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OIG Issues Favorable Advisory Opinion on Neurology Telemedicine Arrangement

On August 29, 2011, the Office of Inspector General (“OIG”) issued Advisory Opinion No. 11-12, regarding a health system’s proposal to provide neuro emergency clinical protocols and immediate consultations with stroke neurologists via telemedicine technology to certain community hospitals. The OIG concluded that the proposed arrangement could potentially generate illegal remuneration under the federal anti-kickback statute (42 U.S.C. §1320a-7b); however, the OIG would not impose sanctions under the anti-kickback statute because the proposed arrangement contains sufficient safe guards to reduce the risk that the arrangement would result in improper payments for referrals of Federal health care program business.

This Advisory Opinion provides insight on how the OIG may view a telemedicine arrangement between referral sources which contains exclusivity provisions. Another important aspect was the OIG’s comments that the proposed arrangement promotes the obvious public benefit of promoting timely access to specialty care for acute care patients.

Factual Background

Under the proposed arrangement, a health system would provide through its flagship hospital, at its expense, the following items and services to certain community hospitals in the health system’s service area: (i) neuro emergency telemedicine technology; (ii) neuro emergency clinical consultations; (iii) acceptance of neuro emergency transfers; and (iv) neuro emergency clinical protocols, training, and medical education. The proposed arrangement would allow hospitals to treat simple stroke cases, rather than transfer them to a comprehensive stroke center with the idea to allow treatment to begin earlier when it is most effective.

The proposed arrangement initially would be offered to community hospitals in the health system’s service area with which the health system has pre-existing, significant contractual relationships. Eventually, the proposed arrangement would be extended to other hospitals based on access-to-care considerations, including the hospital’s location, the location of other stroke programs, the local population density, and the health system’s resources for the proposed arrangement.

The health system certified that the proposed arrangement aims to reduce the mortality and morbidity rates of stroke in the health system’s metropolitan area and lower the costs associated with transfers of stroke cases that, with the proposed arrangement’s support, could be managed at the participating hospitals. The health system also certified that it receives a significant volume of transfers of stroke patients who could effectively be treated in their local community hospitals with the appropriate clinical support. The health system expects that the proposed arrangement would reduce the volume of these transfers and that this reduction would, in turn, free up resources for patients who require the level of tertiary care that the health system’s flagship hospital can provide.

The health system would enter into a written agreement with each participating hospital that sets forth all of the services to be provided by each party under the proposed arrangement. In recognition of the health system’s investment of time and capital in the proposed arrangement, the participating hospitals must agree not to participate in any other neuro emergency telemedicine service without the health system’s prior approval for the length of the agreement, which the health system anticipates would be two years.

The proposed arrangement would include the following components:

  1. Neuro Emergency Telemedicine. The health system’s contracted telemedicine service provider would, at the health system’s expense, install neuro emergency telemedicine technology, including both hardware and software, in the participating hospitals’ emergency departments. The telemedicine technology contains a web-enabled stroke treatment consultation and decision support system with integrated audio-visual capabilities (the “Tele-Stroke Application”) that would enable the health system’s neurologists to consult, in real time, with the participating hospital’s emergency physicians.
  2. Neuro Emergency Clinical Consultations. The health system would, at its expense, furnish the participating hospitals’ emergency physicians with 24/7/365 access to the health system’s stroke expertise, via both telephone and the Tele-Stroke Application. The health system states that although few, if any, of the consultations would be billable to Medicare, to the extent the consultations are covered and payable by third party payors, it would bill and collect for them.
  3. Acceptance of Neuro Emergency Transfers. The health system would, at its expense, ensure that neurosurgeons and neuro intensivists are on call and available to accept transfers of acute stroke patients from the participating hospitals.
  4. Neuro Emergency Clinical Protocols, Training, and Medical Education. The health system would, at its expense, furnish neuro emergency clinical protocols to the participating hospitals and offer access to neuro emergency training and medical education programs to the participating hospitals’ emergency department staffs.
  5. Marketing and Advertising. Each participating hospital would grant the health system a limited, non-exclusive, royalty-free license to use the participating hospital’s trademarks and service marks for purposes of marketing the proposed arrangement.

Legal Analysis

Because the health system and the participating hospitals are potential sources of referrals of Federal health care program business to one another, the OIG commented that the exchange of anything of value between them as a result of the proposed arrangement potentially implicates the anti-kickback statute. The OIG commented that the proposed arrangement was not eligible for safe harbor protection under the personal services and management contracts safe harbor because the participating hospitals’ physicians would use the Tele-Stroke Application to consult with the health system’s neurologists on an unscheduled, as-needed basis.

