Notably, the Center for Medicare and Medicaid Services has put into effect changes to the physician fee schedule. These new changes allow for reimbursement for virtual check-ins, remote evaluations of pre-recorded information, and interprofessional internet consultations. In addition to the new fee schedule, the passing of the SUPPORT Act last year notably removed originating site geographic requirements for treating patients with substance abuse disorders. As reimbursement for telehealth services opens up, service providers must meet patient demands while avoiding various compliance pitfalls.

Fraud, Waste, and Abuse

Service providers who receive reimbursement from governmental payors must be aware of the fraud, waste, and abuse restrictions that are heavily scrutinized by federal and state governments. The Anti-Kickback Statute (42 U.S.C. 1320a-7b(b)) prohibits anyone from offering, soliciting, or receiving anything of value in an attempt to induce referrals for federally funded services. The Stark Law (42 U.S.C. 1395nn), also known as the physician self-referral law, prohibits physicians from referring certain services to an entity with which they have a financial relationship. The Anti-Kickback Statute has civil and criminal penalties, and the Stark Law has civil penalties that include fines, exclusions, or imprisonment for individuals associated with its violation. Given the synergic nature of telehealth, it is crucial that all contractual and referral relationships are tailored towards the safe harbors and exceptions that accompany the Anti-Kickback Statute and Stark Law, respectively.

Corporate Practice of Medicine Doctrine

In certain states, the Corporate Practice of Medicine Doctrine works to prohibit corporate ownership of entities that will provide medical services. Generally, unlicensed entities are prohibited from practicing medicine, and unlicensed persons are prohibited from having an ownership interest in such entity. States can impose substantial fines and penalties on entities and practitioners for aiding the improper corporate practice of medicine. As such, telehealth service providers must review and, when appropriate, modify their corporate presence in certain states to ensure that their ownership structure complies with the doctrine.


The scope of what constitutes the practice of medicine may change state-by-state. A provider’s presence and service to patients in a state may trigger medical licensure requirements if the service falls within the scope of what a particular state deems the “practice of medicine.” Managing employee licensure can be tedious for telehealth providers, given that some states have not statutorily addressed telemedicine in all of its forms. Despite the uncertainty, state medical boards can revoke or restrict the licenses of individual practitioners for failing to comply with board regulations. While advances like the Interstate Medical Compact and the Nursing Licensure Compact make licensure an easier hoop to jump through, the compacts are only available in certain states and do not resolve the inconsistency in interpreting the practice of medicine.

Organizations in the telehealth services industry are finding new and innovative ways to improve treatment efficiencies for all consumers. While technology advances are important, service providers are often dependent on relationships with affiliated entities and licensed practitioners. Whether at the start-up stage or beyond, it is important for telehealth service providers to structure those relationships to avoid regulatory and reimbursement pitfalls.