OIG Issues Favorable Opinion for Providing Free Smartphones to Patients to Promote Telehealth Services

The increased use of telehealth services is a trend that is expected to continue long after the COVID-19 pandemic ends. In keeping with this trend, the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) recently issued a favorable Advisory Opinion that allowed a federally qualified health center (FQHC) to provide free smartphones to its existing patients in an effort to facilitate telehealth services and reduce social isolation caused by the pandemic.

The FQHC loaned approximately 3,000 smartphones to patients on a first-come first-served basis. The FQHC certified that its patients are predominately low-income individuals and that it only provided the phones to patients who did not already own devices that were capable of operating the FQHC’s telehealth application. The phones had a limited use, meaning that they were restricted to making and receiving phone calls, sending and receiving text messages, using the telehealth application, and viewing the patient’s medical records. The phones were funded by the Federal Communications Commission’s COVID-19 Telehealth program and contributions from a local charity. The FQHC used its own funds to pay for voice/data service on each phone for a two-month period, but thereafter the patients were responsible for securing their own voice/data service in order to continue using the phones.

OIG concluded that it would not impose sanctions on this arrangement under the federal Anti-Kickback Statute (AKS) or the Civil Monetary Penalties Law (CMP) which prohibits beneficiary inducements.

OIG explained that the arrangement satisfies the “Promotes Access to Care” exception under the CMP, at least for as long as the COVID-19 public health emergency (PHE) remains in effect. The exception applies when an arrangement improves a beneficiary’s ability to obtain items or services reimbursable by Medicare and Medicaid and poses a low risk of harm to the beneficiary and the Medicare and Medicaid programs by (i) being unlikely to interfere with clinical decision-making, (ii) being unlikely to increase costs to the programs or beneficiaries through overutilization or inappropriate utilization of items or services, and (iii) not raising concerns over patient safety or qualify of care. The arrangement met all of these requirements for the following reasons:

• First, since the phones were provided to low-income individuals, the arrangement likely removed certain socioeconomic barriers to their ability to access telehealth services. Equally importantly, the phones were only offered to patients who did not have an existing device that could operate the FQHC’s telehealth application.
• Second, use of the phones and telehealth application was unlikely to skew clinical decision-making.
• Third, there was a low risk that the use of telehealth services might result in overutilization or inappropriate utilization of items or services reimbursed by Medicaid or Medicaid, and, therefore, the arrangement was unlikely to increase healthcare costs. Since the phones were provided only to existing patients and a patient only needed to receive one service from the FHQC in a 24-month period in order to be eligible to keep the phone, there was a low risk that patients would seek out unnecessary services solely to be able to keep the phones. Patients were required to return the phones only when they were no longer receiving services for a 24-month period from the FQHC.
• Finally, the telehealth services would promote patient safety by reducing in-person contact with providers, staff and other patients during the COVID-19 pandemic. OIG noted that, although in-person visits may result in higher quality of care, there was nothing in the arrangement that would suggest that the telehealth services would pose a risk to patient safety or quality of care.

At the time the opinion was issued, OIG was uncertain whether the arrangement would continue to fall under this CMP exception after the PHE ends because the exception only applies to items or services that are covered by Medicare and Medicaid, and it is uncertain whether those telehealth services will continue to be covered after the PHE ends. Notwithstanding this uncertainty, OIG stated that it would nonetheless not impose sanctions on the arrangement even if the services would no longer be covered by Medicare and Medicaid, because the factors listed above sufficiently reduced the risks of improper beneficiary inducement.

Similarly, OIG concluded that the arrangement was unlikely to result in fraud and abuse under AKS because of the factors summarized above, as well as the fact that the FCC and the local charity that helped fund the phones had no financial interest in patients receiving services from the FQHC. The FQHC also certified that the funds were utilized in compliance with the requirements of the FCC and the local charity.

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