The Florida Bar

Special Fraud Alert: Telemedicine

December 4, 2022

By Sally McKee

On July 20, 2022, the Office of the Inspector General (OIG) of Health and Human Services released a special fraud alert to provide guidance and background information about ongoing telehealth activities that are suspect.

The Federal government has been focused on abusive marketing and billing practices involving Medicare suppliers beginning in April 2019 with “Operation Brace Yourself,” which involved telemedicine physician consultations that resulted in billions of dollars of fraudulent billings to government programs. The enforcement activity continued in September 2020 that described similar telemedicine visits that were used to facilitate genetic cancer tests for Medicare patients who were not at risk for the underlying cancer diagnosis. Related fraudulent activity, again involving physician telehealth visits was announced in 2021 related to COVID-related testing. Finally, in July 2022, the government announced an additional nationwide enforcement activity that focused on durable medical equipment (DME) and clinical laboratory testing schemes.

Hundreds of individuals have been indicted and convicted of Medicare fraud as a result of these enforcement actions. In addition, physicians around the country have been ensnared in these arrangements, leading to revocation of Medicare billing privileges.

There are multiple variations of the underlying schemes, but as an overview the elements may include:

  1. A telemedicine company (or marketing company using telemedicine) offers free or no-cost products or laboratory testing to Medicare beneficiaries. Often these marketing companies work with foreign call center centers that advertise their services on late night television to Medicare program beneficiaries.
  2. The telemedicine company contracts with physicians to write prescriptions for these patients for DME and expensive laboratory test, most commonly genetic screening for cancer.
    1. Sometimes the communication to solicit physicians is through a medical staffing company that offers to provide part-time work that permits a physician to make extra money by conducting telemedicine visits with patients that are supplied by a third party.
    2. The physicians do not bill Medicare for the telemedicine consultation but enters billing information into an electronic medical system maintained by the third party.
    3. The physicians are paid on a per prescription or per patient basis and do not have follow-up contact with the patients.
    4. The telemedicine company sells the physician order to a DME supplier or a clinical laboratory.
    5. The DME or clinical lab fulfills the order by sending devices/conducting the tests and submitting claims to Medicare. Often the patient receives nothing, or in some cases a very inexpensive device.

 

As a result of this activity, the OIG is able to identify these arrangements through data mining of Medicare claims associated with the physician’s billing information. The OIG can identify patients where a physician’s information is used for the ordering of the device or test where there is no corresponding physician bill for the telehealth encounter.

The physician is then investigated by the OIG and is unable to provide patient records because all of the electronic medical records are controlled by the telemedicine company, which by this time has closed and electronic records are not longer available to the physician.

The physician then faces revocation of billing privileges under Medicare and Medicaid because the physician has violated his/her Medicare enrollment agreement, which requires that medical records of patients be maintained. The loss of CMS billing privileges is then reportable to managed care and other private payers. This can be grounds for termination of these private payer agreements.

The legal theory for these investigations is that the telemedicine company is selling prescriptions on a per patient basis to DME suppliers and clinical labs, which is alleged as a violation of the Antikickback statute. The payments to the physicians are based on the volume of the prescriptions written or patients seen, which also violates the Antikickback statue. The physicians are often unaware of the details of the operations and may be told that this type of telemedicine activity is acceptable, and that the telemedicine company is handling all of the details.

Practical insights from this enforcement activity

  • Individuals should not provide their personal information and their Medicare numbers in response to mass-marketing or telephone requests, including responding to television or social media requests. If you or someone you know believes that they have become involved in this type of scheme, you can report the activity to the Health & Human Service through its online form or by calling 1-800-447-8477 (TTY: 1-800-377-4950). Or mail to:

U.S. Department of Health and Human Services
Office of Inspector General
ATTN: OIG HOTLINE OPERATIONS
P.O. Box 23489
Washington, DC 20026

  • If you are advising physicians, be wary of any part-time or short-term work opportunities that the physician is asked to consult with patients unknown to him or her. Any type of activity where a physician writes a prescription for a patient with whom is not an established patient and does not involve a separate bill for the patient encounter may be identified by the OIG as suspicious.
  • Restrictions related to legitimate telehealth consultations were relaxed due to the public health emergency. Reimbursement for telehealth services before the COVID pandemic were limited, and many physicians were not aware of these requirements. The activities described in this article and the Special Fraud alert are not considered to be legitimate telehealth activity.
  • Be wary of any arrangement where the physician does not control the access to the medical records associated with his encounter with the patient and does not separately bill for the patient encounter.
  • White collar defense lawyers have reported that CMS has developed a nonpublic physician compliance program where it will permit certain physicians who were investigated as part of these enforcement activities to retain billing privileges while improving their internal compliance procedures. It is believed that this program was created because of the large number of physicians who became ensnared by these operators of the fraudulent schemes. This program has not been publicized by CMS, so its requirements are not known.
  • Seek advice from an attorney who specializes in healthcare law and regulatory issues. Practices that may be appropriate in other industries are often illegal in the healthcare setting because of the broad range and application of Federal and state anti-fraud laws and regulations.

ABOUT THE AUTHOR

Sally McKee is Senior Counsel, Regulatory & Reimbursement for Baxter Healthcare International. A member of the Florida Bar since 1997, Ms. McKee has extensive experience in health insurance and reimbursement matters. Her current role includes advising on medical device reimbursement for DME suppliers and regulatory matters related to the Antikick statute, the False Claims Act and the Civil Monetary Penalties law.

Disclaimer: This article is for informational purposes only and is not meant or intended to convey specific legal advice. You should seek advice and counsel from a Florida licensed attorney. This information is not intended to create an attorney-client relationship for any legal matter.