Contributor: Lisa W. Clark, JD’89
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Telemedicine provides enormous business opportunities, but regulatory due diligence is a must. While there is no question that telemedicine is here to stay, the legal landscape is fluid. Even though many payers are reimbursing for telemedicine services, a physician cannot practice telemedicine if governing State law prohibits it. As States grapple with how to regulate telemedicine, all eyes are on Texas, where an interesting battle is in play between a telemedicine company, Teladoc, and the State Board of Medicine involving practice of medicine requirements, unlawful agency action, and even antitrust law. Teladoc’s antitrust claim has certainly raised the ante as the telemedicine market defines itself.
A preliminary issue is the definition of telemedicine. According to the American Telemedicine Association, “telemedicine is the remote delivery of healthcare services and clinical information using telecommunications technology. This includes a wide array of clinical services using internet, wireless, satellite and telephone media.” Telemedicine is sometimes called “telehealth” (by Medicare) and the term is closely related to “digital health,” “e-health,” health information technology (“HIT”), and mobile health (“mHealth”) among other terms.
The focus of the telemedicine debate is whether the “practice of medicine” should include the provision of health services when the healthcare provider has an established relationship with the patient and/or is not in the same room with the patient. Twenty-two States have laws, regulations, or guidance that permits some form of remote consultations, often with some restrictions. For instance, in Pennsylvania the State Medicaid program pays for limited telemedicine services between a patient and a specialist as long as the services are provided at an authorized site. Some private Pennsylvania payers and employers cover telemedicine services for common conditions (colds, ear infections, etc.) and for special conditions (dermatology and behavioral health). To date, the Pennsylvania Board of Medicine has not formally weighed in on the extent to which telemedicine is permitted under the State’s practice of medicine laws, or when conditions apply. Thus, Pennsylvania is more fertile ground for telemedicine.
Not so in Texas. Since 2011, the Texas Board of Medicine has shone its spotlight on the practice of telemedicine and specifically Teladoc’s services. Teladoc is one of the nation’s largest telemedicine companies, boasting a network of over 700,000 physicians and 11 million patients. Under its model, it offers immediate physician access via telephone or video for a monthly subscription fee as well as a small visit fee, both of which are typically paid by the consumer. It has contracts with payers, employers, government agencies, and others (including the Texas Medicaid agency) to offer its services to their members and employees. Teladoc physicians are licensed, independent contractors and, in accordance with Teladoc requirements, may diagnose many common conditions and prescribe medications. The doctors are paid a fee for their services.
Five years ago, the Texas Board issued a letter to Teladoc stating that the provision of remote treatment by physicians without an established physician-patient relationship did not comply with practice of medicine requirements. Teladoc argued that there was no specific regulation supporting the Board’s position. Teladoc sued the Board, and the State court ruled in Teladoc’s favor. The Texas Board then tried to pass a regulation to implement the physician-patient relationship requirement. Teladoc again sued and once again the court ruled in its favor. Yet the Texas Board would not back down.
In April 2015, Teladoc sued the Board under antitrust laws alleging that the regulation would restrain trade and have anti-competitive effects by shifting the provision of physician services towards the office setting, and thereby raising prices and reducing the output of physician services. It claimed the Board’s activities were not motivated by quality of care concerns, but rather by the interests of traditional physicians, i.e., those who do not practice telemedicine. Teladoc also noted that 12 of the 14 members of the Board are physicians, all of whom voted in favor of the regulation. Once again Teladoc prevailed, and the Federal court enjoined the Texas Board from implementing the regulation under an antitrust analysis.
The application of antitrust laws to boards of medicine and the other healing arts is not limited to the Teladoc case. As new models of healthcare and bodily treatment emerge, these boards have been under fire for taking positions that undermine competition. Several years ago, the Federal Trade Commission brought an action against the North Carolina Board of Dentistry based on the board’s decision to prohibit professionals who were not dentists from providing teeth whitening services. The Board claimed state immunity. Last year, the United States Supreme Court ruled the Board did not have immunity because the Board was composed predominately of dentists and the State did not actively supervise the Board. Healthcare professionals do not have unilateral discretion to police the profession.
Nevertheless, the Texas Board is pressing on and is appealing to the Federal Appeals Court the District Court’s decision to enjoin the regulation claiming its situation is different from the North Carolina Board of Dentistry’s so that state immunity applies. The Board maintains its decision to require a physician-patient relationship is required to assure quality of care and that it is not violating antitrust laws by manipulating the market. So the battle rages on.
The extent to which the Texas Board will remain resolute in its apparent determination to closely regulate telemedicine is unclear. Over the years it has made a few concessions. Several years ago, it tried to prevent all video-based telemedicine. That restriction was abandoned when it sought to implement the physician-patient relationship requirement discussed above. More recently, it created a license for the out-of-state practice of telemedicine limited to the interpretation of diagnostic testing and reporting and following up with patients where the majority of care was rendered in Texas or another State. Still it is one of the most active boards of medicine on the subject of telemedicine.
While to many the Board’s activities appear to be obstructionist, others believe it is giving careful thought to the questions of “What is telemedicine?” and “How should it be regulated?” In light of this shifting environment, investors and developers should carefully measure the impact of Federal and State laws and developments when evaluating a telemedicine opportunity.
Contact Lisa at: [email protected]
Disclaimer: This article is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this article are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.