In this podcast, Marshall Jackson, Jr., Partner, McDermott, Will & Emery, and Nate Lacktman, Partner, Foley & Lardner, discuss the effect of public health emergency waivers on telehealth companies and key issues legal counsel should think about when advising virtual care companies, including the intersection of health care and e-commerce. The speakers also discuss fraud and abuse risk assessment and how reimbursement could change with the increased adoption of telehealth.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
In this podcast, Marshall Jackson, Jr., Partner, McDermott, Will & Emery, and Nate Lacktman, Partner, Foley & Lardner, discuss the effect of public health emergency waivers on telehealth companies and key issues legal counsel should think about when advising virtual care companies, including the intersection of health care and e-commerce. The speakers also discuss fraud and abuse risk assessment and how reimbursement could change with the increased adoption of telehealth.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
Thank you for joining us today on this, this H A S L A podcast. Um, my name is Marshall Jackson. I'm a partner at the firm McDermott Will and Emory. I'm located in our DC office. I'm a, uh, part of our, uh, general healthcare practice. Um, my practice, uh, is generally health transactional, and I also focus on, you know, digital health, you know, as, as a general matter, um, and helping clients understand the regulatory and transactional nuances within digital health and telemedicine and telehealth specifically. Um, you know, our topic today will be, uh, on telehealth and some of the changes that we've seen, kind of, you know, pre, during, and looking around the corner to post covid. Um, I'm joined today by partner, uh, Nate Lackman from Foley, and I'll have him introduce himself.
Speaker 2:Thanks, Marshall. My name is Nate Lackman. I'm a partner with Foley and Larner and chair of our law firm's national telemedicine and digital health industry team. We advise entrepreneurial healthcare providers and technology companies on business arrangements, compliance, and corporate matters with particular attention to telehealth, digital health and health innovation. So working with hospitals or health systems or startups to build virtual care arrangements across the United States and internationally. Our practice, our team emphasizes strategic counseling and creative business modeling, uh, to realize our clients ambitious and innovative goals. It's a pleasure to be here.
Speaker 1:So, Nate, we, we have, obviously there's a lot to talk about in telehealth. There's been a lot of focus on telehealth in the, the last, uh, several years, but then definitely with the, uh, public health emergency and the, you know, changes in relaxation of some of the laws and kinda looking around the corner to what we can expect, um, kind of coming out of the, the public health emergency. But let's, let's start with, uh, you know, the waivers, the public health emergency waivers, and, you know, can you just talk a little bit about what, what they are, um, and their usefulness to telehealth companies and kind of how telehealth companies are really either utilizing or viewing, uh, a lot of these waivers?
Speaker 2:Sure. You know, regulatory compliance lawyers, we kinda live and breathe the nuances and complexities of these rules. And the public health emergency waivers, uh, sort of obliterated'em. Uh, in short, they are, uh, they take the existing, uh, structures or restrictions and say, due to the emer public health emergency, these rules no longer apply and they will remain, um, waived for the duration of the public health emergency. Why is that important? Why is it useful for telehealth companies? One reason is that, uh, telemedicine companies are com, uh, need to comply with laws across multiple states, multiple geographic locations, right? It's a state where the patient is located that governs. So you're not just doing something in Florida subject to Florida law if you're offering these services everywhere. So some of the key waivers, right, would be licensing or some reimbursement or some prescribing waivers. And what that allows either mid or early stage telehealth companies to do is to really expand their geographic service f footprint without, uh, being encumbered by some of these, uh, healthcare restrictions. There really aren't a lot of fraud abuse waivers, but the, the types of waivers could be seen as more administrative in nature, uh, that can be solved through paperwork and applications for licensing. So the cool part about it is it lets providers, uh, experiment a little bit and test the waters for market, uh, responsiveness and consumer interest in new and different services and different geographies. Uh, you could also, you know, if you're fairly, uh, assertive, you could try to blitz scale, right? Uh, aggressively grow your operations and footprint, um, during this period of time because you're not restricted by things like licensing might that might otherwise slow you down. But there's a caution with that, right? You can't just blitz scale it up, uh, without having an exit strategy. At some point, the waiver's gonna end, right? Uh, so what you would want to do, uh, when you're advising clients, uh, who are offering multi-state telemedicine services is make sure that they have an exit strategy, right? Uh, behind the scenes they should be completing their licensing applications or DEA registrations and, uh, whatnot so that they're not hit with some patient abandonment claim, or they have to transfer off all of their patients and lose their revenue and, and service volume because the waivers have ended and they are not in a position to be compliant. What have you seen on that?
Speaker 1:Y you know, it's interesting. I, I've seen, uh, several, you know, telehealth companies utilize the waivers to, you know, scale their businesses fairly quickly. Um, you know, especially during this public health emergency, um, with, uh, with the cautionary tale that you just mentioned. You know, it's not just an medical strategy, but we can grow very quickly, um, and help, help our clients to grow very quickly. But then also, how do you then cement yourself? You know, as soon as the, cuz at any given moment, um, you know, the waivers can just go away, whether it be, you know, the federal or, or state, uh, state based waivers, um, they can go away. And now, you know, to your point, you just need to have, uh, you need to be in compliance with really whatever was in effect prior to the waivers, right? Unless, you know, things became more permanent. Um, but I've also had a lot of, uh, clients and companies that we've, you know, discussed, you know, how do we scale our businesses during this time without utilizing the waivers because, you know, you know, the timing, the timeframes for the waivers are, are a little bit fickle, right? You know, we, there's a, an expiration date, um, that, you know, can continue to move and will continue to move. Um, but there's an expiration date on the waivers, and you don't want to scale your business, um, you know, scale your company into a state, you know, very quickly and then butt up against, you know, that waiver expiring and you haven't cemented yourself, you know, within, you know, the regulatory compliance, you know, kind of pre covid, right? And so, um, there, it's been an interesting mix of, of, you know, companies really scaling, quickly utilizing the waivers, but then something, you know, what, we're gonna continue to grow, you know, how we grow and if we can utilize waivers, great, but we're really gonna utilize the already existing infrastructure prior to the public health emergency to, to expand.
