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Telehealth Considerations for Medical Device Manufacturers During and After COVID-19

A deep dive into how COVID-19 has forced many healthcare providers to adopt telehealth solutions, and some legal considerations for manufacturers.

October 20, 2020

11 Min Read
telehealth
Image by JPC-PROD - Adobe Stock

Gary Giampetruzzi, Partner, Paul Hastings LLP; Jonathan Stevens, Of Counsel, Paul Hastings LLP; Mara Sanders, Associate, Paul Hastings LLP; Keith McGahan, Chief Legal Officer, Spectrum Pharmaceuticals

Telehealth (i.e., the use of telecommunications technology to deliver health services remotely) has long promised to revolutionize the healthcare industry by dramatically improving access to, and the efficiency of, healthcare. Despite high expectations, an onerous web of overlapping federal and state rules and requirements, lack of consistent payor coverage, and industry inertia had, prior to COVID-19, prevented widespread adoption of telehealth as a primary means of providing care.

With the arrival of COVID-19, however, healthcare providers were forced quickly into digital care. While state and federal regulators have worked swiftly to ease restrictions on telemedicine (the subset of telehealth services that consists of remote delivery of direct clinical care), major fraud and abuse risks remain for telehealth providers and for the medical device manufacturers that rely on telehealth to facilitate access to their products. It remains to be seen, moreover, whether widespread use of telehealth will continue after COVID-19 recedes and regulatory waivers expire.

With patients and providers turning to telemedicine to avoid the risk of face-to-face interaction, COVID-19 fundamentally alters how the healthcare industry operates. To address this shift, the federal government and nearly all U.S. states and territories have issued new rules and waivers of telemedicine rules and requirements. New rules and waivers have, for the most part, fallen into one of three categories: (1) waivers of state restrictions on cross-border medical practice, (2) easing of telemedicine billing restrictions by government payors, and (3) reimbursement parity requirements for commercial payors. Some states have also amended patient consent requirements and restrictions on electronic prescribing to remove barriers to the delivery of telemedicine services. All told, these waivers have proven effective at permitting telemedicine to rapidly expand in order to match the sudden demand for remote care.

COVID-19 Regulatory Waivers for Telehealth Services Fall Short for Manufacturers

State and federal regulatory waivers are essential to protecting healthcare providers against liability for failure to meet burdensome telemedicine requirements during the COVID-19 pandemic. These waiver do not, however, address the healthcare fraud and abuse concerns raised by reliance on telehealth (whether telemedicine or the broader category of digital health platforms) by medical device manufacturers to facilitate access to products. The rapid—and largely unanticipated—proliferation of telehealth has, moreover, amplified many of the fraud and abuse concerns posed by telehealth prior to COVID-19.

Recognizing the need for hospitals and clinics to quickly contract with care providers to fill COVID-19 staffing needs, the Department of Health and Human Services Office of Inspector General (OIG) has stated that it will exercise its enforcement discretion to refrain from imposing sanctions on COVID-19-related financial arrangements that violate the Anti-Kickback Statute (AKS)1. OIG’s policy of enforcement discretion with respect to the AKS, however, does not apply to arrangements between manufacturers and providers2. Likewise, in FAQs and other guidance, OIG has focused on leniency in provider-to-provider relationships (such as hospital-physician relationships), providing little insight into what leniency, if any, will be afforded to manufacturers that are looking to work with providers to resolve barriers to access posed by COVID-19.

Telehealth and Manufacturer Patient Access Initiatives

As manufacturers look to address patient access concerns caused by economic recession and lack of in-person care, particularly for vulnerable populations, use of telehealth solutions to facilitate rapid expansion of patient access initiatives may be a potent source of risk. Traditional risks associated with manufacturer patient assistance program (PAP) initiatives may be compounded in the remote care paradigm of COVID-19, particularly when it comes to copay waivers and free technology solutions3.

telehealth

Manufacturer Copay Support Programs

Recognizing the limitations of performing financial needs assessments without an in-office visit and face-to-face interactions with office staff, OIG has stated that, during COVID-19, it will not penalize providers for routine waivers of copayments for financially needy patients4.  As with its AKS policy, however, OIG has not stated that it will provide the same flexibility for manufacturers. Medical device manufacturers should be cognizant of the fact that, in a remote care environment, manufacturers may not be able to rely on providers to collect information necessary to make eligibility determinations for the manufacturer’s PAP. Manufacturers could face challenges ensuring that PAP administrators (such as vendors, HUBs, specialty pharmacies, etc.) have systems in place to obtain patient consent remotely and confirm patient eligibility when patients aren’t present in physician’s offices, interacting with office staff, or filling a prescription at the pharmacy.

