OIG Special Fraud Alert:

On July 20, 2022, the Office of Inspector General of the US Department of Health & Human Services (OIG) issued a Special Fraud Alert urging healthcare practitioners to exercise caution when entering into arrangements with telemedicine companies. OIG issued this Special Fraud Alert the same day the US Department of Justice (DOJ) announced criminal charges against 36 defendants in 13 federal districts as part of the DOJ’s Nationwide Coordinated Law Enforcement Effort to Combat Telemedicine, Clinical Laboratory, and Durable Medical Equipment Fraud.^[1]

The Special Fraud Alert notes that OIG has recently conducted dozens of investigations of alleged fraud schemes involving companies that provide telehealth, telemedicine, or telemarketing services (collectively, Telemedicine Companies). It also notes that in many of these investigations, OIG found evidence that the Telemedicine Companies intentionally paid physicians and non-physician practitioners (collectively, Practitioners) kickbacks to generate orders or prescriptions for medically unnecessary durable medical equipment, genetic testing, wound care items, or prescription medications.

The Special Fraud Alert warns that such kickback schemes implicate the federal Anti-Kickback Statute and can lead to Practitioners, Telemedicine Companies, and others that participate in the schemes being held liable criminally, civilly, and administratively. Liability may arise from (1) paying or receiving payment in violation of the federal Anti-Kickback Statute; and (2) causing submission of fraudulent claims to federal healthcare programs such as Medicare, Medicaid, and Tricare, which may constitute a violation of the federal False Claims Act and other federal laws.

As a cautionary guide, the Special Fraud Alert identifies seven arrangement characteristics that may raise OIG scrutiny:

1. The patients for whom a Practitioner orders or prescribes items or services are identified or recruited by a Telemedicine Company, sales agent, recruiter, call center, or health fair, and/or through internet, television, or social media advertising for free or low-cost out-of-pocket items or services. 

2. A 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.

3. A Telemedicine Company compensates a 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 medical records that the Practitioner reviewed.

4. A Telemedicine Company furnishes items and services only to federal healthcare program beneficiaries and does not accept insurance from any other payor.

5. A Telemedicine Company claims to furnish items and services only to individuals who are not federal healthcare program beneficiaries but may, in fact, bill federal healthcare programs.

6. A Telemedicine Company only furnishes one product or a single class of products (e.g., durable medical equipment, genetic testing, diabetic supplies, or various prescription creams), potentially restricting a Practitioner’s treatment options to a predetermined course of treatment.

7. A Telemedicine Company does not expect Practitioners to follow up with patients, nor does it provide Practitioners with the information required to follow up with patients (e.g., the Telemedicine Company does not require Practitioners to discuss genetic testing results with each purported patient).

OIG advises in the Special Fraud Alert that this list of suspect criteria is illustrative and not exhaustive. Therefore, even arrangements that do not specifically fit one or more of these suspect criteria may still be suspect. However, OIG also indicates that it recognizes there are many legitimate telemedicine and telehealth arrangements, and explicitly states that the Special Fraud Alert is not intended to discourage those legitimate arrangements. Rather, OIG is using the Special Fraud Alert to encourage Practitioners (and, by extension, their advisors) to use heightened scrutiny, exercise caution, and consider the above list of suspect criteria before entering into arrangements with Telemedicine Companies.

Telehealth Expansion Legislation

Significantly, a week after OIG issued the Special Fraud Alert, the US House of Representatives overwhelmingly (416-12) passed the Advancing Telehealth Beyond COVID-19 Act of 2022 (HR 4040), which encourages broad use of telehealth by expanding and extending for at least an additional two years — through December 2024 — the Medicare telemedicine payment policies that were introduced for the COVID-19 public health emergency. The House bill removes geographic restrictions and expands originating sites for telehealth services, continues expansion of the practitioners eligible to provide telehealth services, allows mental health services to be provided via telehealth and telecommunications, and continues certain COVID-19 allowances for audio-only telehealth services. The bill is now pending in the Senate.

^[1] Press Release, US Department of Justice, Justice Department Charges Dozens for $1.2 Billion in Health Care Fraud (July 20, 2020), https://www.justice.gov/opa/pr/justice-department-charges-dozens-12-billion-health-care-fraud.