Speaker 2:Yeah. And like, these waivers aren't automatic, all of'em, you know, which is interesting. Some states it's not like, oh, there's a waiver, I don't need to be licensed. Some states it might be easy, but you gotta like, send in a letter, like almost check the box in order to avail yourself of it
Speaker 1:Cor correct. Yeah. I mean, it's, you know, 50 states and, you know, 51 jurisdictions, you know, ed in DC and there's 51 flavors of, you know, waivers and ways to, to do things. And, um, you know, of working with some clients, you know, you go into certain jurisdictions, even with the phy, the licensure waivers. Some states you don't have to do anything. Or maybe there's a notice requirement of other states. There's actually not a waiver. Um, there is a, you know, expedited licensure pathway, but it's, it still takes time, right? And, you know, in those states in which there is a waiver, it's great to be able to go in that state and, you know, submit your business, um, at least for the physicians to submit the business in the state. Um, but you can't utilize that and rely on that. You know, again, I think to to your point, then that provider needs to go through what, whatever the licensing process is in that state. So as soon as the waiver goes away, um, you know, they're, they can continue to provide services in that state. There's not a kind of automatic, you, you need to hand off a client, you know, a, a patient, there's not a patient abandonment issue or some other quality of care issue that comes, because now how you got into the state is, is no longer available to you.
Speaker 2:Yeah. And, and for all the, uh, outside council listening to this, you know, when your clients wanna build new entities, like, uh, just because there's a waiver on medical licensure for practice does not mean that the state has waived its, uh, professional corporations code laws regarding, uh, correct. Corporate practice medicine or physician ownership. Like, so if California might have a waiver, Hey, you can deliver care without a license, does not mean you can create an in-state California professional corporation owned by a doctor who's not licensed to practice there.
Speaker 1:Right? Right. Yeah. One, one example, one good example of that is New York, you know, new York's pathway to getting, uh, uh, starting up a medical practice and, and going through the, the, you know, board of education, uh, excuse me, the Department of Education and the Secretary of State, you know, it's, it's a little bit cumbersome. It takes a, takes some time, um, and takes, uh, you know, clients working with counsel to really navigate that process well, even with a, uh, licensure waiver for a provider, you know, to be able to avail the company, the business to do business in the estate, you still have to go through that process. And so why, you know, and, you know, there's, there's almost a disconnect, right? Between the licensure waiver and the pathway to doing business in a state. Um, and, you know, I think outside council, and, you know, even in-house council really needs to make sure that they're aligning, you know, how they're maneuvering within these various states and see where there's disconnects, you know, between a waiver and kind of the process of doing business in a state too.
Speaker 2:Yeah. And look like, let's, let's be raw. I think you would be naive to think that healthcare is not a business, right? Right. So there are economic, there's growth plays, there's marketing, there's strategy. It, it is a, it is a, the healthcare is an industry and it's a business. So I, I get it that, uh, high growth companies want, want to expand using this, uh, waivers as an opportunity, but it's a business of healthcare, right? So these are actual patients involved. And so I, I think that, uh, to that aggressive scaling it, it also depends on the nature of service. If you're offering like, kind of one off, um, urgent care alternate type of a thing where there wouldn't be an ongoing doctor-patient relationship, okay, that's, that's one thing. But if you're offering something that's like chronic disease management or mm-hmm.<affirmative> it naturally you would take care of this patient for years or mental health for a very long time, and you're not preparing for when these waivers are gonna end, that is an absolute problem. That's either gonna be a compliance risk on licensure or a patient abandoned risk on your, on your qual continuity of care.
Speaker 1:Yeah, exactly. Exactly.
Speaker 2:Well, okay, what about, let's get concrete about it, right? What have you seen, we're talking waivers in general, but maybe some of the listeners here, if they're, uh, in the middle of their morning jog, they're like, Hey, look, Nate, like what are the waivers? Right? So, Marshall, what specifically are some of the biggest changes you've seen? Right. Uh, keep it limited to virtual care laws, right? But the changes you've seen during the public health emergency, and if you had to look into the, uh, fortune, uh, the tarot cards, what do you think is gonna be, uh, remaining, uh, come this time next year?