Manufacturer Technology Solutions

Manufacturers who wish to roll out technological solutions that allow providers to prescribe products remotely should be aware that the AKS may apply in full force to such initiatives. For example, while OIG has stated that it would view a hospital’s offer to non-employed physicians of free access to its telehealth platform as non-abusive in light of the exigencies of COVID-19, OIG has not commented on offers of the same by manufacturers5. Manufacturers should assume, therefore, that the fraud and abuse risks of providing access to technology for providers remains unchanged by COVID-19. To the extent that technological platforms have independent value to providers, they may be subject to scrutiny under the AKS6.

With respect to the provision of technological assistance directly to patients, OIG has also issued FAQs which state that, in light of the exigencies of COVID-19, OIG will take a more lenient view of the provision of free goods and services – such as free cell phones– by providers to patients in order to facilitate care during COVID-197. Again, OIG has not spoken to the AKS implications of provision of the same by manufacturers.

Looking to Pre-COVID Enforcement for Instruction

Manufacturers looking to capitalize on telehealth to expand patient access programs to address barriers to access caused by COVID-19 should be aware that OIG may not view such efforts with the same permissiveness that it has afforded provider-sponsored initiatives. In managing these potentially compounded COVID-19 related risks, a review of pre-COVID-19 guidance and enforcement actions is instructive.

  1. Excessive prescription volume may be a red flag. In 2019, a string of federal enforcement actions targeted telehealth activities by providers, telehealth companies, and manufacturers8. In some cases, prosecutors pointed to high-volume prescribing by providers who performed only cursory, remote examinations prior to writing a prescription as evidence that improper inducements had been offered to physicians9. With the promise of efficiency offered by telehealth, providers, and manufacturers alike should be aware that the adequacy of provider-patient telehealth interactions may, more so than face-to-face interactions, be subject to scrutiny. Interactions that are too brief to support prescribing or where the communication modality cannot support diagnosis (such as an audio-only interaction where visual examination is required) may be indicative of the presence of inappropriate incentives.
     

  2. Beware of free tech. OIG has long taken the position that the offer of free technology solutions to providers and patients is permissible provided that the technology does not hold value independent of the prescribed product that it supports10. For example, OIG has approved of laboratories offering free clinical laboratory ordering and results platforms because such platforms hold only value that is inextricably linked to the ordered tests11. OIG has also approved of manufacturer-sponsored programs to loan limited-functionality smartphones to financially needy patients at no cost, so that such patients can access an app that was designed to promote treatment adherence12. Where technological solutions have offered more than limited functionality that directly supports the prescribed product, however, the government has taken the position that such products are remuneration that pose unacceptable risks of noncompliance with the AKS, leading, in some cases, to substantial settlements13. As manufacturers look to develop technological solutions for the patient access concerns posed by remote prescribing—whether it be ePrescribing solutions or patient engagement platforms—a careful approach should be taken to analyzing the value of such platforms and ensuring that they are deployed in a manner that fully complies with the AKS.
     

  3. Continue to uphold PAP standards.In recent years, PAPs have been the subject of significant scrutiny by federal prosecutors14. In a pre-COVID-19 world, medical device manufacturers could rely on information and patient consents collected in doctor’s offices, by providers or office staff, to make PAP eligibility determinations and enroll patients in PAPs. PAP assistance, whether provided by manufacturer-sponsored programs or through independent charitable foundations, was reserved for a small subset of financially needy patients. As COVID-19 has taken a toll on the U.S. economy, many previously-insured patients have found themselves unemployed and without health insurance, prompting a need to expand the reach of patient assistance programs. This expansion is occurring remotely, in an environment in which it can be difficult for providers and office staff to collect patient consent forms and accurate patient eligibility data and talk to patients about PAP options. In light of the challenges posed by remote care, manufacturers who are looking to facilitate PAP access during COVID-19 should be mindful that processes are put in place to ensure that PAP consent, eligibility, and patient communication standards are upheld in a telehealth environment.

 
Foot notes

1 - OIG, OIG Policy Statement Regarding Application of Certain Administrative Enforcement Authorities Due to Declaration of Coronavirus Disease 2019 (COVID-19) Outbreak in the United States as a National Emergency (Apr. 3, 2020), available at https://oig.hhs.gov/coronavirus/OIG-Policy-Statement-4.3.20.pdf.

2 - OIG’s policy states that OIG will exercise its enforcement discretion with respect to arrangements that meet the requirements of at least one of the Stark Law “blanket waivers,” none of which would apply to financial arrangements with pharmaceutical or medical device manufacturers.

3 - As diagnostic testing programs go remote, manufacturers should also be aware that remote delivery of diagnostic test results poses heightened compliance risks. Among other risks, various state laws prohibit or restrict direct-to-patient delivery of clinical laboratory test results.

