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Top 5 Telehealth Law Predictions for 2021

With 2020 officially behind us, what does 2021 have in store for telemedicine and digital health policy? A year ago, our team predicted 2020 would bring “notable expansions in Medicare and Medicaid coverage” and “the reimbursement landscape looks promising for virtual care services.” Looking back, that was an understatement (if an easy one). Below are five new predictions for what legal changes telemedicine and digital health companies might expect to see this year.

1.  Licensing: More Efforts to Increase Reciprocity and Reduce Barriers

In an effort to balance workload nationally and expand access to health care practitioners during the Public Health Emergency (PHE), many states temporarily suspended medical licensing requirements. As these temporary waivers begin to sunset, some state legislatures will seek to make the waivers permanent, allowing practitioners licensed in other states to deliver telehealth services across state lines, provided the out-of-state practitioner follows local state practice standards. While this may be a topic of discussion among policy shops, we expect few states will actually enact such changes in 2021.

Federally, the PREP Act allows practitioners to deliver telehealth services across state lines under a licensure exemption for COVID testing and certain limited “covered countermeasures” (e.g., treatment of COVID-19 infections). The PREP Act also grants certain immunities and protections, preempting state laws during the PHE. Given its Constitutional complexity and political nature, interstate licensing does not have a widely-accepted “solution,” nor does it have the bipartisan support seen in other areas of telehealth. Licensure will be a friction point between virtual care stakeholders and traditional practitioners invested in brick and mortar locations industry. The status quo (i.e., profession-specific interstate compacts and state-by-state patchwork legislative efforts) has left many digital health stakeholders unimpressed, frustrated, and increasingly searching for an alternate solution. Yet, a federal “top-down” preemption approach will be perceived as an unconstitutional encroachment on states’ rights under the 10th Amendment. Keep an eye out for a third channel to thread the needle, perhaps tying federal funds (e.g., Medicaid or COVID relief dollars) to state adoption of certain licensure waivers, enticing states to opt-in to interstate licensure reciprocity rather than federally compel it.

2.  Modalities: Technology-Neutral State Laws that Prioritize Quality of Care.

In 2020, many states enacted new telehealth laws and rules to change prior practice standards, allowable modalities, or prescribing requirements. Changes included eliminating face-to-face exams, practicing via telephone only, or waiving modality prescribing restrictions on telemedicine. Some of these changes were made by legislation while others by executive order or regulation. Many of the changes were on a temporary basis during the pandemic (with expiration dates that, confoundingly, often did not match the federally declared Public Health Emergency date). These waivers created a telehealth regulatory environment that focused less on technical modalities of care delivery (e.g., audio-video vs. asynchronous) and more on meeting the standard of medical care for a given patient. Aiding in this effort, the American Telemedicine Association (ATA) published model policy language for state telehealth rules, to serve as a reference tool for best practices. This trend towards technology-neutral telemedicine laws will continue in 2021, with stakeholders emphasizing the importance of medical standard of care and clinical quality of services, rather than proscriptive modality requirements.

3.  Privacy: Greater Sensitivity to Patient-as-Consumer in Digital Health

Telemedicine and digital health companies handling patient information on substance use disorder treatment can expect to see favorable changes to HIPAA laws, designed to encourage easier sharing of patient data, particularly for treatment purposes. Similar changes are anticipated to regulations under 42 C.F.R. Part 2 to ease payment and health care operations. Telehealth companies should also keep an eye on state data privacy laws. More states are expected to enact their own consumer laws to protect data privacy, as California did with its California Consumer Privacy Act. And the Federal Trade Commission (FTC)—the nation’s top federal privacy regulator—will continue enforcement investigations against organizations that violate consumer privacy rights. Given the proliferation of new telehealth services and startup companies launched in 2020, increased privacy regulation is likely to occur in 2021.

4.  Enforcement: OIG/DOJ Will Build on Prior Investigations

Building on its 2019 and 2020 criminal and civil investigations, HHS OIG and DOJ will continue its takedown of companies engaged in “telefraud“: scams that couple aggressive online marketing tactics with telemedicine services to serve as a conduit for illegal kickback arrangements with pharmacies, DME suppliers, and laboratories. Most telemedicine enforcement actions to date have involved kickback schemes and billing for medically unnecessary equipment and diagnostic tests, and few have centered on billing and coding of telehealth professional services. The ATA has commented how these companies do not represent the industry at large, and issued a letter articulating hallmarks of legitimate telemedicine providers.

With many traditional in-person providers having newly (and quickly) moved into telehealth in 2020, along with new temporary waivers of billing and coding rules and a relaxed regulatory environment, the future will likely see more Medicare audits and overpayment claims of telehealth professional services. Some niche areas of enforcement may be marketing/referral arrangements with pharmacies and laboratories, waivers of patient financial responsibility, ordering high-cost genetic tests, billing for practitioners located outside the United States, and arrangements seeking to take advantage of the global pandemic.

5.  Payment: Continued Expansion of Telehealth Reimbursement

The pandemic compelled health plans, both government and commercial, to remove prior restrictions on telehealth and expand coverage for virtual care at a rate previously unseen. The new policy changes on Medicare reimbursement followed the previously established pathway of coverage, but the pace at which they were made was stunning. CMS also introduced nearly 100 telehealth service codes covered on a temporary basis until the Public Health Emergency expires. Much of 2020’s reimbursement expansion will continue through 2021, as commercial payers follow CMS’ lead. Remote patient monitoring still has plenty of room to grow. Despite the recent payment expansions RPM has seen, it has yet to have its “breakout year” in widespread use and payment.