Speaker 1:So let's, I'll start with Medicare, right? Um, you know, there's been push for many years on, you know, uh, loosening the reigns of, you know, providing telehealth services, you know, to Medicare beneficiaries. You know, Medicare has, you know, typically has a lot of requirements and restraints, um, you know, regarding, uh, you know, the delivery of telehealth services. And, you know, some of the changes that we've seen, um, during this public health emergency, one of'em is the qualifying providers, you know, who can provide, you know, telehealth services, you know, prior to the public health emergency. You know, there's a limited, uh, limited set of providers, you know, physicians, nurse practitioners, PAs, you know, nurse midwives, you know, psychologists, um, and, you know, registered dieticians, um, and who can provide those services that, that are reimbursed by Medicare, you know, during the public health emergency, it was opened up. It's, you know, CMS expanded the type of, the types of professionals that can furnish, you know, telehealth services from a distance site to include, um, you know, physical therapists, occupational therapists, speech pathologists. Um, and I think that's, that's one of the facets. You know, I think if I can look into a crystal ball, um, one of the changes that we will continue to see and continue, um, you know, post covid, and that a a lot of, you know, whether it be coalitions, providers, you know, even payers are pushing for, right? Because now, especially when we're talking about continuity of care, um, and value-based care, um, it, there's a lot of handoff between provider types, um, even within the telehealth community. And so you're not just, uh, working with a patient, you know, on just their, you know, their primary care issue. There may be an underlying behavioral healthcare, you know, aspect of that. Can you then provide that telehealth service, you know, into a Medicare beneficiary for their behavioral health issues? Or, you know, even pt, right? There's other, there's other pieces of it, you know. Um, and by expanding the qualified providers, then you'll be able to expand the, the services and, and who can, uh, receive, uh, or deliver those services. Um, another is the originating site, you know, and geographic, uh, requirements related to, you know, Medicare reimbursement for telehealth services. That's probably been the most restrictive. You know, it's the originating site locations, um, have, you know, really been narrowly tailored, um, to, you know, physician practice, office hospitals, critical access, you know, um, hospitals and, and rural health clinics and the like. Um, and one of the big things, and, you know, for telehealth is being a, a Medicare beneficiary or a patient to be able to receive care in their home, right? And so with the, uh, with the change or the relaxation during the public health emergency, that's one thing that's opened up. Now, the home, the patient's home, um, the beneficiary's home is, you know, essentially an originate site. Um, you know, they can receive that care in the home, and the provider who's delivering the care can now be reimbursed. Um, you know, by Medicare, this is a huge, there's, you know, this is a huge sticking point. This is a, you know, there's a huge push to keep this in place, um, going, going forward. Um, it, it probably is the most restrictive, in my view, um, the most restrictive requirement. And so I think we'll see in, there's been a push even at the federal level there. There's, we'll see this probably cemented going forward, you know, post covid. Um, there are other things, there's other waivers we've talked about licensure. Um, there's a, there's kind of a, a, a dispute right now, um, just, just this past week or, you know, there, the federal government is, wants to push out, you know, basically that there's gonna be kind of a blanket waiver of licensure, you know, for, you know, physician licensure or healthcare, you know, provider licensure. And, which is, uh, I mean, there's a lot of issues with that, right? But it's, you know, licensure is a state-based, um, regulatory, you know, issue. It's not a federal issue. And so, um, whether we see, you know, there's a, a continued push from the federal government on that, um, I don't think that's something that we'll see cemented where there's a blanket licensure for all physicians or even other provider types. I mean, think about the trickle down effect. You know, we<laugh>, we're, we're two lawyers here, you know, and, you know, who have to be licensed in, you know, various states. Um, you know, if there's a push for healthcare providers to be, have a blanket federal license or, you know, regime, why can't lawyers be the same way? So I think, you know, that's one thing I don't see as sticking. Um, dea, uh,
Speaker 2:Well, wait, I interrupt. Oh, yeah. It's different. Cause the lawyers, we get to write the laws. So, I mean,<laugh>, but no, you, you raised a good point. And if there's anyone listening who's like, uh, hey, uh, my client, they, they say, we, we wanna put, uh, hire you to help with, uh, a federal, uh, exemption type of a thing. The closest para, here's what you could look at. Look at what, uh, the rules came out when there was proposed and some bills for Medicare to make, uh mm-hmm.<affirmative> Medicare not require like an exemption which failed, uh, you could look at for the VA's Anywhere Care Act, if you read the pre the commentary to the regs, it was like a tortured interpretation to try to claim it as the federal property, right? Until, uh, Congress acted to make it by statute. But the call closest parallel, uh, parallel would be the Sports Medicine Licensure Clarification Act, which allows sports medicine doctors to be exempt as long as they're licensed in one state. And I talked to the lawyers in lobbyists who handled that thing, and they said it was years of lobbying and, um, right. Getting people on board. So it's a heavier lift than you might imagine. But those would probably be three places to look.
Speaker 1:Yeah, I think, I think the one place we, we will see on the licensure front, and, and kind of what we're seeing going forward is now to be able to mobilize, you know, uh, healthcare providers, you know, throughout various states, you know, fairly quickly. I think on the state level, we'll start to see processes change. We may see some, uh, rec more reciprocity between states. So I think we will see some changes on licensure. It's gonna be at the state level. And I think, you know, but one thing to keep in mind is that, you know, as, as outside counsel, we need to make sure that as we're counseling these, um, these clients who are scaling, um, you know, over time, you, you gotta be cognizant of kind of where those changes are happening and what is the kind of easiest pathway for, uh, a, a provider and for a client to continue, um, to, to continue to get their provider's license, right. Um,
Speaker 2:If anything is gonna happen with registration, so not, not the licensure, but the dea,
Speaker 1:So DEA registration, you know, I, if for those, uh, who don't know, I mean, during the Public Health Mercy, you know, the dea first off, there was a, there was supposed to be a special, uh, registration process, right? For providers to be able to prescribe via telehealth, you know, without an in-person, um, visit. It was a, you know, it, it, you know, one of the exceptions to the, the in-person, uh, the initial in-person visit, um, requirement, right? Um, I, I think we'll continue, there's still a continued push to, to get that special registration process to go through right now because of the public health emergency. Um, there's another exception for, obviously for public health emergency. So right now, providers can prescribe without an initial, you know, consultation, you know, via telehealth. Um, I don't think, I mean, this is me trying to, you know, looking through a, a crystal ball. I don't think that will continue, you know, you know, post the public health emergency. I think there's gonna be a continued push to get the special registration process finalized. I mean, the, it's already been in works and, you know, it is essentially a pathway for not only the DEA to really be able to hone in on, you know, you know, those DEA registered physicians and kind of keep accountability there. Um, but there's been a lot of work that's been put into that from many stakeholders, right? So I don't think we'll just see a blanket waiver that, you know, now, you know, providers can, you know, a as an initial consultation, you know, be able to prescribe, you know, uh, controlled substances, right? I mean, and I, I think there's, there's quality of care, you know, components and, you know, issues with that. And, you know, depending on what type of provider you talk to, you know, there, I think there's varying, uh, varying degrees of where they kind of fall on on that. Um, but I think that's one of the things we won't see. We won't see a blanket waiver kind of be cemented going forward, but we will see a registration proc, uh, you know, solidification of the registration process. Um, but even down to the state level, you know, there's still state level changes that need to happen even with that, right? And so, one of the things I, I mean, I don't see in my, you know, looking in a crystal ball, you know, how the states are, are gonna handle, I mean, there's obviously, right now there's also a waiver on the state level, right? For, um, for state level registrations. But those need to be cemented as well, you know, going forward so that the federal process, you know, matches up to state processes in, in some way. Um, and I think the processes, it is gonna take a little bit of time. I think the processes will be solidified, and that's, that's kind of what we're gonna see. I don't know. What, what do you think on the, especially with controlled substances, is, is, and prescribing controlled substances is always a big issue, especially in, um, you know, substance abuse disorders and, you know, behavioral and mental health, you know, how do you foresee that, you know, coming out, you know, after this, uh, pandemic?
