The US Department of Justice and the US Department of Health and Human Services Office of Inspector General recently announced a significant healthcare fraud takedown involving $4.5 billion in allegedly false and fraudulent claims involving telehealth. The allegations involved telehealth executives paying healthcare providers to order unnecessary items and services, as well as payments from durable medical equipment companies, laboratories and pharmacies for those orders. While the alleged conduct is not representative of the legitimate and crucial telehealth services offered by the vast majority of healthcare providers, the government’s continued focus on telehealth arrangements, combined with the ongoing expansion of coverage for telehealth services, provides an important opportunity for healthcare providers to evaluate their telehealth service offerings and arrangements and to further enhance their related compliance activities.

IN DEPTH

On September 30, 2020, the US Department of Justice (DOJ) issued a press release describing the largest national healthcare fraud and opioid enforcement action in the DOJ’s history (the Takedown). The Takedown involved coordination with the US Department of Health and Human Services Office of Inspector General (OIG) and other federal and state law enforcement agencies, and resulted in cases against more than 345 defendants in 51 judicial districts. The government charged the defendants with participating in healthcare fraud schemes involving more than $6 billion in alleged losses to federal health care programs, with the vast majority of alleged losses ($4.5 billion) stemming from arrangements involving alleged “telefraud.”

According to the DOJ press release, a recently announced National Rapid Response Strike Force led the initiative focused on telehealth. The National Rapid Response Strike Force is part of the Health Care Fraud Unit of DOJ’s Criminal Division Fraud section, and its mission is to “investigate and prosecute fraud cases involving major health care providers that operate in multiple jurisdictions, including major regional health care providers operating in the Criminal-Division-led Health Care Fraud Strike Forces throughout the United States.”

Background

In recent years, the government has increasingly focused on alleged healthcare fraud schemes involving telehealth services. In connection with the Takedown, OIG issued a fact sheet and graphic highlighting the increase in “telefraud” arrangements leveraging “aggressive marketing and so-called telehealth services.” The individuals charged in the Takedown included telehealth company executives, medical providers, marketers and business owners who allegedly used telemarketing calls, direct mail, and television and internet advertisements to collect information from unsuspecting patients.

Many of the cases involved telehealth executives who allegedly paid healthcare providers to order unnecessary durable medical equipment (DME), genetic and other diagnostic testing, and medications, either without any patient interaction or with only a brief phone call. The government alleged that the arrangements involved kickbacks to telehealth executives after the DME company, laboratory or pharmacy billed Medicare or Medicaid for items and services that the government asserts were often not provided to beneficiaries or were “worthless to patients . . . and delayed their chance to seek appropriate treatment for medical complaints.”

DOJ provided a summary of the cases prosecuted, which included a wide variety of alleged fraudulent schemes involving telehealth, including the following:

• A marketing company that recruited Medicare beneficiaries to obtain medically unnecessary genetic testing ordered by telehealth physicians who received illegal kickbacks and bribes from telehealth companies.

• An owner and operator of a telehealth company who paid kickbacks and bribes to call centers and healthcare professionals in exchange for referrals and orders for medically unnecessary genetic cancer screening tests for Medicare beneficiaries.

• A laboratory owner who conspired to pay kickbacks for genetic testing orders and specimens to run medically unnecessary diagnostic testing.

• Laboratory owners who were charged with paying kickbacks to a network of marketers to procure DNA samples for genetic testing that they knew to be medically unnecessary and not reimbursable by the patients’ health care benefit programs. Beneficiaries were solicited through methods such as telemarketing, door-to-door sales and appearances at senior health fairs, and the tests were approved by a range of medical professionals, including doctors operating on telehealth platforms, who had not previously treated the patients and had little or no contact with the patients in connection with prescribing the testing.

Practical Implications

The Takedown is an example of the government’s continued and growing focus on telehealth services arrangements. Although the alleged fraudulent practices are not representative of the broader community of telehealth providers that deliver necessary care to patients in a convenient and efficient way, the government’s actions offer insights that can help legitimate telehealth providers further enhance their ongoing compliance practices. As telehealth becomes an increasingly common method for delivering healthcare, current telehealth providers and those organizations considering expanding into telehealth services, as well as individual healthcare providers who may provide telehealth services through another company, should consider the following issues when reviewing their existing telehealth programs or before establishing a new telehealth service line or entering into arrangements with third parties to provide telehealth services.

