Going forward, telemedicine will no doubt continue to play an expanded role in the health care system. Yet both practitioners and insurers should be aware of the potential for abuse of these telemedicine services and the criminal, civil and administrative ramifications.

Along these lines, this column discusses a nationwide coordinated law enforcement action announced in late July by the U.S. Department of Justice (DOJ), and a special telemedicine fraud alert (the Alert) issued on the same day by the U.S. Department of Health and Human Services Office of Inspector General (OIG) encouraging practitioners to exercise caution when entering into arrangements with purported telemedicine companies.

Enforcement actions

In recent years, the DOJ has brought a number of telemedicine enforcement actions, including 2019's Operation Brace Yourself, 2019's Operation Double Helix, 2020's Operation Rubber Stamp, and the telemedicine component of the 2021 National Health Care Fraud Enforcement Action.

The DOJ's July law enforcement action was similarly notable. The DOJ filed criminal charges against 36 defendants in 13 federal districts across the United States for more than $1.2 billion in alleged fraudulent telemedicine, cardiovascular and cancer genetic testing, and DME schemes, with the alleged telemedicine schemes accounting for more than $1 billion of the total alleged intended losses. The enforcement action included criminal charges against a telemedicine company executive, owners and executives of clinical laboratories, DME companies, marketing organizations, and medical professionals.

According to the government, the law enforcement action primarily targeted alleged schemes involving the payment of illegal kickbacks and bribes by laboratory owners and operators in exchange for the referral of patients by medical professionals working with fraudulent telemedicine and digital medical technology companies. The charges included some of the first prosecutions in the nation related to allegedly fraudulent cardiovascular genetic testing, which the DOJ said is "a burgeoning scheme." As asserted in court documents, medical professionals made referrals for expensive and medically unnecessary cardiovascular and cancer genetic tests, as well as DME. For example, cardiovascular genetic testing was not a method of diagnosing whether an individual presently had a cardiac condition and was not approved by Medicare for use as a general screening test for indicating an increased risk of developing cardiovascular conditions in the future.

Related: Office of Inspector General warns against telemedicine fraud

Some of the defendants charged in the enforcement action allegedly controlled a telemarketing network, based both domestically and overseas, that lured thousands of elderly and/or disabled patients into a criminal scheme. The owners of marketing organizations allegedly had telemarketers use deceptive techniques to induce Medicare beneficiaries to agree to cardiovascular genetic testing, and other genetic testing and equipment.

One particular case involved the operator of several clinical laboratories who was charged in connection with an alleged scheme to pay over $16 million in kickbacks to marketers who, in turn, allegedly paid kickbacks to telemedicine companies and call centers in exchange for doctors' orders. As alleged in court documents, orders for cardiovascular and cancer genetic testing were used by this defendant and others to submit over $174 million in false and fraudulent claims to Medicare, but the test results were not used in the treatment of patients.

The DOJ's allegations, the alleged frauds targeted by the DOJ, and the characteristics of the defendants all help point to the types of cases that the government is likely to continue to pursue in the future. The OIG's Alert—the first special fraud alert that it has issued in almost two years—also is quite informative in this regard.

The OIG's alert

In preparing to release its Alert, the OIG said that it conducted dozens of investigations of fraud schemes involving companies that purported to provide telehealth, telemedicine or telemarketing services (collectively, Telemedicine Companies). The OIG found that in some of these frauds, Telemedicine Companies intentionally paid physicians and nonphysician practitioners kickbacks to generate orders or prescriptions for medically unnecessary DME, genetic testing, wound care items, or prescription medications, resulting in the submissions of fraudulent claims to Medicare, Medicaid, and other federal health insurance programs.

The OIG found that one common element of these schemes was the way Telemedicine Companies used kickbacks to "aggressively recruit and reward" practitioners. Generally, the Telemedicine Companies arranged with practitioners to order or prescribe medically unnecessary items and services for individuals (whom the OIG referred to as "purported patients") who were solicited and recruited by Telemedicine Companies. In many of these arrangements, Telemedicine Companies paid practitioners in exchange for ordering or prescribing items or services for purported patients with whom the practitioners had limited, if any, interaction, and without regard to medical necessity. The OIG said that these payments sometimes were described as payment per review, audit, consult, or assessment of medical charts and that Telemedicine Companies often told practitioners that they did not need to contact the purported patients or that they only needed to speak to the purported patients by telephone.

In addition, the OIG continued, practitioners were not given an opportunity to review the purported patient's real medical records and the Telemedicine Companies directed practitioners to order or prescribe a preselected item or service, regardless of medical necessity or clinical appropriateness. In many cases, the OIG found, the Telemedicine Companies sold the orders or prescriptions generated by practitioners to other individuals or entities that then fraudulently billed for the unnecessary items and services.

In the OIG's view, these schemes raised fraud concerns because of the potential for harm to federal health insurance programs and their beneficiaries by inappropriately increasing costs to the federal programs for medically unnecessary items and services and, in some instances, items and services a beneficiary never received; harm to beneficiaries by, for example, providing medically unnecessary care, items that could harm a patient, or improperly delaying needed care; and corruption of medical decision-making.

Read more: DOJ announces fraud charges totaling more than $1.2B

A key portion of the OIG's Alert sets forth a list of seven "suspect characteristics" related to practitioner arrangements with Telemedicine Companies that the OIG stated, taken together or separately, could suggest an arrangement that presents a heightened risk of fraud and abuse. Importantly, the list is not exhaustive and the OIG made it clear that the presence or absence of any one factor is not determinative of whether a particular arrangement with a Telemedicine Company would be grounds for legal sanctions.

The seven suspect characteristics are:

• 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 only furnishes items and services to federal health insurance program beneficiaries and does not accept insurance from any other payor.
• The Telemedicine Company claims to only furnish items and services to individuals who are not federal health insurance program beneficiaries but may in fact bill federal health care programs.
• The Telemedicine Company only furnishes 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 practitioners to follow up with purported patients nor does it provide practitioners with the information required to follow up with purported patients (e.g., the Telemedicine Company does not require practitioners to discuss genetic testing results with each purported patient).

Conclusion

The OIG noted in its Alert that it was not intending to discourage legitimate telehealth arrangements, and it seems clear that telemedicine is quickly growing in acceptance throughout the health care system. This growing acceptance, however, is not lost on the many crooked individuals who are constantly looking for new ways to illegally exploit insurance benefits for their own personal profit. Hopefully, with the increased government scrutiny facing telemedicine, the inevitable fraud and abuse can be contained and the benefits of telemedicine fully realized.

Michael A. Sirignano is a partner in the insurance fraud and commercial litigation practice groups at Rivkin Radler. He may be reached at [email protected].