However, the OIG concluded that the facts and circumstances of the proposed telemedicine arrangement adequately reduced the risk that the remuneration provided under the proposed arrangement could be an improper payment for referrals of Federal health care program business between the parties. The OIG listed the following reasons for its conclusion:

  1. The health system would be unlikely to generate appreciable referrals through the proposed arrangement because neither the participating hospitals nor their physicians would be required or encouraged to refer patients to the health system’s hospital as a condition of program participation, and no emergency physician would receive additional compensation under the program.
  2. Under the proposed arrangement, program participation initially would be offered to hospitals with which the health system typically has some sort of clinical affiliation.
  3. While both the participating hospitals and the health system might benefit from the proposed arrangement, the primary beneficiaries would be the stroke patients who, with the program’s support, could be treated at the participating hospitals’ emergency departments, when treatment is most effective.
  4. Although the proposed arrangement would afford the health system and the participating hospitals the opportunity to engage in marketing activities using each other’s marks, neither the health system nor any participating hospital would be required to engage in any marketing activities, and each party would be responsible for the costs associated with its own marketing activities.
  5. The proposed arrangement is unlikely to result in increased costs to the Federal health care programs. The health system certified that few, if any, of the consultations it would provide under the program would be billing to Medicare.

The OIG commented that the physicians of the participating hospitals might also benefit from the proposed arrangement through the opportunity to enhance their professional skills by attending medical education programs. However, the OIG noted that the medical education programs in the proposed arrangement would not be comparable to the type of continuing medical education that is available for commercial purchase, or medical education programs that pose a grater risk of fraud or abuse such as continuing medical education services sponsored by pharmaceutical manufacturers.

Clay Countryman is a partner with Breazeale, Sachse & Wilson, L.L.P.

OIG Issues Favorable Advisory Opinion on Neurology Telemedicine Arrangement

On August 29, 2011, the Office of Inspector General (“OIG”) issued Advisory Opinion No. 11-12, regarding a health system’s proposal to provide neuro emergency clinical protocols and immediate consultations with stroke neurologists via telemedicine technology to certain community hospitals. The OIG concluded that the proposed arrangement could potentially generate illegal remuneration under the federal anti-kickback statute (42 U.S.C. §1320a-7b); however, the OIG would not impose sanctions under the anti-kickback statute because the proposed arrangement contains sufficient safe guards to reduce the risk that the arrangement would result in improper payments for referrals of Federal health care program business.

This Advisory Opinion provides insight on how the OIG may view a telemedicine arrangement between referral sources which contains exclusivity provisions. Another important aspect was the OIG’s comments that the proposed arrangement promotes the obvious public benefit of promoting timely access to specialty care for acute care patients.

Factual Background

Under the proposed arrangement, a health system would provide through its flagship hospital, at its expense, the following items and services to certain community hospitals in the health system’s service area: (i) neuro emergency telemedicine technology; (ii) neuro emergency clinical consultations; (iii) acceptance of neuro emergency transfers; and (iv) neuro emergency clinical protocols, training, and medical education. The proposed arrangement would allow hospitals to treat simple stroke cases, rather than transfer them to a comprehensive stroke center with the idea to allow treatment to begin earlier when it is most effective.

The proposed arrangement initially would be offered to community hospitals in the health system’s service area with which the health system has pre-existing, significant contractual relationships. Eventually, the proposed arrangement would be extended to other hospitals based on access-to-care considerations, including the hospital’s location, the location of other stroke programs, the local population density, and the health system’s resources for the proposed arrangement.

The health system certified that the proposed arrangement aims to reduce the mortality and morbidity rates of stroke in the health system’s metropolitan area and lower the costs associated with transfers of stroke cases that, with the proposed arrangement’s support, could be managed at the participating hospitals. The health system also certified that it receives a significant volume of transfers of stroke patients who could effectively be treated in their local community hospitals with the appropriate clinical support. The health system expects that the proposed arrangement would reduce the volume of these transfers and that this reduction would, in turn, free up resources for patients who require the level of tertiary care that the health system’s flagship hospital can provide.

The health system would enter into a written agreement with each participating hospital that sets forth all of the services to be provided by each party under the proposed arrangement. In recognition of the health system’s investment of time and capital in the proposed arrangement, the participating hospitals must agree not to participate in any other neuro emergency telemedicine service without the health system’s prior approval for the length of the agreement, which the health system anticipates would be two years.