Speaker 2:Yeah, I mean, this, it needs to get done. Um, the, everyone's focused on covid, rightly so, but, um, the opioid crisis continues, uh, to grow, right? Right. And, and people are taking their own lives, and it, it is, it is still, uh, an emergency. It was declared a public health emergency before covid came on the scene. And I think that, uh, we're seeing a lot more, uh, providers, either brick and mortar or virtual only, uh, moving into the s u d substance use disorder treatment realm. And, uh, states are, uh, uh, allowing a lot of this to be done virtually. There's even, uh, it depends upon the drugs that you're prescribing mm-hmm.<affirmative>, I, I, and I think it's important, I think the, uh, Ryan Hayak changes, uh, and for listeners here, the, the Rhine Hay Act basically requires a threshold one-time in-person exam between the prescriber and the patient before you can use telemedicine to prescribe it's a federal law. And, uh, there was, you know, that there's been moving for changes on that for years. It's, uh, being held up right now in the ags office for review before it goes out. I still remain optimistic that eventually that that will, uh, get published. The DEA has, uh, signaled that it, you know, it supports the use of telemedicine in connection with clinically valid prescribing practices. Mm-hmm.<affirmative>, you know, uh, and we know that like, you know, uh, medication or medication assisted therapy is, is an important component of, uh, treating people for, um, uh, psychiatric needs. Uh, so I, I don't think we should remove that tool from, from the clinician's quiver, so to speak. Uh, there is difference between that in prescribing opioids or other drugs that have high risks of, of diversion or clinically inappropriate practices. So I think the DEA actually has done a really good job of exerting its own enforcement discretion historically on this issue to target, uh, internet pharmacies and prescribers that are doing really just atrocious or substandard practices, uh, compared to those that are using it in a, uh, reason clinically valid way. Yeah. The other thing on these waivers, though, uh, again, yeah. Uh, your outside council, you're advising one of your clients, uh, it's not as cumbersome or bad or complicated as you might imagine. There are different, uh, ways to like navigate it. For example, um, if you are representing a telemedicine group, and they're more of a b2b, or a B2B to C model, where their contracts are with hospitals, let's say mm-hmm.<affirmative>, they, uh, issuing a, an order for inpatient administration of a controlled substance is not a prescription under the deas uh, rules. So that's because the patient is, uh, not taking it home, right? It's an, it's an order for inpatient administration of the drug so that it, it does not, uh, fall under the Ryan Hayk umbrella and the, um, prescriber herself could, uh, stand in the shoes of the hospital's institutional, uh, DEA number, um, for purposes of the registration. So there are ways to still accomplish, like multi-state and virtual care services mm-hmm.<affirmative>, but in a true direct to consumer model. Yeah. You'll, you'll need to have those state registrations and Ryan Hayak compliance.
Speaker 1:All right. All right. Uh, just quickly, what about, what, what about phone calls? Phone calls has been, I think, has historically, but has, has come to come to light even more on, you know, whether that's gonna be something that's gonna continue going forward to be waived at, you know, telehealth services, you know, can be, you know, provided via audio, only phone calls, you know, what do you, what do you see in that, um, aspect?
Speaker 2:I'll tell you what, of all of the DEA waivers that came out, or, or not, dea, of all of the covid related waivers that came out and changes, uh, phone calls surprised me the most, uh, for, uh, in two different buckets. One is like a, just a scope of practice for telemedicine, and then the other is coverage and reimbursement on the scope of practice. Pretty much every state is very clear that a telephone only, right? A phone call only is not an acceptable modality to create a doctor-patient relationship. Uh, while you, for existing doctor-patient relationships, certainly physicians can call their patients and speak with them, uh, for follow-up care or other kind of things, but not to create these new arrangements. A lot of states have waived that. And, um, some governors are trying to make permanent their executive order to allow phone only. That's very surprising to me. The second one is payment reimbursement. Historically, there are separate codes, C P T codes for phone only consults. And, uh, historically, the AMA has pushed to say, you gotta pay for these, right?<laugh>, these are legitimate medical services, and we should get paid. And, uh, Medicare has said, uh, two things. First they say, no, it's not cov not a covered service. And then they have said in their manuals, well, it is a covered service if it's considered an integral part of an otherwise covered service. Namely, if you, the phone call was like within 24 hours before of the seven days after a covered service, in which event, it's provider liable, meaning that you can't build a, uh, Medicare program, nor can you build a patient. You just have to eat it and, uh, pay for that time outta your overhead. And a lot of commercial plans have followed suit and, and just said, no, no payment for phone calls. That's changed quite a bit. And when they first waived it and said, okay, we'll pay for phone calls, great. And then Siemens says, wow, there's a lot more phone calls than we thought. And, uh, people are saying it, they're, they're spending 20, 30 minutes on the phone, let's increase the reimbursement rates for these calls. All that being said, in the proposed, uh, in the fee schedule, uh, physician fee schedule, proposed rule that came out last week, CMS said that they are inclined not to continue that, um, in, in 2021, which, um, I can see, uh, you know, for some things I could see both sides of it. Right. Uh, I, I, I personally believe that for telemedicine and virtual care, there's a lot of things you can do, uh, through Async, um, as well. But I, I, I think it, there's some importance of having some, uh, clinically relevant extrinsic medical information through which you can validate the veracity of the patient's responses. So maybe a phone call, uh, under the established code, uh, under the current codes are for established patients only. We'll see what they do. Um, but really with the proliferation of virtual care technologies and telemedicine apps and, you know, a secure base kind of zooms and Skypes and FaceTimes, uh, you know, it really shouldn't be that much of a barrier, I think, widespread for patients to use that type of technology as opposed to phone only.
