Legal Intelligencer article by Lamb McErlane Health Law Chair Vasilios J. (Bill) Kalogredis, Esq.*

On July 20 of this year, the Office of Inspector General (OIG) released a special fraud alert to warn and encourage physicians as well as non-physician practitioners to exercise heightened caution when entering into arrangements with “purported telemedicine companies[1].” Dozens of investigations conducted by OIG revealed various fraud schemes utilized by such telemedicine companies. These inappropriate schemes were targeted at increasing the acceptance and use of telemedicine by paying kickbacks to medical professionals to generate orders and/or prescriptions for medically unnecessary durable medical equipment, genetic testing, wound care items, or prescription medications, which can result in submissions of fraudulent claims to Medicare, Medicaid, and other Federal health care programs. According to the United States Department of Justice (DOJ), Medicare fraud costs US taxpayers billions of dollars every year.

In 2016 the global telemedicine market was valued at approximately $25 billion. It is predicted that by 2025 that number will reach $113 billion[2]. Although the use of telemedicine services in the US was on a steady climb even before the COVID-19 pandemic, it was underused and understudied. The all-around acceptance of telehealth was substantially low, considering integration and logistics issues. Prior to the spread of the coronavirus disease the services covered by Federal healthcare programs through telemedicine were limited. In March of 2020 the Centers of Medicare and Medicaid (CMS) decided to relax telemedicine rules and expand telehealth in response to the pandemic after a Public Health Emergency (“PHE”) was declared. Consequently, Medicare now covers many telemedicine visits, virtual check-ins, telephone visits, and e-visits. Additionally, reimbursement for telehealth services, including audio only, has been the same as if the service was furnished in person[3]. Other relaxed conditions were introduced such as no preexisting relationship requirement between the patient and the practitioner, as well as ability to conduct the virtual contact from home using expanded approved platforms like Zoom, FaceTime and Skype.

As a result, the patient-doctor interaction transformed dramatically, and the use of telehealth services has skyrocketed. To illustrate, in February of 2020 only 1% of primary care visits through Medicare were conducted via telemedicine. In April of 2020 CMS reported that almost half of such visits were conducted via telemedicine. Telehealth services are well received by many patients and providers and there is no indication that recipients of such services as well as service providers are interested in exclusively going back to pre-Covid medical visit arrangements, even though telehealth remains accessible to certain groups of patients more than to the others.

However, with all the positive sentiment, while telemedicine health care has been growing in the United States since the beginning of the pandemic, so has the number of fraudulent submissions and risks associated with telehealth services. Department of Health and Human Services (HHS) Office of Inspector General (OIG) agents work with the DOJ to investigate and pursue providers that inappropriately bill federal health care programs. Practitioners and telemedicine companies were held civilly, criminally, and administratively liable for paying or receiving a payment in violation of the Federal anti-kickback statute, causing a submission of claims in violation of the False Claims Act, and/or other Federal criminal laws. Only recently, a number of persons have been detained by the DOJ, and they have been charged in connection with suspected kickback schemes worth more than $1 billion, in which telemedicine businesses allegedly paid physicians to order unnecessary tests and equipment. The Federal anti-kickback statute is a criminal law that prohibits knowingly and willfully soliciting or receiving any payment in return for items or services reimbursable by a federal health care program. Each violation of the Federal anti-kickback statute constitutes a felony punishable by a maximum fine of $100,000, imprisonment up to 10 years, or both. Conviction may also lead to exclusion from federal health care programs, such as Medicare and Medicaid.

The way the mentioned schemes usually work is relatively common among fraudulent telemedicine companies. The purported company pays kickbacks to aggressively recruit doctors to induce these doctors to order or prescribe medically unneeded items and services for individuals who were solicited and recruited by the same telemedicine company. In many such cases, by the directions of these companies, doctors do not even see the “patient” or only have limited telephone contact without being given an opportunity to review the purported patient’s  medical records. Additionally, according to the OIG, the telemedicine company may direct practitioners to order or prescribe a preselected item or service, regardless of medical necessity or clinical appropriateness.