The proposed arrangement would include the following components:

  1. Neuro Emergency Telemedicine. The health system’s contracted telemedicine service provider would, at the health system’s expense, install neuro emergency telemedicine technology, including both hardware and software, in the participating hospitals’ emergency departments. The telemedicine technology contains a web-enabled stroke treatment consultation and decision support system with integrated audio-visual capabilities (the “Tele-Stroke Application”) that would enable the health system’s neurologists to consult, in real time, with the participating hospital’s emergency physicians.
  2. Neuro Emergency Clinical Consultations. The health system would, at its expense, furnish the participating hospitals’ emergency physicians with 24/7/365 access to the health system’s stroke expertise, via both telephone and the Tele-Stroke Application. The health system states that although few, if any, of the consultations would be billable to Medicare, to the extent the consultations are covered and payable by third party payors, it would bill and collect for them.
  3. Acceptance of Neuro Emergency Transfers. The health system would, at its expense, ensure that neurosurgeons and neuro intensivists are on call and available to accept transfers of acute stroke patients from the participating hospitals.
  4. Neuro Emergency Clinical Protocols, Training, and Medical Education. The health system would, at its expense, furnish neuro emergency clinical protocols to the participating hospitals and offer access to neuro emergency training and medical education programs to the participating hospitals’ emergency department staffs.
  5. Marketing and Advertising. Each participating hospital would grant the health system a limited, non-exclusive, royalty-free license to use the participating hospital’s trademarks and service marks for purposes of marketing the proposed arrangement.

Legal Analysis

Because the health system and the participating hospitals are potential sources of referrals of Federal health care program business to one another, the OIG commented that the exchange of anything of value between them as a result of the proposed arrangement potentially implicates the anti-kickback statute. The OIG commented that the proposed arrangement was not eligible for safe harbor protection under the personal services and management contracts safe harbor because the participating hospitals’ physicians would use the Tele-Stroke Application to consult with the health system’s neurologists on an unscheduled, as-needed basis.

However, the OIG concluded that the facts and circumstances of the proposed telemedicine arrangement adequately reduced the risk that the remuneration provided under the proposed arrangement could be an improper payment for referrals of Federal health care program business between the parties. The OIG listed the following reasons for its conclusion:

  1. The health system would be unlikely to generate appreciable referrals through the proposed arrangement because neither the participating hospitals nor their physicians would be required or encouraged to refer patients to the health system’s hospital as a condition of program participation, and no emergency physician would receive additional compensation under the program.
  2. Under the proposed arrangement, program participation initially would be offered to hospitals with which the health system typically has some sort of clinical affiliation.
  3. While both the participating hospitals and the health system might benefit from the proposed arrangement, the primary beneficiaries would be the stroke patients who, with the program’s support, could be treated at the participating hospitals’ emergency departments, when treatment is most effective.
  4. Although the proposed arrangement would afford the health system and the participating hospitals the opportunity to engage in marketing activities using each other’s marks, neither the health system nor any participating hospital would be required to engage in any marketing activities, and each party would be responsible for the costs associated with its own marketing activities.
  5. The proposed arrangement is unlikely to result in increased costs to the Federal health care programs. The health system certified that few, if any, of the consultations it would provide under the program would be billing to Medicare.

The OIG commented that the physicians of the participating hospitals might also benefit from the proposed arrangement through the opportunity to enhance their professional skills by attending medical education programs. However, the OIG noted that the medical education programs in the proposed arrangement would not be comparable to the type of continuing medical education that is available for commercial purchase, or medical education programs that pose a grater risk of fraud or abuse such as continuing medical education services sponsored by pharmaceutical manufacturers.

Clay Countryman is a partner with Breazeale, Sachse & Wilson, L.L.P.

OIG Issues Favorable Advisory Opinion on Neurology Telemedicine Arrangement

On August 29, 2011, the Office of Inspector General (“OIG”) issued Advisory Opinion No. 11-12, regarding a health system’s proposal to provide neuro emergency clinical protocols and immediate consultations with stroke neurologists via telemedicine technology to certain community hospitals. The OIG concluded that the proposed arrangement could potentially generate illegal remuneration under the federal anti-kickback statute (42 U.S.C. §1320a-7b); however, the OIG would not impose sanctions under the anti-kickback statute because the proposed arrangement contains sufficient safe guards to reduce the risk that the arrangement would result in improper payments for referrals of Federal health care program business.

This Advisory Opinion provides insight on how the OIG may view a telemedicine arrangement between referral sources which contains exclusivity provisions. Another important aspect was the OIG’s comments that the proposed arrangement promotes the obvious public benefit of promoting timely access to specialty care for acute care patients.

Factual Background

Under the proposed arrangement, a health system would provide through its flagship hospital, at its expense, the following items and services to certain community hospitals in the health system’s service area: (i) neuro emergency telemedicine technology; (ii) neuro emergency clinical consultations; (iii) acceptance of neuro emergency transfers; and (iv) neuro emergency clinical protocols, training, and medical education. The proposed arrangement would allow hospitals to treat simple stroke cases, rather than transfer them to a comprehensive stroke center with the idea to allow treatment to begin earlier when it is most effective.