Speaker 1:No, I, I agree. Look, uh, with the numerous number of digital health tools, even if you're talking specifically tele telehealth, um, there are other data points and, uh, you know, interactions that, you know, a lot of providers, um, have, whether it be before they even, uh, you know, have the consultation, the telehealth consultation, whether it be, you know, uh, the questionnaire that they received prior to, um, you know, some type of medical record or, you know, background information on the, on the patient, um, that helps with those data points you were just talking about. So, phone, I, I agree with you. Phone only it, it did surprise me, but, you know, going forward, I don't think it's gonna be a, a big thing. Um, and I do think it'll be scaled back, not only on the federal level, you know, for, you know, federal payers, but even, you know, commercial players, um, are looking at, they don't want to reimburse for phone only, um, when there are these other avenues to be able to connect with, uh, with patients and members.
Speaker 2:Yeah. And the other problem with phone only for what it's worth, it's still a fee for service based methodology. So, although it might be easier, right? Uh, I, I get it. Why it's time limited because doctors and patients are both fearful of get, of getting, uh, sick. But it is not, to me, it's not nearly as, um, exciting from either a payment model or a patient care perspective as these things like remote patient monitoring, chronic care management or whatnot, which involve, uh, phone, they don't require audio video. Right? Right. Uh, so that's what I would like to see doctors and hospitals providers look to more, rather than saying, Hey, keep paying me on a fee for service basis to use phone, phone only.
Speaker 1:Right. Well, let's switch gears a little, a little bit, you know, as legal counsel, you know, for our listeners here who are gonna be council, whether outside council or even in-house council. So a lot of these, uh, telehealth, you know, companies or even technology companies who are, you know, getting into the, the digital health space, you know, what should they be thinking about when advising these virtual care companies?
Speaker 2:Well, okay, one of the first things I,
Speaker 1:Very, very broad, very broad question. So there's a lot to cover just in that.
Speaker 2:Uh, yeah. Well, how about the, here's what I, I would, again, um, no, slight to, uh, our brethren who are privacy security experts, but I think the people just immediately think privacy and security for telemedicine. And, uh, they think then state medical board laws, and that's it. And that's like really, uh, myopic, really what you need to think about is the intersection of healthcare laws and e-commerce laws. Double that up, um, and then apply it across a multi-state footprint. So you're talking about, again, you have a company, let's say they're based in New York, certainly they'll be subject to New York state law if they're delivering care, uh, to patients in New York. Um, but then if they're also treating patients in Texas and Illinois and Louisiana and Florida, right? There's all these different laws that they're subject to concrete example, let's switch it up. They are in the state of California. No, this might not actually work, but let's just keep it simple. State of California, and which allows percentage based contracts, uh, on gross percentage of collections. And they say, we also want to treat patients in Illinois. Illinois doesn't allow that, right? So you can't have a model that works in one state, but doesn't work in a different state if you're operating in both. So how do you do that? How do you square that circle? You need to come up with models that, uh, are scalable and, um, across multiple jurisdictions. How do you do that? The best thing is just to talk to your client. Don't, uh, some, some, uh, projects you might get as outside council, Hey, I wanna do a contract with X, Y, Z. Okay, fine, I'll advise you. Or I have a, I want to do some sort of sales rep or marketing type of arrangement. Okay. I can advise you on it. Here though, when you're working with virtual care companies, I think it really needs to emphasize the importance of scoping it out at the inception of the work, and then understanding the client's strategy and goals. Like really, really understand it. It's, uh, some of these companies, their goal is gonna be to transform the way healthcare is delivered for a certain patient population. Other companies, their goal is to just try to make a bunch of money because they're venture capital or private equity back then they, they are involved in the healthcare space. Uh, but by understanding those differences, then you can advise them accordingly. Maybe those, the profit oriented ones are gonna need extra emphasis from you on, uh, hey, uh, you need to make sure that you're working with your medical advisors and, and physician owners and all that kind of stuff. Uh, I don't think it's appropriate or, or good for, for the industry as a whole, if the outside council will just say, Hey, I'm not a doctor. I don't even need to worry about that kind of stuff. Yep. You know, figure it out. Um, right. Because there's too much, there's too much growth in here that I think will be as outside council in a really good position to help influence the industry and make it, make it better. I would hate to see, and I know we've talked about this, uh, o other friends at, at, at firms who do this, we talk about it. We don't wanna see telemedicine turn into, um, get the impre Yeah. The impression that some, some home health and DME type sectors have got. How about you? What do you like, what are some of the things you do with, uh, brand new client? They're say, Hey, Marshall, um, we wanna hire you, uh, and your folks, uh, what, what do you do at the beginning of that?
