Fee-Splitting Risks in Telehealth – Impacts on Telemedicine Structures
Understanding Fee-Splitting Laws in Telehealth: Key Concepts Explained
Fee-splitting in telehealth is a critical legal and compliance consideration for healthcare providers, telehealth platforms, and management service organizations (MSOs) operating in the rapidly evolving digital health landscape. As telehealth continues to expand, understanding how fee-splitting laws apply to virtual care models is essential for avoiding regulatory pitfalls and ensuring sustainable business operations.
How State Fee-Splitting Laws Affect Telehealth and CPOM Compliance
Fee-splitting laws are closely related to telehealth corporate practice of medicine (CPOM) compliance. State fee-splitting laws generally restrict physicians from sharing professional fees with non-licensed persons or entities, especially when payments are connected to referrals, patient volume, or services that the non-licensed entity did not personally render. Some states may permit revenue-based arrangements when they reflect bona fide services at fair market value, while others prohibit or closely scrutinize percentage-based compensation. For telehealth companies, this means MSO fees, platform fees, marketing arrangements, lead-generation relationships, and provider compensation models should be reviewed carefully before being implemented.
Common Fee-Splitting Risks in Telehealth Business Models
Common fee-splitting risks in telehealth arise when business models or compensation structures involve sharing revenue with non-clinical partners. The risk is particularly significant when a non-clinical entity is compensated as a percentage of professional revenue, receives payments that increase with patient volume, or is rewarded for directing patients to a particular provider or service. Even where the payment is characterized as a technology fee, platform fee, or marketing fee, regulators may examine whether the amount reflects the fair value of legitimate services or instead operates as remuneration for referrals or patient access.
State-by-State Variations in Telehealth Fee-Splitting Laws
State laws on fee-splitting in telehealth can vary dramatically, making multi-state compliance especially challenging. Wisconsin illustrates how state-specific rules can affect CPOM in telehealth. Wisconsin law reflects restrictions on fee sharing and referral payments, and regulators may look beyond contract labels to determine whether payments compensate legitimate non-clinical services or reward business generation. Illinois is another example of a state where percentage-based management fees can raise concerns. Because state laws differ, a compensation model that appears acceptable in one jurisdiction may create risk in another.
Federal Anti-Kickback and Fraud Laws Impacting Telehealth Fee-Splitting
Federal law adds further complexity to fee-splitting in telehealth. The federal anti-kickback statute can be implicated when remuneration is exchanged to induce or reward referrals of items or services reimbursable by federal health care programs. The Stark Law may also be relevant when physician referrals for designated health services are involved. These federal rules do not replace state CPOM and fee-splitting analysis; they sit alongside it. A structure may need to satisfy state professional practice rules, state fee-splitting prohibitions, federal fraud-and-abuse laws, payor contract requirements, and professional board expectations.
Best Practices for Telehealth Fee-Splitting Compliance
- Avoid percentage-based compensation tied to referrals, patient volume, or revenue when possible.
- Conduct a state-by-state analysis of fee-splitting laws before entering new markets.
- Ensure all compensation models reflect fair market value for actual services provided.