The proposed arrangement initially would be offered to community hospitals in the health system’s service area with which the health system has pre-existing, significant contractual relationships. Eventually, the proposed arrangement would be extended to other hospitals based on access-to-care considerations, including the hospital’s location, the location of other stroke programs, the local population density, and the health system’s resources for the proposed arrangement.

The health system certified that the proposed arrangement aims to reduce the mortality and morbidity rates of stroke in the health system’s metropolitan area and lower the costs associated with transfers of stroke cases that, with the proposed arrangement’s support, could be managed at the participating hospitals. The health system also certified that it receives a significant volume of transfers of stroke patients who could effectively be treated in their local community hospitals with the appropriate clinical support. The health system expects that the proposed arrangement would reduce the volume of these transfers and that this reduction would, in turn, free up resources for patients who require the level of tertiary care that the health system’s flagship hospital can provide.

The health system would enter into a written agreement with each participating hospital that sets forth all of the services to be provided by each party under the proposed arrangement. In recognition of the health system’s investment of time and capital in the proposed arrangement, the participating hospitals must agree not to participate in any other neuro emergency telemedicine service without the health system’s prior approval for the length of the agreement, which the health system anticipates would be two years.

The proposed arrangement would include the following components:

  1. Neuro Emergency Telemedicine. The health system’s contracted telemedicine service provider would, at the health system’s expense, install neuro emergency telemedicine technology, including both hardware and software, in the participating hospitals’ emergency departments. The telemedicine technology contains a web-enabled stroke treatment consultation and decision support system with integrated audio-visual capabilities (the “Tele-Stroke Application”) that would enable the health system’s neurologists to consult, in real time, with the participating hospital’s emergency physicians.
  2. Neuro Emergency Clinical Consultations. The health system would, at its expense, furnish the participating hospitals’ emergency physicians with 24/7/365 access to the health system’s stroke expertise, via both telephone and the Tele-Stroke Application. The health system states that although few, if any, of the consultations would be billable to Medicare, to the extent the consultations are covered and payable by third party payors, it would bill and collect for them.
  3. Acceptance of Neuro Emergency Transfers. The health system would, at its expense, ensure that neurosurgeons and neuro intensivists are on call and available to accept transfers of acute stroke patients from the participating hospitals.
  4. Neuro Emergency Clinical Protocols, Training, and Medical Education. The health system would, at its expense, furnish neuro emergency clinical protocols to the participating hospitals and offer access to neuro emergency training and medical education programs to the participating hospitals’ emergency department staffs.
  5. Marketing and Advertising. Each participating hospital would grant the health system a limited, non-exclusive, royalty-free license to use the participating hospital’s trademarks and service marks for purposes of marketing the proposed arrangement.

Legal Analysis

Because the health system and the participating hospitals are potential sources of referrals of Federal health care program business to one another, the OIG commented that the exchange of anything of value between them as a result of the proposed arrangement potentially implicates the anti-kickback statute. The OIG commented that the proposed arrangement was not eligible for safe harbor protection under the personal services and management contracts safe harbor because the participating hospitals’ physicians would use the Tele-Stroke Application to consult with the health system’s neurologists on an unscheduled, as-needed basis.

However, the OIG concluded that the facts and circumstances of the proposed telemedicine arrangement adequately reduced the risk that the remuneration provided under the proposed arrangement could be an improper payment for referrals of Federal health care program business between the parties. The OIG listed the following reasons for its conclusion:

  1. The health system would be unlikely to generate appreciable referrals through the proposed arrangement because neither the participating hospitals nor their physicians would be required or encouraged to refer patients to the health system’s hospital as a condition of program participation, and no emergency physician would receive additional compensation under the program.
  2. Under the proposed arrangement, program participation initially would be offered to hospitals with which the health system typically has some sort of clinical affiliation.
  3. While both the participating hospitals and the health system might benefit from the proposed arrangement, the primary beneficiaries would be the stroke patients who, with the program’s support, could be treated at the participating hospitals’ emergency departments, when treatment is most effective.
  4. Although the proposed arrangement would afford the health system and the participating hospitals the opportunity to engage in marketing activities using each other’s marks, neither the health system nor any participating hospital would be required to engage in any marketing activities, and each party would be responsible for the costs associated with its own marketing activities.
  5. The proposed arrangement is unlikely to result in increased costs to the Federal health care programs. The health system certified that few, if any, of the consultations it would provide under the program would be billing to Medicare.

The OIG commented that the physicians of the participating hospitals might also benefit from the proposed arrangement through the opportunity to enhance their professional skills by attending medical education programs. However, the OIG noted that the medical education programs in the proposed arrangement would not be comparable to the type of continuing medical education that is available for commercial purchase, or medical education programs that pose a grater risk of fraud or abuse such as continuing medical education services sponsored by pharmaceutical manufacturers.

Clay Countryman is a partner with Breazeale, Sachse & Wilson, L.L.P.