Patient-Provider Relationship. Two common features of many of the Takedown cases, according to DOJ, were the lack of meaningful interaction between provider and patient and the ordering of medically unnecessary products or services. These cases often involved alleged inappropriate patient marketing activities where a potential patient received a “cold call” followed by a telephonic examination if the potential patient expressed a willingness to speak to a provider. The requirements for establishing a sufficient patient-provider relationship for diagnosis, treatment, and the ordering of medical equipment and laboratory testing are determined primarily by state laws and regulations. These laws and regulations may be unclear on the types of technology modalities required to conduct a patient examination that supports the issuance of a prescription or order. In addition to complying with state law requirements, a valid patient-provider relationship is typically required to bill payors for telehealth services. Identifying the sometimes blurry line between appropriate and inappropriate conduct is critical to ensuring that appropriate care is delivered and to mitigating legal risk.

Employee Moonlighting. Provider organizations should consider evaluating any “moonlighting” activities by their employed or contracted providers. In light of the Coronavirus (COVID-19), many physicians and other providers are seeking additional opportunities to provide care to patients because of the sharp decline in in-person visits. Providers may begin providing telehealth services through other companies or entities during their “off” hours. These providers should ensure that they engage with reputable telehealth companies to avoid getting caught up in the types of alleged telefraud arrangements that were the focus of the Takedown. Provider organizations should understand what their physicians are doing outside of their regular jobs; if a physician is unknowingly participating in a potentially fraudulent telehealth arrangement, that could negatively affect the provider organization’s reputation. Provider organizations that permit their employed and contracted staff to “moonlight” can help mitigate risk by offering education and resources to individual providers to ensure they are aware of the existence of fraudulent telehealth companies and networks that may not have the providers’—or their patients’—best interests in mind.

Coverage and Billing Requirements. Increasing recognition of the value and benefits of telehealth is resulting in the rapid evolution of coverage and billing requirements for telehealth services. While these changes can positively affect a telehealth program’s operations, organizations should carefully review and stay up-to-date on government and commercial payor requirements for telehealth services, as they are not always as broad or liberating as they may first appear. Organizations should ensure that appropriate checks are in place to make certain that they use proper billing and reimbursement codes.

COVID-19 Waivers and Their Eventual Expiration. During the COVID-19 public health emergency, the Centers for Medicare and Medicaid Services (CMS) expanded payment for telehealth under its 1135 waiver authority and permitted providers to use dozens of new billing codes for telehealth services. Telehealth regulations have also been relaxed at the state level, as we previously detailed here and here. This rapid regulatory change has allowed more flexibility for providers and improved access to telehealth services for patients during the COVID-19 pandemic. Despite these changes, legitimate telehealth providers should develop medically appropriate clinical protocols to govern care provided via telehealth, ensure the use of safe and secure technology, and establish operating guidelines to ensure care is provided consistent with all state and federal requirements. In addition, the COVID-19-related emergency declarations that allow for these changes will end, and providers should be prepared to comply with pre-pandemic laws and regulations.

State Licensure. In order to legitimately provide and bill for telehealth services, providers should be licensed to practice their respective profession in the state in which the patient is located at the time of the encounter, unless an exception exists. In response to COVID-19, many states have waived or loosened the licensure requirements.

Key Takeaways

Telehealth providers should:

• Carefully consider the implications before entering into an arrangement with other parties, including DME companies, laboratories and pharmacies, and contemplate what different parties will provide in connection with the arrangement.

• Be particularly diligent in the design and compliance oversight of marketing strategies to confirm that patients are reached through appropriate channels, which may not include “cold calls.”

• Ensure that state-level requirements to establish a legitimate physician-patient relationship are satisfied. This involves evaluating the proposed arrangement under applicable state laws and regulations. Many of these laws and regulations have changed in light of COVID-19.

• Ensure that the provider’s compliance program appropriately addresses issues brought up by telehealth arrangements, including careful review of marketing materials and compensation and billing arrangements.

• Carefully evaluate coding and billing practices to ensure such practices are consistent with both government and commercial payor requirements. Again, these requirements have changed considerably because of COVID-19 and likely will continue to evolve.

Winnie Uluocha contributed to this article.