationship with the County Clinic but the facilities are separated by about 80 miles making it difficult for patients to access the Provider.  Under the Proposed Arrangement, the Provider would donate information technology-related equipment and services to the County Clinic to facilitate telemedicine encounters between the Provider and the County Clinic’s patients for certain HIV prevention and treatment services.  The Provider would cover the costs of the equipment, its set up, and maintenance through grant-funding from the State Department of Health.  The Provider would bill the Medicare program for the professional services delivered in the telemedicine encounters.  The County Clinic would house the equipment and bill the state Medicaid program an originating site fee related to the telemedicine encounters. The originating site is not required to provide any personnel or equipment in order to bill for the facility fee (Q3014) (which is only a coverage requirement to provide the telehealth consult).

OIG Analysis

AKS makes it a criminal offense to knowingly and willfully offer or receive remuneration in an effort to induce or reward referrals of items or services reimbursable by federal health care programs. CMP provides for penalties against any person who offers or transfers remuneration to a Medicaid or Medicare beneficiary that the benefactor knows or should know is likely to influence the beneficiary’s selection of a specific provider, service, or item that will be paid, in whole or part, by Medicaid or Medicare.

Under the Proposed Arrangement, the County Clinic would receive remuneration of the free equipment and services and the Provider would have the opportunity to bill for the telehealth consultation referred by the County Clinic.  As such, the OIG acknowledged that the Proposed Arrangement could potentially generate prohibited remuneration under the federal AKS with the requisite intent to induce or reward referrals of services payable by a federal health care program.  However, the OIG identified the following factors as minimizing the potential risk of fraud and abuse:

• There are safeguards in place to prevent patient steering to the Provider for treatment; namely use of technology with any other provider is not restricted and patients are given the option to have either a virtual or in-person consultation

• Not likely to result in patient steering for prescriptions to any pharmacy operated by the Provider or County Clinic

• There would be no increased cost to any federal health care program

• Patients would benefit by having increased access to treatment; making it more likely that patients will seek out and receive such services

It is important to keep in mind that under the Proposed Arrangement the County Clinic would not obtain ownership of the equipment, as the Provider would use grant funds awarded by the State Department of Health to cover the costs of the equipment and services and the state agency would retain title and have the authority to recover the equipment at any time.  This could prove to be an important distinction concerning whether and how donating providers can provide information technology-related equipment and services to referring facilities in the other arrangements.

Notes and Comments

In prior Advisory Opinions (99-14, 04-07 and 11-12) concerning donations of information technology-related equipment and supplies, the OIG similarly concluded that it would not pursue sanctions; however, those proposed arrangements would not have directly resulted in a service payable by a federal health care program, but rather would only potentially result in other items or services to the patient by the donating provider. Under the Proposed Arrangement, both the County Clinic and the Provider would be in a positon to submit claims to a federal health care program as a result of the telemedicine encounter and follow-up services.  Nevertheless, the OIG concluded that there would be no increased cost to any federal health care program because the County Clinic would have performed the preliminary tests and referred clinically appropriate patients for in-person consultations and, potentially, follow-up items and services regardless of the Proposed Arrangement.

While the analysis acknowledges the additional reimbursement the County Clinic would receive for serving as the originating site (i.e., the location of the Medicaid beneficiary when the service furnished via a telecommunications system occurs), there is no actual analysis of this facility fee and why it is not considered an increased cost.  To be clear, the County Clinic does not provide the HIV preventative services to be delivered by the Provider via the telemedicine consultation, and therefore, would not have previously received any payments if and when the patient was referred to the Provider for an in-person consultation.

Again, it appears that the OIG is willing to prioritize the health benefits to patients over any secondary or tertiary benefits to the referring provider; especially when such subsequent benefits are unlikely to result in overutilization and have the potential to decrease costs to federal health care programs.