OIG Issues Favorable Advisory Opinion on Neurology Telemedicine Arrangement

On August 29, 2011, the Office of Inspector General (“OIG”) issued Advisory Opinion No. 11-12, regarding a health system’s proposal to provide neuro emergency clinical protocols and immediate consultations with stroke neurologists via telemedicine technology to certain community hospitals. The OIG concluded that the proposed arrangement could potentially generate illegal remuneration under the federal anti-kickback statute (42 U.S.C. §1320a-7b); however, the OIG would not impose sanctions under the anti-kickback statute because the proposed arrangement contains sufficient safe guards to reduce the risk that the arrangement would result in improper payments for referrals of Federal health care program business.

This Advisory Opinion provides insight on how the OIG may view a telemedicine arrangement between referral sources which contains exclusivity provisions. Another important aspect was the OIG’s comments that the proposed arrangement promotes the obvious public benefit of promoting timely access to specialty care for acute care patients.

Factual Background

Under the proposed arrangement, a health system would provide through its flagship hospital, at its expense, the following items and services to certain community hospitals in the health system’s service area: (i) neuro emergency telemedicine technology; (ii) neuro emergency clinical consultations; (iii) acceptance of neuro emergency transfers; and (iv) neuro emergency clinical protocols, training, and medical education. The proposed arrangement would allow hospitals to treat simple stroke cases, rather than transfer them to a comprehensive stroke center with the idea to allow treatment to begin earlier when it is most effective.

The proposed arrangement initially would be offered to community hospitals in the health system’s service area with which the health system has pre-existing, significant contractual relationships. Eventually, the proposed arrangement would be extended to other hospitals based on access-to-care considerations, including the hospital’s location, the location of other stroke programs, the local population density, and the health system’s resources for the proposed arrangement.

The health system certified that the proposed arrangement aims to reduce the mortality and morbidity rates of stroke in the health system’s metropolitan area and lower the costs associated with transfers of stroke cases that, with the proposed arrangement’s support, could be managed at the participating hospitals. The health system also certified that it receives a significant volume of transfers of stroke patients who could effectively be treated in their local community hospitals with the appropriate clinical support. The health system expects that the proposed arrangement would reduce the volume of these transfers and that this reduction would, in turn, free up resources for patients who require the level of tertiary care that the health system’s flagship hospital can provide.

The health system would enter into a written agreement with each participating hospital that sets forth all of the services to be provided by each party under the proposed arrangement. In recognition of the health system’s investment of time and capital in the proposed arrangement, the participating hospitals must agree not to participate in any other neuro emergency telemedicine service without the health system’s prior approval for the length of the agreement, which the health system anticipates would be two years.

The proposed arrangement would include the following components:

  1. Neuro Emergency Telemedicine. The health system’s contracted telemedicine service provider would, at the health system’s expense, install neuro emergency telemedicine technology, including both hardware and software, in the participating hospitals’ emergency departments. The telemedicine technology contains a web-enabled stroke treatment consultation and decision support system with integrated audio-visual capabilities (the “Tele-Stroke Application”) that would enable the health system’s neurologists to consult, in real time, with the participating hospital’s emergency physicians.
  2. Neuro Emergency Clinical Consultations. The health system would, at its expense, furnish the participating hospitals’ emergency physicians with 24/7/365 access to the health system’s stroke expertise, via both telephone and the Tele-Stroke Application. The health system states that although few, if any, of the consultations would be billable to Medicare, to the extent the consultations are covered and payable by third party payors, it would bill and collect for them.
  3. Acceptance of Neuro Emergency Transfers. The health system would, at its expense, ensure that neurosurgeons and neuro intensivists are on call and available to accept transfers of acute stroke patients from the participating hospitals.
  4. Neuro Emergency Clinical Protocols, Training, and Medical Education. The health system would, at its expense, furnish neuro emergency clinical protocols to the participating hospitals and offer access to neuro emergency training and medical education programs to the participating hospitals’ emergency department staffs.
  5. Marketing and Advertising. Each participating hospital would grant the health system a limited, non-exclusive, royalty-free license to use the participating hospital’s trademarks and service marks for purposes of marketing the proposed arrangement.

Legal Analysis

Because the health system and the participating hospitals are potential sources of referrals of Federal health care program business to one another, the OIG commented that the exchange of anything of value between them as a result of the proposed arrangement potentially implicates the anti-kickback statute. The OIG commented that the proposed arrangement was not eligible for safe harbor protection under the personal services and management contracts safe harbor because the participating hospitals’ physicians would use the Tele-Stroke Application to consult with the health system’s neurologists on an unscheduled, as-needed basis.

