The U.S. Department of Health and Human Services, Office of Inspector General (OIG), recently issued a favorable Advisory Opinion (25-03) regarding a proposed arrangement (Arrangement) where a non-clinical management support organization and an affiliated professional corporation wholly owned by physician shareholders (PC) enters into lease agreements with telehealth platforms (Platforms) and providers employed by or contracted with these Platforms (Platform Providers). As telehealth continues to grow in popularity across nearly all patient groups, OIG’s favorable opinion is a welcome development for those working in the telehealth space.
PC certified that it has payor contracts with numerous commercial health plans, as well as contracts with commercial entities that administer Medicare Advantage and Medicaid Managed Care plans. According to PC, patients residing in underserved and rural communities, in particular, are negatively impacted by limited access to insurance-covered telehealth services furnished by Platform Providers.
Under the Arrangement, PC enters into an agreement with the Platforms to lease the Platform Providers to render telehealth services to Platform patients covered by insurance plans with whom PC has contracts. In exchange, the Platforms provide certain administrative services to PC. PC pays an hourly rate lease fee based on the licensure type of each Platform Provider regardless of whether the plans ultimately reimburse PC for these telehealth services. PC also pays a separate fee for non-clinical administrative services provided under the Arrangement (collectively, Service Fee).
OIG found that PC’s offer and payment of the Service Fee to the Platforms implicates the Anti-Kickback Statute, particularly because the Platforms refer Platform Patients to PC for services reimbursable by the Federal health care programs. Yet, OIG concluded that the Service Fee would be protected by the personal services and management contracts and outcomes-based payment arrangements safe harbor primarily because of PC’s certifications that:
- The Arrangement, including the Service Fee, would meet all of the conditions for the personal services and management contracts and outcomes-based payment safe harbor;
- The methodology for determining each component of the Service Fee would be set in advance, consistent with fair market value in arm’s-length transactions, and would not take into account the volume or value of any referrals or business generated for which payment may be made in whole or in part by the Federal health care programs; and
- The services performed would not involve counseling or promotion of a business arrangement or other activity that violates any state or Federal law, and the aggregate services contract would not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the service.
OIG further noted that the likelihood the Service Fee would be determined in a manner that takes into account the volume or value of any referrals or business that is reimbursable by a Federal health care program was decreased because PC pays the hourly rate lease fee regardless of whether plans reimburse PC for telehealth services it provides.
Despite uncertainty surrounding continued telehealth flexibilities, which are set to expire at the end of September, management support organizations, professional corporations, and telehealth providers may find this favorable opinion helpful, particularly if they treat patients in underserved and rural communities. Those considering similar arrangements would be well-served to ensure compliance with applicable laws, rules, and regulations.
A complete copy of Advisory Opinion 25-03 is available here.
Should you have any questions regarding the above or wish to have your proposed arrangement analyzed for compliance purposes, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].