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Physicians in one state who deliver care to patient located in another state must be aware of laws governing telemedicine as well as those relating to the corporate practice of medicine.
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AAOS Now

Published 2/1/2015
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Nicholas Hudalla, JD

The Intersection Between Telemedicine and the Corporate Practice of Medicine Doctrine

Advances in technology have led to increased access to health care, as well as differing approaches and new questions concerning medical licensure requirements across state lines. The impact can be seen in areas such as the provision of remote healthcare services to patients located outside of a physician’s home state.

However, any provider who engages in telemedicine across state lines must be familiar not only with the licensure laws in the patient’s home state, but also with any restrictions that the patient’s home state places on the type of entity through which healthcare services may be rendered.

Statutory, regulatory, or Medicaid program provisions defining and addressing the practice of telehealth or telemedicine have been adopted in the District of Columbia and all states except for New Jersey and Rhode Island. Although the terms are commonly used interchangeably, telemedicine refers to the remote provision of clinical healthcare services, whereas telehealth refers to the provision of a broader range of healthcare services, including clinical care and other services such as monitoring vital signs or providing health education services, when provided remotely. States may have a statutory/regulatory framework that addresses telehealth, telemedicine, or both.

Prior to delivering remote healthcare services, such as a video consultation with a patient located in another state, providers need to understand and comply with the remote healthcare licensure laws of the state in which the patient is physically located (the patient’s forum state).

For instance, if a provider located outside of Missouri renders a documented medical opinion concerning the diagnosis of a patient in Missouri as a result of the transmission of the patient’s medical data by electronic means, that provider is engaged in the “practice of medicine across state lines,” or telemedicine. Under Missouri law, this provider must have an unrestricted Missouri medical license.

Under current Tennessee law, however, an out-of-state provider who renders that same service for a patient located in Tennessee would not need an unrestricted Tennessee medical license, but would be required to obtain a special telemedicine license from the Tennessee Board of Medical Examiners.

Telemedicine laws are constantly being updated, underscoring the importance of monitoring licensure laws. For example, in February 2014, the Tennessee Board of Medical Examiners proposed eliminating the telemedicine license and requiring anyone engaged in telemedicine to obtain an unrestricted Tennessee medical license. The proposal would also have required the provider to have a face-to-face examination with the patient prior to treating him or her through telemedicine.

Corporate practice of medicine
In addition to knowing and following state licensure laws, telemedicine providers must also understand and comply with the corporate practice medicine doctrine, to the extent that it is enforced in the state where the patient is located. Where enforced, this doctrine generally prohibits corporations from engaging in the practice of medicine or employing a physician to provide medical services, with exceptions typically being made for licensed hospitals, health maintenance organizations, or professional corporations.

For example, if a state enforces the corporate practice of medicine doctrine, a licensed physician and an unlicensed person cannot form a limited liability company in which the physician provides medical services and the unlicensed person manages the business operations. Further, a corporation would typically be prohibited from directly employing a physician, although states may allow a corporation to engage the physician through an independent contractor relationship.

The purpose of the corporate practice of medicine doctrine is to reduce the influence and impact on a physician’s medical judgment. Although the doctrine is complicated, additional difficulties arise when medical services are rendered across state lines, because definitions and enforcement vary dramatically from state to state.

Some states, such as Missouri, have never adopted the corporate practice of medicine doctrine. Physicians who provide remote healthcare services to patients in Missouri may render those services through any type of entity and may be directly employed by a nonprofessional entity, as long as the physicians are licensed to practice in Missouri.

But in Tennessee, no person, corporation, firm, company, or association may engage in the unlicensed practice of medicine or telemedicine. As a result, corporations and associations are prohibited from employing or, arguably, independently contracting with physicians to engage in the practice of medicine.

Tennessee has some limited statutory exceptions, including allowing hospitals to employ physicians and allowing groups of physicians to form professional corporations or domestic nonprofit public benefit corporations to engage in the practice of medicine. But other corporations, limited liability companies, and partnerships are prohibited from engaging in the practice of medicine by employing or independently contracting with physicians.

In states such as Missouri, which do not enforce the corporate practice of medicine doctrine, physicians who provide remote healthcare services to a Missouri patient must simply comply with the appropriate licensure laws. In corporate practice states such as Tennessee, however, physicians must not only ensure that they comply with Tennessee’s licensure laws but also that they are rendering services through an entity (such as a physician professional corporation) that does not violate the corporate practice of medicine doctrine.

As the practice of telemedicine grows, states will continue to take steps to oversee and protect patients within their boundaries. They will regulate both physician licensure requirements and the type of entities authorized to render healthcare services. Therefore, any provider who is engaged in or is contemplating engaging in the practice of medicine across state lines must understand and comply with the licensure laws of the patient’s forum state and, where applicable, the restrictions arising under the corporate practice of medicine doctrine.

A table outlining the approach taken by each state to the corporate practice of medicine.

Nicholas Hudalla, JD, is an associate attorney with Hogan Marren, Ltd., a Chicago-based law firm. He can be reached at nh@hmltd.com

Editor’s note: This article is presented for general information only and should not be construed as presenting legal advice; for legal advice, consult a qualified professional.

References

  1. Center for Connected Health Policy, State Telehealth Policies and Reimbursement Schedules: A Comprehensive Plan of the 50 States and District of Columbia 5 (Sept. 2014)
  2. HelathIT.gov, What is telehealth? How is telehealth different from telemedicine? (last visited Dec. 8, 2014).
  3. Mo. Rev. Stat. § 334.010.2 (2014). Missouri excludes from the definition of telemedicine: (1) consultation with a physician licensed in Missouri when the Missouri physician retains ultimate authority for the diagnosis or treatment; or (2) participation in utilization review. Mo. Rev. Stat. § 334.010.3 (2014).
  4. Mo. Rev. Stat. § 334.010.1 (2014).
  5. Tenn. Comp. R. & Regs. 0880-02-.16 (2014).
  6. Tennessee Board of Medical Examiners, Notice of Rulemaking Hearing, 02-08-14 (filed Feb. 11, 2014).
  7. State ex inf. Sager v. Lewin, 106 S.W. 581, 583 (Mo. App. Ct. 1907).
  8. State ex rel. Loser v. Nat’l Optical Stores Co., 189 Tenn. 433, 444-45 (1949).
  9. 07 Tenn. Op. Att’y Gen. No. 116 (2007).
  10. Tenn. Code Ann. §§ 63-6-204(d), (e), (f)(1), (g) (2014).
  11. Tenn. Code Ann. § 63-6-204(f)(4).