However, the OIG concluded that the facts and circumstances of the proposed telemedicine arrangement adequately reduced the risk that the remuneration provided under the proposed arrangement could be an improper payment for referrals of Federal health care program business between the parties. The OIG listed the following reasons for its conclusion:

  1. The health system would be unlikely to generate appreciable referrals through the proposed arrangement because neither the participating hospitals nor their physicians would be required or encouraged to refer patients to the health system’s hospital as a condition of program participation, and no emergency physician would receive additional compensation under the program.
  2. Under the proposed arrangement, program participation initially would be offered to hospitals with which the health system typically has some sort of clinical affiliation.
  3. While both the participating hospitals and the health system might benefit from the proposed arrangement, the primary beneficiaries would be the stroke patients who, with the program’s support, could be treated at the participating hospitals’ emergency departments, when treatment is most effective.
  4. Although the proposed arrangement would afford the health system and the participating hospitals the opportunity to engage in marketing activities using each other’s marks, neither the health system nor any participating hospital would be required to engage in any marketing activities, and each party would be responsible for the costs associated with its own marketing activities.
  5. The proposed arrangement is unlikely to result in increased costs to the Federal health care programs. The health system certified that few, if any, of the consultations it would provide under the program would be billing to Medicare.

The OIG commented that the physicians of the participating hospitals might also benefit from the proposed arrangement through the opportunity to enhance their professional skills by attending medical education programs. However, the OIG noted that the medical education programs in the proposed arrangement would not be comparable to the type of continuing medical education that is available for commercial purchase, or medical education programs that pose a grater risk of fraud or abuse such as continuing medical education services sponsored by pharmaceutical manufacturers.

Clay Countryman is a partner with Breazeale, Sachse & Wilson, L.L.P.

OIG Issues Favorable Advisory Opinion on Neurology Telemedicine Arrangement

On August 29, 2011, the Office of Inspector General (“OIG”) issued Advisory Opinion No. 11-12, regarding a health system’s proposal to provide neuro emergency clinical protocols and immediate consultations with stroke neurologists via telemedicine technology to certain community hospitals. The OIG concluded that the proposed arrangement could potentially generate illegal remuneration under the federal anti-kickback statute (42 U.S.C. §1320a-7b); however, the OIG would not impose sanctions under the anti-kickback statute because the proposed arrangement contains sufficient safe guards to reduce the risk that the arrangement would result in improper payments for referrals of Federal health care program business.

This Advisory Opinion provides insight on how the OIG may view a telemedicine arrangement between referral sources which contains exclusivity provisions. Another important aspect was the OIG’s comments that the proposed arrangement promotes the obvious public benefit of promoting timely access to specialty care for acute care patients.

Factual Background

Under the proposed arrangement, a health system would provide through its flagship hospital, at its expense, the following items and services to certain community hospitals in the health system’s service area: (i) neuro emergency telemedicine technology; (ii) neuro emergency clinical consultations; (iii) acceptance of neuro emergency transfers; and (iv) neuro emergency clinical protocols, training, and medical education. The proposed arrangement would allow hospitals to treat simple stroke cases, rather than transfer them to a comprehensive stroke center with the idea to allow treatment to begin earlier when it is most effective.

The proposed arrangement initially would be offered to community hospitals in the health system’s service area with which the health system has pre-existing, significant contractual relationships. Eventually, the proposed arrangement would be extended to other hospitals based on access-to-care considerations, including the hospital’s location, the location of other stroke programs, the local population density, and the health system’s resources for the proposed arrangement.

The health system certified that the proposed arrangement aims to reduce the mortality and morbidity rates of stroke in the health system’s metropolitan area and lower the costs associated with transfers of stroke cases that, with the proposed arrangement’s support, could be managed at the participating hospitals. The health system also certified that it receives a significant volume of transfers of stroke patients who could effectively be treated in their local community hospitals with the appropriate clinical support. The health system expects that the proposed arrangement would reduce the volume of these transfers and that this reduction would, in turn, free up resources for patients who require the level of tertiary care that the health system’s flagship hospital can provide.

The health system would enter into a written agreement with each participating hospital that sets forth all of the services to be provided by each party under the proposed arrangement. In recognition of the health system’s investment of time and capital in the proposed arrangement, the participating hospitals must agree not to participate in any other neuro emergency telemedicine service without the health system’s prior approval for the length of the agreement, which the health system anticipates would be two years.