4 - OIG, OIG Policy Statement Regarding Physicians and Other Practitioners That Reduce or Waive Amounts Owed by Federal Health Care Program Beneficiaries for Telehealth Services During the 2019 Novel Coronavirus (COVID-19) Outbreak (Mar. 17, 2020), available at https://oig.hhs.gov/fraud/docs/alertsandbulletins/2020/policy-telehealth-2020.pdf.

5 - OIG, FAQs–Application of OIG's Administrative Enforcement Authorities to Arrangements Directly Connected to the Coronavirus Disease 2019 (COVID-19) Public Health Emergency (Rev. Sep. 3, 2020), available at https://oig.hhs.gov/coronavirus/authorities-faq.asp.

6 - 56 Fed. Reg. 35952, 35978 (July 29, 1991).

7- OIG, FAQs–Application of OIG's Administrative Enforcement Authorities to Arrangements Directly Connected to the Coronavirus Disease 2019 (COVID-19) Public Health Emergency (Rev. Sep. 3, 2020), available at https://oig.hhs.gov/coronavirus/authorities-faq.asp.

8 - See, e.g., U.S. Department of Justice, Federal Indictments & Law Enforcement Actions in One of the Largest Health Care Fraud Schemes Involving Telemedicine and Durable Medical Equipment Marketing Executives Results in Charges Against 24 Individuals Responsible for Over $1.2 Billion in Losses (Apr. 9, 2019), available at https://www.justice.gov/opa/pr/federal-indictments-and-law-enforcement-actions-one-largest-health-care-fraud-schemes; U.S. Department of Justice, Federal Law Enforcement Action Involving Fraudulent Genetic Testing Results in Charges Against 35 Individuals Responsible for Over $2.1 Billion in Losses in One of the Largest Health Care Fraud Schemes Ever Charged (Sep. 27, 2019), available at https://www.justice.gov/opa/pr/federal-law-enforcement-action-involving-fraudulent-genetic-testing-results-charges-against.

9 - See, e.g., U.S. Department of Justice, Federal Law Enforcement Action Involving Fraudulent Genetic Testing Results in Charges Against 35 Individuals Responsible for Over $2.1 Billion in Losses in One of the Largest Health Care Fraud Schemes Ever Charged (Sep. 27, 2019), available at https://www.justice.gov/opa/pr/federal-law-enforcement-action-involving-fraudulent-genetic-testing-results-charges-against (“{t}he defendants allegedly paid doctors to prescribe CGx testing, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen”); U.S. Department of Justice, Anesthesiologist Indicted for Alleged Role in $7 Million Telemedicine Health Care Fraud Conspiracy (July 9, 2019), available at https://www.justice.gov/usao-edny/pr/anesthesiologist-indicted-alleged-role-7-million-telemedicine-health-care-fraud(“. . . medical providers signed numerous prescriptions and order forms for durable medical equipment (DME) and drugs for beneficiaries, when the DME and drugs were not medically necessary and not the result of an actual doctor-patient relationship or examination”).

10 - 56 Fed. Reg. 35952, 35978 (July 29, 1991); 68 Fed. Reg. 68, 23731, 23735 (May 5, 2003); see also OIG, Adv. Op. No. 12-20 (Dec. 12, 2012); OIG, Adv. Op. No. 00-10 (Dec. 15, 2000); OIG, Adv. Op. No. 08-05 (Feb. 15, 2008).

11 - 78 Fed. Reg. 79202, 79210 (Dec. 27, 2013).

12 - OIG, Adv. Op. No. 19-02 (Jan. 24, 2019).

13 - U.S. Department of Justice, Pathology Laboratory Agrees to Pay $63.5 Million for Providing Illegal Inducements to Referring Physicians (Jan. 30, 2019), available at https://www.justice.gov/opa/pr/pathology-laboratory-agrees-pay-635-million-providing-illegal-inducements-referring.

14 - See, e.g., U.S. Department of Justice, Two Pharmaceutical Companies Agree to Pay a Total of Nearly $125 Million to Resolve Allegations That They Paid Kickbacks Through Copay Assistance Foundations (Apr. 25, 2019), available at https://www.justice.gov/opa/pr/two-pharmaceutical-companies-agree-pay-total-nearly-125-million-resolve-allegations-they-paid; U.S. Department of Justice, Three Pharmaceutical Companies Agree to Pay a Total of Over $122 Million to Resolve Allegations that they Paid Kickbacks Through Co-Pay Assistance Foundations (Apr. 4, 2019), available at https://www.justice.gov/usao-ma/pr/three-pharmaceutical-companies-agree-pay-total-over-122-million-resolve-allegations-they.

 
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