Speaker 1:It, it, it, similar to what you were saying, we have a deep discussion on, you know, one, their business, um, you know, how they're gonna be delivering services, kind of forecasting and kind of pushing the client to look not only, you know, a few months out, if we're just, if they're a startup and a true startup, you know, let's look out the next year, where do you wanna be? And let's look, you know, if we can three to five years and, and where you wanna be. Because then when we're looking, um, down the road a bit, that's a good way to figure out where our starting point is gonna be. How do we structure their business? How do we ensure, to your point, if we're gonna be in Florida and then scale into Illinois, making sure that we have a structure in place that can be nimble enough to, you know, provide care in, in both places, right. And make sure all the back office, you know, administrative, you know, aspects of the, of the business work well together. Um, so you continue to be aligned and can continue to scale. Um, you know, one thing is, you know, we, we do at McDermott, and I, I know you guys do it Foley, but definitely encourage, um, others who are listening on here. I mean, it, it is a team effort of, you know, subject matter experts, right? You know, you know, we have our kind of, uh, things that we bring to the table, you know, in terms of our experience, but they're, especially for telemedicine and digital health in general, you know, there are facets of fraud and abuse, you know, corporate structure, FDA components, potentially privacy, security, you know, pharmacy, you know, relationships that, you know, you really need to have, depending upon the client, depending upon their business, you wanna have the subject matter experts able to, um, be at the table to have that conversation, especially early on, because now, again, we can continue to hone in and help the client structure their business with all these various facets in place. You know, we've, I've definitely seen instances where, um, you know, thankfully we, we are at a, a place, you know, firms that, you know, have, you know, national, um, recognition and and large scale, but even, you know, solo practitioners and smaller, um, firms, you know, need to be able to tap into even their subject matter experts so they can get a full footprint and help clients kind of grow and, and see these different facets of their business. Um, because it's not, and to what we were talking earlier, there's so many changes both on, on the federal level and a state level. You know, no one person can really keep a hold in, you know, of all these changes that are happening, um, that affect these digital health, you know, companies. Right? Um, I think the other thing that if you thinking about is making sure, you know, there's, there's oftentimes there may be a client that comes in and says, you know, Hey, I see such and such company, um, they're doing it this way, and I want to be them. That's how I want to, you know, structure our business. And like, you, you have to have the conversation to see, okay, well what, what are you, what are the services they're providing? Because while these, you know, very large telemedicine and telehealth companies and digital health companies from a consumer per, you know, point of view, they seem beautiful and streamlined, but there's a lot of, you know, back office, you know, components to it that are working in harmony that took some time to kind of craft and, and grow and scale. And it, it, it's not a necessarily an easy process. It's, it's a manageable process, but it's not necessarily easy process that you can just create a copy and say, okay, this, we're dropping it into our business, and that's how we're doing things. Um, so that, you know, having those conversations early is, is always good. And bringing the folks to the table who need to be at the table to help structure and, and kind of hone in the business and bring the providers to the table as well as the business folks and marketing altogether, um, it is always a good thing.
Speaker 2:Yeah. I mean, so for those listening, right? Don't just think that, uh, you look at the website of some other company, took the terms you use, and, um, it's gonna look really slick. It's gonna look beautiful, and it's gonna look simple if they're doing it right. And that's because they're, they're principles in software programming in Silicon Valley saying, uh, you need, uh, in healthcare designed to delight the user, right? Make it not just easy, but, but an an enjoyable user experience mm-hmm.<affirmative> because they have that, it's a, it's competitive edge, uh, as well. But, um, it's the opposite of how normal, like a hospital or medical center is like a morass of, uh, paperwork and administrative complexity and the almost bail, the shouldn't, right? Right. That doesn't mean that behind the scenes that these, uh, structures and the arrangements are, are, uh, just simple, right? They're, they're very complex and they're nuanced if they're done right to ensure compliance. So, uh, it's a, don't, don't fool yourselves that it, it's, it's so easy. Certainly you can do it as a skilled legal counsel, but what would happen is if you just take a look at one or two of those and then, um, copycat it, it's like that movie with Michael Keaton multiplicity. When you're making a copy of a copy of a copy, it starts to get really fuzzy at the edges. And then all of a sudden what was, particularly with these multi-state, uh, technology enabled healthcare companies, um, it's a, it's a cu cumulative effect of a lot of different little either mistakes or gaps or deliberate risks that all of a sudden you look back and you're, you know, um, six, uh, instead of you thought you were just like six inches out, you're actually six feet out. Um, and that will make a really big difference. I, uh, one thing that our team does is we'll advise clients on the front end with their product folks, uh, hey, these, this is what you have to include in your, uh, direct-to-consumer online user experience to be compliant with, like, uh, federal click sign stuff, different, take telemedicine, uh, uh, uh, credit card, merchant account, all all these different things, right? So we, they give'em the information ahead of time. They program out their wire frames, or they design their wire frames program out the beta, then we do a walkthrough of their ux, then they iterate, and then we do another walkthrough of that, and, uh, try to make sure that we're giving like, live real-time advice, uh, stress testing it. Otherwise, uh, they'll just make it too simple and they'll take gaps. And they say that that happens because they want to, uh, accelerate cart to checkout or try to make it an elegant, easy experience for the patient user. So there's always gonna be that tension, and as outside counselor, you can be that, uh, source of, of expertise to advise them on both.
Speaker 1:Uh, same, same here. We definitely do, do that same and have that same process. And I mean, there's definitely multiple checks that we, you know, hope to have with, uh, with our clients, um, in that same way. Now, let's, let's kind of use that though. So for those who may do, whether it be make a copy of a copy of a copy or, you know, who are just coming in, they're, they're a brand new startup, um, or an entrepreneur, you know, obviously we know for the past many years there's been, you know, do og uh, DOJ and oig, you know, enforcement action and settlements, you know, that have involved, you know, telemedicine companies. So, you know, as outside council when, uh, assessing a potential client, you know, who wants to get into telemedicine, you know, what are some of the things that lawyers need to be looking at to distinguish between kind of compliant entrepreneurs, you know, those who are really thinking about and focusing on risks and kind of, of growth within the regulatory scheme and some of the more higher risk companies who are, you know, kind of cowboys, you know, coming to the table.