The proposed arrangement would include the following components:

  1. Neuro Emergency Telemedicine. The health system’s contracted telemedicine service provider would, at the health system’s expense, install neuro emergency telemedicine technology, including both hardware and software, in the participating hospitals’ emergency departments. The telemedicine technology contains a web-enabled stroke treatment consultation and decision support system with integrated audio-visual capabilities (the “Tele-Stroke Application”) that would enable the health system’s neurologists to consult, in real time, with the participating hospital’s emergency physicians.
  2. Neuro Emergency Clinical Consultations. The health system would, at its expense, furnish the participating hospitals’ emergency physicians with 24/7/365 access to the health system’s stroke expertise, via both telephone and the Tele-Stroke Application. The health system states that although few, if any, of the consultations would be billable to Medicare, to the extent the consultations are covered and payable by third party payors, it would bill and collect for them.
  3. Acceptance of Neuro Emergency Transfers. The health system would, at its expense, ensure that neurosurgeons and neuro intensivists are on call and available to accept transfers of acute stroke patients from the participating hospitals.
  4. Neuro Emergency Clinical Protocols, Training, and Medical Education. The health system would, at its expense, furnish neuro emergency clinical protocols to the participating hospitals and offer access to neuro emergency training and medical education programs to the participating hospitals’ emergency department staffs.
  5. Marketing and Advertising. Each participating hospital would grant the health system a limited, non-exclusive, royalty-free license to use the participating hospital’s trademarks and service marks for purposes of marketing the proposed arrangement.

Legal Analysis

Because the health system and the participating hospitals are potential sources of referrals of Federal health care program business to one another, the OIG commented that the exchange of anything of value between them as a result of the proposed arrangement potentially implicates the anti-kickback statute. The OIG commented that the proposed arrangement was not eligible for safe harbor protection under the personal services and management contracts safe harbor because the participating hospitals’ physicians would use the Tele-Stroke Application to consult with the health system’s neurologists on an unscheduled, as-needed basis.

However, the OIG concluded that the facts and circumstances of the proposed telemedicine arrangement adequately reduced the risk that the remuneration provided under the proposed arrangement could be an improper payment for referrals of Federal health care program business between the parties. The OIG listed the following reasons for its conclusion:

  1. The health system would be unlikely to generate appreciable referrals through the proposed arrangement because neither the participating hospitals nor their physicians would be required or encouraged to refer patients to the health system’s hospital as a condition of program participation, and no emergency physician would receive additional compensation under the program.
  2. Under the proposed arrangement, program participation initially would be offered to hospitals with which the health system typically has some sort of clinical affiliation.
  3. While both the participating hospitals and the health system might benefit from the proposed arrangement, the primary beneficiaries would be the stroke patients who, with the program’s support, could be treated at the participating hospitals’ emergency departments, when treatment is most effective.
  4. Although the proposed arrangement would afford the health system and the participating hospitals the opportunity to engage in marketing activities using each other’s marks, neither the health system nor any participating hospital would be required to engage in any marketing activities, and each party would be responsible for the costs associated with its own marketing activities.
  5. The proposed arrangement is unlikely to result in increased costs to the Federal health care programs. The health system certified that few, if any, of the consultations it would provide under the program would be billing to Medicare.

The OIG commented that the physicians of the participating hospitals might also benefit from the proposed arrangement through the opportunity to enhance their professional skills by attending medical education programs. However, the OIG noted that the medical education programs in the proposed arrangement would not be comparable to the type of continuing medical education that is available for commercial purchase, or medical education programs that pose a grater risk of fraud or abuse such as continuing medical education services sponsored by pharmaceutical manufacturers.

Clay Countryman is a partner with Breazeale, Sachse & Wilson, L.L.P.

OIG Issues Favorable Advisory Opinion on Neurology Telemedicine Arrangement

On August 29, 2011, the Office of Inspector General (“OIG”) issued Advisory Opinion No. 11-12, regarding a health system’s proposal to provide neuro emergency clinical protocols and immediate consultations with stroke neurologists via telemedicine technology to certain community hospitals. The OIG concluded that the proposed arrangement could potentially generate illegal remuneration under the federal anti-kickback statute (42 U.S.C. §1320a-7b); however, the OIG would not impose sanctions under the anti-kickback statute because the proposed arrangement contains sufficient safe guards to reduce the risk that the arrangement would result in improper payments for referrals of Federal health care program business.

This Advisory Opinion provides insight on how the OIG may view a telemedicine arrangement between referral sources which contains exclusivity provisions. Another important aspect was the OIG’s comments that the proposed arrangement promotes the obvious public benefit of promoting timely access to specialty care for acute care patients.

Factual Background

Under the proposed arrangement, a health system would provide through its flagship hospital, at its expense, the following items and services to certain community hospitals in the health system’s service area: (i) neuro emergency telemedicine technology; (ii) neuro emergency clinical consultations; (iii) acceptance of neuro emergency transfers; and (iv) neuro emergency clinical protocols, training, and medical education. The proposed arrangement would allow hospitals to treat simple stroke cases, rather than transfer them to a comprehensive stroke center with the idea to allow treatment to begin earlier when it is most effective.