Employers will explore more telehealth services for employees to deal with the stress of the pandemic, focusing on tele-primary care, behavioral health, and specialty care like fertility. As more traditional providers offer telehealth services in addition to in-person care, we may see telehealth increasingly paid on a fee for service basis (rather than a PEPM enterprise model). At the same time, value based models focusing on or centered around virtual care, including bundled payments and shared savings, will grow beyond the pilot phase, as providers begin to “own” certain care pathways.

Time will tell how these five predictions will hold up over the next 12 months. What is certain, however, is that telemedicine and virtual care continues to be one of the fastest-growing areas in healthcare.

What You Need to Know about the Corporate Transparency Act

On January 1, 2021, Congress passed the National Defense Authorization Act for Fiscal Year 2021, which includes the Corporate Transparency Act (the CTA).1 The CTA requires all U.S. businesses to file “beneficial ownership” information with the Financial Crimes Enforcement Network (FinCEN). In sum, the CTA is designed to ban the anonymous shell companies that criminals and certain foreign officials use to hide and move corrupt proceeds and other illicit financing.

The CTA is the first significant update to the U.S. anti-money laundering laws in 20 years and gives FinCEN significant authority to adopt necessary regulations to implement the provisions of the CTA.

The CTA’s Key Provisions

The CTA requires companies in the U.S. to file a report that provides the name, date of birth, current address, and unique identification number (from a passport or driver’s license, for example) of the company’s “beneficial owner(s)” to FinCEN, a bureau of the U.S. Treasury Department. This information must be updated every year to reflect any changes.

Reporting Requirements

For purposes of the CTA, the reporting requirements are broad and apply to existing corporations, LLCs, and other similar entities as well as to new entities when they are formed. The CTA, however, provides exemptions for larger companies, heavily regulated companies, and companies that already provide information to a relevant government agency. The CTA explicitly exempts:

  • Companies that employ more than 20 people, report revenues of more than $5 million on tax returns, and have a physical presence in the United States;
  • Most financial services institutions, including investment and accounting firms, securities trading firms, banks, and credit unions that report to and are regulated by government agencies such as the Securities and Exchange Commission, the Office of the Comptroller of the Currency, or the FDIC; and
  • Churches, charities, and other nonprofit organizations.

Beneficial Ownership

Under the CTA, a “beneficial owner” is an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise:

  • Exercises substantial control over an entity; or
  • Owns or controls at least 25% of the ownership interests in an entity.

There are five exceptions from the term “beneficial owner”:

  • A minor child, if the child’s parent’s or guardian’s information is otherwise is reported properly;
  • An individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual;
  • An individual acting as an employee whose control is derived solely because of employment status;
  • An individual whose only interest in the entity is through a right of inheritance; and
  • A creditor of the entity, unless the creditor meets the requirements of a beneficial owner.

Applicant

The CTA defines “applicant” broadly as an individual who “files” an application to form an entity in the U.S. or, for a foreign entity, an individual who “registers or files” an application for the foreign entity to do business in the U.S. The terms “file” and “register” are not defined in the CTA, and this is an area where FinCEN is expected to provide relevant guidance.

Timing for Compliance

The CTA contemplates different timing requirements for compliance based on the stage of entity formation and changes in beneficial ownership. The timing requirements are as follows:

  • Entities formed after the FinCEN regulations are effective must file this information at the time of formation or registration;
  • Entities existing before the date the regulations are effective must report this information, in a timely manner, and not later than two years after the effective date of the regulations; and
  • A reporting company must update the information provided to FinCEN upon a change in beneficial ownership.

Data Storage and Access

The CTA contains numerous provisions regarding FinCEN’s data protection. FinCEN must store the information received in a private database not accessible to the public. Under the CTA, this information may only be released to:

  • A federal, state, local, or tribal law enforcement agency conducting an active
    investigation;
  • A federal agency making the request on behalf of a foreign law enforcement agency under mutual legal assistance protocols; and
  • A financial institution conducting due diligence under the Banking Secrecy Act or USA PATRIOT Act – with customer consent.

The information is not available to the general public, nor can it be queried under the Freedom of Information Act. The information may only be used for law enforcement, national security, or intelligence purposes.

Penalties

Violations of the CTA carry civil penalties of up to $500 for every day the violation continues and criminal fines up to $10,000 and/or imprisonment for up to two years. The unauthorized disclosure of information collected under the Act carries the same $500-per-day civil penalty but includes a higher criminal penalty of up to $250,000 and/or a higher maximum term of imprisonment of five years. Unauthorized disclosure includes both a disclosure by a government employee and disclosure by a third-party recipient of information under the CTA.

What Does This Mean For Me?

The CTA will impose new burdens on many entities operating in the U.S and is likely to have significant implications for foreign and domestic businesses. Clients should be aware of these new requirements and continue to monitor FinCEN’s regulations to further understand the full extent of their reporting obligations. Required compliance with the CTA does not start until January 2022, the deadline for Congress to enact the regulations. All companies potentially subject to the CTA should assess their application and, where appropriate, enhance their compliance processes to verify that the required information is being collected and reported to FinCEN in accordance with the CTA.

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