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On the same day that the U.S. Department of Justice (“DOJ”) announced the filing of criminal charges against 36 defendants for alleged schemes involving more than $1.2 billion in fraudulent telemedicine claims, the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) published a Special Fraud Alert (“Special Alert”) advising healthcare providers to “exercise caution and use heightened scrutiny” when entering into arrangements with companies purporting to provide telehealth, telemedicine, or telemarketing services.1 The simultaneous announcements reflect the government’s sharpening focus on the potential for fraud stemming from the rapid expansion of telehealth services during and in response to the COVID-19 pandemic.
Prior to the pandemic, Medicare paid for telehealth services by a limited number of providers in limited circumstances (generally, in rural areas); the Centers for Medicare& Medicaid Services (“CMS”) estimated that only 15,000 fee-for-service beneficiaries each week received a Medicare telemedicine service.2 On March 6, 2020, the government expanded the covered telehealth services to include common office visits, mental health counseling, and preventive health screening. By December 2020, the government had added 144 telehealth services to the list of covered services, and a preliminary review by CMS showed that between mid-March and mid-October 2020, over 24.5 million out of 63 million Medicare beneficiaries and enrollees had received a telemedicine service.3
The July 20, 2022, OIG Special Alert identifies seven “suspect characteristics” of a fraudulent telehealth scheme.
- The purported patients for whom the practitioner orders or prescribes items or services were identified or recruited by the Telemedicine Company, telemarketing company, sales agent, recruiter, call center, health fair, and/or through internet, television, or social media advertising for free or low out-of-pocket cost items or services.
- The practitioner does not have sufficient contact with or information from the purported patient to meaningfully assess the medical necessity of the items or services ordered or prescribed.
- The Telemedicine Company compensates the practitioner based on the volume of items or services ordered or prescribed, which may be characterized to the practitioner as compensation based on the number of purported medical records that the practitioner reviewed.
- The Telemedicine Company furnishes items and services only to federal healthcare program beneficiaries and does not accept insurance from any other payor.
- The Telemedicine Company claims to furnish items and services only to individuals who are not federal healthcare program beneficiaries but may, in fact, bill federal healthcare programs.
- The Telemedicine Company furnishes only one product or a single class of products (e.g., DME, genetic testing, diabetic supplies, or various prescription creams), potentially restricting a practitioner’s treating options to a predetermined course of treatment.
- The Telemedicine Company does not expect the ordering practitioner (or another practitioner) to follow up with purported patients, nor does it provide ordering practitioners with the information required to follow up with purported patients (e.g., the Telemedicine Company does not require practitioners to discuss the results of genetic testing they ordered with each purported patient).
In addition to informing practitioners of the risks, the Special Alert pointedly noted that the OIG and DOJ have investigated numerous criminal, civil, and administrative fraud cases involving kickbacks from telemedicine companies to practitioners. As well as personal liability under the Anti-Kickback Statute, improper arrangements with telemedicine companies may lead to civil, criminal, or administrative liability under other federal laws, including the OIG’s exclusion authority, the Civil Monetary Penalties Law, the criminal healthcare fraud statute, and the False Claims Act.
Given these risks, as well as the OIG’s explicit warnings, healthcare providers should exercise care in entering into agreements to provide telehealth services. In particular, they should perform due diligence on the telehealth company, including by seeking references from other providers and evaluating the expectations for the provision of services in light of the OIG’s “suspect characteristics.”