The proposed arrangement initially would be offered to community hospitals in the health system’s service area with which the health system has pre-existing, significant contractual relationships. Eventually, the proposed arrangement would be extended to other hospitals based on access-to-care considerations, including the hospital’s location, the location of other stroke programs, the local population density, and the health system’s resources for the proposed arrangement.

The health system certified that the proposed arrangement aims to reduce the mortality and morbidity rates of stroke in the health system’s metropolitan area and lower the costs associated with transfers of stroke cases that, with the proposed arrangement’s support, could be managed at the participating hospitals. The health system also certified that it receives a significant volume of transfers of stroke patients who could effectively be treated in their local community hospitals with the appropriate clinical support. The health system expects that the proposed arrangement would reduce the volume of these transfers and that this reduction would, in turn, free up resources for patients who require the level of tertiary care that the health system’s flagship hospital can provide.

The health system would enter into a written agreement with each participating hospital that sets forth all of the services to be provided by each party under the proposed arrangement. In recognition of the health system’s investment of time and capital in the proposed arrangement, the participating hospitals must agree not to participate in any other neuro emergency telemedicine service without the health system’s prior approval for the length of the agreement, which the health system anticipates would be two years.

The proposed arrangement would include the following components:

  1. Neuro Emergency Telemedicine. The health system’s contracted telemedicine service provider would, at the health system’s expense, install neuro emergency telemedicine technology, including both hardware and software, in the participating hospitals’ emergency departments. The telemedicine technology contains a web-enabled stroke treatment consultation and decision support system with integrated audio-visual capabilities (the “Tele-Stroke Application”) that would enable the health system’s neurologists to consult, in real time, with the participating hospital’s emergency physicians.
  2. Neuro Emergency Clinical Consultations. The health system would, at its expense, furnish the participating hospitals’ emergency physicians with 24/7/365 access to the health system’s stroke expertise, via both telephone and the Tele-Stroke Application. The health system states that although few, if any, of the consultations would be billable to Medicare, to the extent the consultations are covered and payable by third party payors, it would bill and collect for them.
  3. Acceptance of Neuro Emergency Transfers. The health system would, at its expense, ensure that neurosurgeons and neuro intensivists are on call and available to accept transfers of acute stroke patients from the participating hospitals.
  4. Neuro Emergency Clinical Protocols, Training, and Medical Education. The health system would, at its expense, furnish neuro emergency clinical protocols to the participating hospitals and offer access to neuro emergency training and medical education programs to the participating hospitals’ emergency department staffs.
  5. Marketing and Advertising. Each participating hospital would grant the health system a limited, non-exclusive, royalty-free license to use the participating hospital’s trademarks and service marks for purposes of marketing the proposed arrangement.

Legal Analysis

Because the health system and the participating hospitals are potential sources of referrals of Federal health care program business to one another, the OIG commented that the exchange of anything of value between them as a result of the proposed arrangement potentially implicates the anti-kickback statute. The OIG commented that the proposed arrangement was not eligible for safe harbor protection under the personal services and management contracts safe harbor because the participating hospitals’ physicians would use the Tele-Stroke Application to consult with the health system’s neurologists on an unscheduled, as-needed basis.

However, the OIG concluded that the facts and circumstances of the proposed telemedicine arrangement adequately reduced the risk that the remuneration provided under the proposed arrangement could be an improper payment for referrals of Federal health care program business between the parties. The OIG listed the following reasons for its conclusion:

  1. The health system would be unlikely to generate appreciable referrals through the proposed arrangement because neither the participating hospitals nor their physicians would be required or encouraged to refer patients to the health system’s hospital as a condition of program participation, and no emergency physician would receive additional compensation under the program.
  2. Under the proposed arrangement, program participation initially would be offered to hospitals with which the health system typically has some sort of clinical affiliation.
  3. While both the participating hospitals and the health system might benefit from the proposed arrangement, the primary beneficiaries would be the stroke patients who, with the program’s support, could be treated at the participating hospitals’ emergency departments, when treatment is most effective.
  4. Although the proposed arrangement would afford the health system and the participating hospitals the opportunity to engage in marketing activities using each other’s marks, neither the health system nor any participating hospital would be required to engage in any marketing activities, and each party would be responsible for the costs associated with its own marketing activities.
  5. The proposed arrangement is unlikely to result in increased costs to the Federal health care programs. The health system certified that few, if any, of the consultations it would provide under the program would be billing to Medicare.

The OIG commented that the physicians of the participating hospitals might also benefit from the proposed arrangement through the opportunity to enhance their professional skills by attending medical education programs. However, the OIG noted that the medical education programs in the proposed arrangement would not be comparable to the type of continuing medical education that is available for commercial purchase, or medical education programs that pose a grater risk of fraud or abuse such as continuing medical education services sponsored by pharmaceutical manufacturers.

Clay Countryman is a partner with Breazeale, Sachse & Wilson, L.L.P.

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