Speaker 2:Great question. Because I think you have an ethical obligation to, to, you know, as lawyers to make sure that, you know, the companies you work with are doing it, right. It's a different, if they hire you after getting in trouble and, and you're a white and white collar and you're trying to, uh, defend them, but building out on the front end, right? You wanna make sure that, that they're doing it right, not just for your client, but, but for the industry patients at large. So here's the easiest way that I found to, to sniff out, uh, that in like a 30 minute intro call, you just ask them, uh, what their mo rather than telling'em lawyers like to talk, right? But rather than just telling them what you think it should be, listen to what their mo their model is. And the two things that you wanna look for is what is the flow of money? So they say follow the money, but understand the flow of the funds. It's always gonna start with the patient or maybe the payer, right? But trace out where it all goes and where it ends up, and then follow the flow of the patient user experience. That's gonna tell you pretty much everything you need to know from a basic fraud use perspective. You'll then, uh, the reason is these companies are building out what's known as full stack or end-to-end user experiences that integrate not just, oh, uh, the physician services, but maybe management, or there could be a marketing company, um, uh, Miller or Pharmacist Fulfillment Laboratory, possibly dme, right? And so you, you, you map it all out and then that's when you're gonna be able to see, oh, here's, here's fee splitting, here's kickbacks, here's corporate practice violations, right? And, uh, but by asking the clients to articulate it, you will get a bead or you'll get a read on how sophisticated they are and what they care about. And then when you'll make some suggestions saying, I think you'll need to do it this way or that way. And if they say, that's impossible because that, that will destroy our business, or nobody we know does that, then you know, that<laugh>, that might be an issue. Like, for example, if the patient is never paying for anything because either copays are always waived or, um, there's just zero expense it costs to the patient. Like, uh, in order for them to get the, the products or the genetic test or whatever it is, that should be a red flag. What I don't do is I don't say, oh, oh, there's no federal dollars, then it's fine. That's, that's not a way to<laugh> to go about doing it. Like 40, 45 states have all payer anti-kickback
Speaker 1:Statutes. Exactly. Exactly.
Speaker 2:Commercial reimbursement and Medicare is accelerating coverage. It's such a rapid rate. The next thing you know, like your cash only model could in fact be covered under Medicare and subject to the mandatory claim submission rule. What about you? What do, how do you snuff them out?
Speaker 1:I think it's the same thing. Having that initial conversation and really kind of get a beat on, um, kind of where they see the business and the product and service, you know, at, at the outset and kind of where they wanna scale to. I think to, to your last point, so one of the things in thinking about, it's like, you know, a lot of people don't know, um, coming to the table, the various corporate practice roles, right? And which, you know, obviously vary state by state. Um, and like if we're scaling a, you know, or, or the, the company is looking to scale a, a business, um, both in a corporate practice state and then, you know, in a non, uh, cplm state, having the conversation of, well, well, can you provide the service, right? Can you provide the service in a corporate practice state? Have you thought about the structure? Or what do you think about the structure? And I think to your point is they say, no, we can't, we can't align ourselves in like a physician practice management structure cuz that's gonna kill our business. And, you know, you advise them on kind of the reasons why the structure is there, you advise them on pathways. Um, but if they're like, no, that's not what we want to do, that's not how we kind of scale things. And you kind of know that's, it's a higher risk company that, or, or entrepreneur who may not be thinking about all the various passes and nuances, um, uh, right on with following the money. That's the easiest way to kind of snip out, you know, some of the fee splitting and, um, and kick back, uh, you know, potentials, right? Um, within, within any structure. Um, and you, you know, for all those listening, you, you advised your clients on, okay, in this state, you can do it this way, in this state, you can do it this way. And here's potentially a pathway where it makes sense for all states, right? Or many states. Um, and, and how the, having the, you know, specific user experience and how the money is, is paid and flows. I think the other thing, you know, having the conversation early on of also, do you, do you think that you'll expand your business beyond, you know, uh, just a self-pay model, right? I mean, you mentioned, you know, many states have an all payer, uh, kickback or feas, you know, kickback the wall, right? You know, for those that don't, it's like, well, if you're taking self pay, you know, at the outset, do you think you're gonna expand into, you know, commercial reimbursement, right? Do you think you'll expand services into, you know, potential Medicaid or Medicare, um, you know, coverage services and, and, you know, enroll in Medicaid and Medicare, so potentially to receive reimbursement, because we need to be thinking about that at the outset, right? And again, having the, the structure and flows work in a fashion that the company is nimble enough to do that. Um, it is always good to have those conversations early, and that way you can advise the company on how it should structured itself, um, you know, to be able to then take on various types of, of payers, uh, and reimbursement. Um, and if there are companies that they may say, Hey, we'll we'll never do federal, um, you know, be enrolled in Medicare, right? We're not gonna provide that level of service. Well, you're like, okay, that's fine. Um, but then if they're really trying to, uh, take on a lot more risk with it, whether it be the type of arrangement that they have, you know, between that their company and another partner or you know, how they structure their business, you can kind of get a beat on kind of where their risk tolerance is and whether it's kind of too far to the, to, you know, to the right, um, you know, you know, to take on as the client. So
Speaker 2:Yeah, and when you talk about these multi-state ones with, with high, high, high growth and scale every, we kinda have different philosophies, right? But I don't like building it out right up to the line on a state by state basis. I try to, uh, say, okay, let's distill all of the 50 state logs and rolls and put something together that, um, is more, uh, conservative from a, for an abuse perspective, basically building out as the federal dollars applied, uh, so that you can, um, uh, know that you're, uh, adhering to the different state laws without having to do a state by state. But yeah. Um, you know, the other thing, one of, one of my, uh, our privacy, uh, healthcare privacy, big data lawyers said something like, if, uh, if there's uh, no pri no cost for the product, you are the product
Speaker 1:<laugh><laugh>.
Speaker 2:That was interesting. But, um, so we, I mean, you mentioned that you mentioned some of the, uh, some of the corporate, uh, investments stuff in Yeah. I know your team does a ton of, of, of private equity, um, and, uh, deals with corporate practice stuff. What, what are you seeing on the funding side for digital health, whether it's I p o or p uh, private equity or, or venture capital?