Furthermore, in many cases telemedicine companies do not provide sufficient technical support to the procedures or visits performed by doctors. Even if the practitioner attempts to provide services in good faith, but technical difficulties prevent them from doing so, the billed services can invite liability. Similarly, if a telemedicine appointment occurs, but the parties cannot clearly see or hear each other to appropriately benefit from the appointment, the services could be considered wasteful. It is for that reason that it is extremely useful for providers to understand the requirements for each type of interaction, which CPT codes to apply, and how to bill for them I order to be in compliance with the regulations. According to the OIG, telemedicine companies also paid practitioners an additional fee based on the volume of performed services or ordered prescriptions, which may not only implicate or potentially violate  federal law but may naturally incentivize the provider to order medically unnecessary items and corrupt medical decision-making which may consequently harm the patient.

Therefore, the OIG issued the said fraud alert, to encourage healthcare professionals to exercise extra caution when engaging with suspicious telemedicine companies. Based on the enforcement experience, the OIG has developed and proposed a list of suspect characteristics for providers to consider when or even better, before entering into arrangements with telemedicine companies. The list is the following:

• The purported patient to whom the provider is rendering services or is ordering prescriptions was provided or recruited by the telemedicine company.
• The provider does not have sufficient contact with the purported patient or is not sufficiently familiarized with the medical records of the patient to assess medical necessity of the services rendered or items ordered.
• The provider is financially incentivized by the telemedicine company based on the volume of services or prescriptions.
• The telemedicine company encourages the doctor to perform services or order items covered by the federal health care programs and does not accept other insurance coverages.
• The telemedicine company limits the range or class of products it furnishes, potentially restricting provider treatment options to the predetermined course.
• The telemedicine company does not expect the provider to further follow up with the purported patient.

The list is not exhaustive. But it may potentially help the practitioners to stay away from unintended compliance violations or committing fraud which may lead to legal sanctions or prosecution. Nevertheless, the OIG does not discourage practitioners from rendering legitimate telehealth services by issuing the fraud alert. Instead, it tries to raise an awareness that potential liability may arise if providers are not careful in choosing who to engage with and how to proceed when it comes to telehealth. According to Politico, there is currently no consensus on how to tackle healthcare fraud, particularly regarding telemedicine. “And potential guardrails could also complicate things for people who really benefit from telehealth: those with disabilities, transportation problems, or who live in rural areas[4].” Nevertheless, it is obvious and the modern trend also suggests that telehealth is here to stay.

[1] DHHS OIG – Special Fraud Alert t: OIG Alerts Practitioners to Exercise Caution When Entering into Arrangements with Purported Telemedicine Companies. July 20, 2022 – https://oig.hhs.gov/documents/root/1045/sfa-telefraud.pdf

[2] ABA Criminal Justice: White Collar Crime Committee. Fraud Emerges as Telehealth Surges – https://www.americanbar.org/content/dam/aba/publications/criminaljustice/2021/telehealth_fraud.pdf

[3] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9035352/

[4] Politico – Fraud is the killjoy at the telehealth party: August 8, 2022 – https://www.politico.com/news/2022/08/07/telehealth-pandemic-fraud-00049948#:~:text=Congress%20is%20rushing%20to%20maintain,without%20safeguards%20could%20enable%20fraud.

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Vasilios J. (Bill) Kalogredis, Esq. has been exclusively advising physicians, dentists, and other health care professionals and their businesses as to contractual, regulatory and transactional matters for over 45 years. He is Chairman of Lamb McErlane PC’s Health Law Department. bkalogredis@lambmcerlane.com. 610-701-4402.

*Artyom (Art) Sharbatyan contributed to this article. Art has extensive real life practical experience in the healthcare field with particular concentration in dental practice groups. He represents healthcare providers in their business and legal needs at Lamb McErlane, PC’s Health Law Department. asharbatyan@lambmcerlane.com; 610-701-4416.

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