On July 20, 2022, the HHS Office of Inspector General (OIG) issued a special fraud alert warning physicians and other health care practitioners to use “heightened care” when entering into telemedicine arrangements that have ” suspicious characteristics” of a fraud scheme. The release of the Alert follows significant enforcement actions by federal regulators as patients and practitioners become more accustomed to delivering care via telemedicine.
Issuance of special fraud alert coincides with criminal charges in alleged $1.2 billion telemedicine fraud scheme
As we recently reported in our Investigative blogon July 20, 2022, the US Department of Justice (DOJ) deposited criminal charges against dozens of defendants from across the country for alleged fraud worth more than $1.2 billion, including alleged telemedicine, cardiovascular and cancer genetic testing and durable medical device (DME) schemes. The charges primarily center on lab owners and operators who the DOJ alleges paid illegal kickbacks and kickbacks in exchange for patient referrals from medical professionals working with fraudulent telemedicine and digital medical technology companies.
On the same date as the DOJ’s announcement, the OIG released a Special Fraud Alert (Alert) encouraging doctors and other health care practitioners to “exercise caution and use increased due diligence” when entering into agreements with companies that claim to offer telehealth, telemedicine or telemarketing services like those the DOJ alleges in the charges. its criminal (collectively referred to in Alert as the Telemedicine Company).
What does a fraudulent telemedicine deal look like?
According to the OIG, fraudulent telemedicine arrangements “vary in design and operation, and they have involved a wide range of individuals and different types of entities, including international and domestic telemarketing call centers, staffing companies, practitioners, marketers, brokers, and others. “
However, these arrangements often have one key element in common: paying kickbacks to doctors and other practitioners for ordering or prescribing unnecessary medical items and services for individuals with whom the practitioners have little, if any, interaction. In many cases, Telemedicine Companies solicit and recruit purported “patients” and then sell the practitioners’ prescriptions or orders to another party, who then fraudulently bills the items and services to federal health care programs and/or payers others.
Examples of these “dubious” deals include DME insurance deals, such as in a case from August 2021 in which the DOJ filed criminal charges against the owner of multiple telemedicine companies for allegedly orchestrating $784 million in false claims and fraudulent to Medicare. In that case, the DOJ alleged that Telemedicine Companies facilitated interns’ orders for medically unnecessary orthotic braces and medications, for which DME suppliers billed Medicare. The DME suppliers then used the proceeds they received to pay kickbacks to Telemedicine Companies and commission practitioners through various intermediary entities. According to the DD, this was “one of the largest Medicare fraud schemes ever charged by the Department of Justice.” (You can read more of our coverage of this case on our Investigations Blog here.)
“Suspicious Characteristics” of a Fraudulent Telemedicine Agreement
In the Alert, the OIG highlighted seven “suspicious characteristics” about intern agreements with Telemedicine Companies that may suggest an agreement presents an “increased risk of fraud and abuse”:
- The prospective patients for whom the physician orders or prescribes items or services are 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 items or services with low out-of-pocket costs.
- The physician does not have sufficient contact or information with the alleged 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 alleged medical records the Practitioner has reviewed.
- The Telemedicine Company provides items and services only to federal health care program beneficiaries and does not accept insurance from any other payer.
- The Telemedicine Company claims to provide items and services only to individuals who are not federal health care program beneficiaries, but may in fact bill federal health care programs.
- The Telemedicine Company offers only a single product or class of products (eg, DME, genetic tests, diabetes devices, or various prescription creams), potentially limiting a practitioner’s treatment options to a predetermined course of treatment.
- The Telemedicine Company does not expect the ordering physician (or other practitioner) to follow up on prospective patients, nor does it provide ordering practitioners with the information required to follow up on prospective patients (eg, the Telemedicine Company does not require practitioners to discuss on the results of the genetic testing they ordered with each putative patient).
If one or more of these factors are present in an agreement with a telemedicine company, the parties to the agreement may face liability under the Anti-Sniffer Statute (ACS) and other fraud and abuse laws. The AKS prohibits the intentional and knowing exchange of anything of value for referrals for items or services reimbursable by Medicare, Medicaid, and other federal health care programs. Participating in a bribery transaction may result in criminal prosecution by the DOJ and the imposition of penalties by the OIG, including civil monetary penalties and exclusion from federal health care programs. A kickback agreement can also form the basis for DOJ or a private whistleblower to file a civil action under the federal False Claims Act, under which claims against federal health care programs for items or services related to a kickback scheme are considered “to false” or “misleading.”
Because the OIG’s special fraud alerts are relatively rare, their issuance is usually a strong indicator of what the OIG considers an enforcement priority. With this latest alert, the OIG’s main apparent goal is to inform physicians and other health care practitioners of red flags to watch out for as telemedicine arrangements become more common. At the same time, however, the OIG warns practitioners that they may be personally liable for a violation of the ACA and other fraud and abuse laws to the extent that they participate in a fraudulent arrangement with a telemedicine company. As the OIG, DOJ and other federal agencies continue aggressive enforcement actions to combat fraudulent telemedicine schemes, practitioners should heed the OIG’s warning and ensure careful review of their telemedicine agreements, paying attention to specifically any suspicious characteristics described by the OIG.