Speaker 1:I mean, we've seen, I mean, there's been continued, you know, focus and, uh, I think, uh, an uptick on, um, you know, digital health as a general matter. Um, you know, venture capital, uh, funds are definitely, um, you know, backing a lot of startups. We're seeing, you know, bigger seeds and, and series A rounds, right? Um, into a lot of these tech technology companies, um, and, and telemedicine companies, telehealth companies. Um, and so it, it, it's a growth area and I, I think the, uh, sponsors are, are really starting to see that, um, on the private equity side. I don't think I've seen, uh, the same level of investment, um, from private equity, um, as we've seen in venture capital, um, directly into a telemedicine, uh, or telehealth company. But I, well, we have seen is a lot of investment in, you know, physician provi, you know, you know, practices and providers of, of various types who have a digital, um, health component or telehealth component to their practice. You know, it's, it's more of a Bolton interest, um, within private equity. Um, I, I think we'll continue to see that, um, it's, you know, ways for private equity to invest not only in a practice, but then utilizing, you know, telehealth as a kind of multiplier and to scale, whether with that investment or across a platform. Um, and yeah, I think we'll continue to see, see a, a lot more interest in investment opportunities. Um, as you know, the reimbursement changes, you know, in telehealth and in digital health as a general matter, um, you know, it's been, obviously we had the big, uh, ip, not, not just ipo, but merger, you know, Teledoc and Livongo, um, just recently, which is public. Um, I think, we'll, I think we'll continue to see, you know, certain companies bubble up in ipo, um, and we'll see some activity there. I mean, it, it, it's an area of growth. You know, you, you see this, right? Telehealth and digital health in general is an, is definitely an area of growth, and there's a lot of focus on it right now. So I think we'll continue to see, you know, upticks and funding, um, you know, from various facets. I don't know what, what about you, what are you guys saying on your side?
Speaker 2:Well, um, unless the internet breaks and we go back to, uh, uh, entirely low tech, disconnected society, my plan is to, uh, continue doing telemedicine digital health work for the rest of my career. Uh, I, I think there's a, I think the pathway is that long and, um, I think it's very promising, so I'm bullish on it.<laugh>. Yeah,<laugh>.
Speaker 1:So one, I think one thing of, one thing with, with funding obviously, and, and, you know, advising, not just, you know, I advise, you know, obviously many telehealth clients, but I work with a lot of, you know, private equity and, and venture capital clients as well, and kind of evaluating, you know, various, you know, investment platforms, whether it be, you know, position groups in general who maybe have a, uh, a technology, you know, you know, resource or product or service. Um, but I know one of the, one of the things that we're always looking at is reimbursement. You know, how is reimbursement landscape kind of, um, what is it currently and how is it changing? And that way we can project revenue in the, like, you know, you know, with the increase of adoption of digital health tools and telemedicine, you know, how do you see reimbursement continuing to change? Um, you know, with this increased adoption,
Speaker 2:It's gonna get, it's gonna grow. We're gonna see more and more coverage, um, of both from Medicare state Medicaid programs as well as commercial payers. We can, we know we're seeing it on the Medicare side because, uh, a, there's been a bunch of bills, uh, in Congress to, uh, eliminate those restrictions from the Social Security Act B uh, CMS itself. And their proposed physician, uh, fee schedule rule has, has shown significant increases in the covered services, as well as uses of virtual care, like allow, allowing direct supervision to be fulfilled, uh, through audio, video, and, and for incident to billing, uh, other types of, uh, uh, remote remote access. See the White House's executive order that came out, uh, earlier this week, uh, again, pushing CMS to further, uh, increase, uh, coverage of, of virtual care services known on the Medicare side. Now 50 states, uh, all 50 states have some sort of coverage for virtual under their Medicaid programs. Um, earlier this year, the Medicare Advantage regulations went into effect significantly broadening the ability for MA plans to cover all sorts of virtual type services. And it's not even defined like telehealth. It could, I think you look at that, you could do cool AI chat bots and stuff and count that as medical spend, depending upon how they have it set up. And then on the commercial side, you have about 40 states or so with some law on the books requiring commercial health plans to cover services delivered via telehealth. If that service was covered, uh, in person under a patient's health benefit program, and more states will pass those laws. I can say, you know, we, I, I've helped draft some. So we have clients that are, uh, that we're working with now saying, Hey, we want to, uh, uh, pass new legislation. So you, I guarantee you will see more, uh, coming out, um, in the next 12 months for anybody out there listening if they want a, a good report, we published a, uh, it's a total 50 state survey. It's all, uh, like all the pinpoint sites are out there, it's free, just like Google, you know, uh, fo e telemedicine, 50 state reimbursement survey and you can use it, uh, with just, we put it out there, uh, for other lawyers and, and public affairs people to use as a good library resource, but we're gonna see a lot more expansion of reimbursement.
Speaker 1:Yeah, I, I, I agree. I think especially on, it's interesting cuz um, on the commercial payer side, I mean, you know, private payers have, have always had, um, you know, more flexibility to cover, you know, services. Right. Um, I think we'll continue to see an increase in uptick in, um, in them covering, you know, various types of telehealth services, um, or in digital health, you know, services, um, you know, working with, uh, several of our, our payer clients, um, you know, we've, that's, that's one thing that, you know, we've definitely seen right? Is, is, is an uptick in them saying, you know, we're, how can we best connect with our members? Um, and with the continued adoption of telehealth, you know, that's a, that's a way to continue to connect with members and provide them, you know, much, much needed care. So I, I agree with you. We're definitely gonna continue to see an uptick, um, and a growth in the types of services that are, that are covered, you know, going forward,
Speaker 2:I'd say, Marshall, this is really fun. I'm glad, I'm glad we spent the time
Speaker 1:Everyone listening. Thanks. Thanks for joining us. This has been great.