Doctors: Don’t Fall Victim to Telemedicine Fraud Schemes

Male doctor talking to a telemedicine patient via cell phone in front of a laptop.

Telemedicine companies are supposed to facilitate medically necessary services to beneficiaries over the telephone via licensed medical professionals. In reality, however, many of these “telemedicine companies” are established to defraud federal healthcare benefit programs, such as Medicare, Medicaid, and TRICARE.

These fraudulent telemedicine companies arrange with physicians to order or prescribe medically unnecessary supplies or services for “patients” who are solicited and recruited by telemedicine companies. While these schemes vary in structure and operation, they often involve prescription drugs, genetic tests, or durable medical equipment (DME), such as orthotic devices.

Anyone associated with these dishonest companies could suffer by association, including physicians and nurse practitioners. If you are a medical professional considering a telehealth side gig, make sure you know what to avoid and what’s at stake.

OIG Alerts Physicians to Exercise Caution When Entering into Telemedicine Agreements

The Department of Health and Human Services Office of Inspector General (OIG) issued a special fraud alert in 2022, warning physicians and other practitioners to exercise caution and use heightened scrutiny when entering into arrangements with telemedicine companies.

“These schemes raise fraud concerns because of the potential for considerable harm to federal healthcare programs and their beneficiaries,” stated the July 2022 Special Fraud Alert,” which may include:

  • An inappropriate increase in costs to federal healthcare programs for medically unnecessary items and services and, in some instances, items and services a beneficiary never receives;
  • Potential to harm 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.”

The OIG advised physicians to watch for these suspicious characteristics:

  • “Patients” are identified and recruited by a call center or telemarketing company, or through the Internet, social media, or television.
  • Limited or no interaction with the purported patient
  • Limited or no access to the patient’s real medical records
  • Physician compensation is based on the volume of items or services ordered or prescribed.
  • All the purported patients are Medicare or other federal health plan beneficiaries and not insured by any other payor.
  • Treatment options are limited to one product or a single class of products, such as durable medical equipment, genetic testing, diabetic supplies, or prescription creams.
  • No expectation or ability to follow up with patients.

The OIG emphasized that its Special Fraud Alert is not intended to discourage physicians from using telehealth or telemedicine to provide medically necessary care to their patients.

Multiple Federal Laws Implicated in Telemedicine Company Schemes

These telemedicine fraud schemes may implicate several federal laws, including:

  • Anti-Kickback Statute, a federal criminal law that can be used to against healthcare providers who willfully and knowingly pay, offer, solicit, or receive any form of remuneration in exchange for referrals or for generating business involving any service or item payable by federal healthcare programs.
  • Civil Monetary Penalties Law gives the Secretary of Health and Human Services (HHS) the power to impose civil money penalties for false and fraudulent claims to federal healthcare programs.
  • False Claims Act, which makes it illegal to knowingly submit false or fraudulent claims to the federal government for payment. Although it specifies the term “knowingly,” the False Claims Act can still apply in cases where violations occur as the result of lack of due diligence or with “reckless disregard.”

In addition, telemedicine rules and regulations vary by state, which is why providers must ensure compliance with their professional license standards, reimbursement, insurance, and other guidelines in the state where a patient receives care.

Physicians can be held personally liable for their involvement in fraudulent arrangements that implicate state or federal regulations.

Feds Are Taking Action

The Centers for Medicare & Medicaid Services (CMS), OIG, and Department of Justice (DOJ) routinely team up to investigate and prosecute laboratory owners and operators, medical professionals, and telemedicine companies involved in alleged fraud and bribery schemes that exploit telemedicine technologies.

In 2023, one coordinated federal investigation led to some criminal charges and administrative actions against 52 medical professionals over more than $1.2 billion in fraudulent billing. According to court documents, these medical professionals made referrals for expensive and medically unnecessary cardiovascular and cancer genetic tests, as well as durable medical equipment.

Another 2023 enforcement action resulted in charges against 24 physicians and other licensed professionals who illegally prescribed prescription drugs that were not medically necessary.

The consequences of being associated with these fraudulent telemedicine companies – no matter how well-intentioned – could include prison time, criminal fines, recoupments, and threats to your professional license.

Physicians: Are You the Victim of a Telemedicine Company Fraud Scheme?

As a doctor or other medical professional, it’s important to keep an eye out for these types of fraudulent schemes. If you are approached about an arrangement with a telemedicine or marketing company, be sure to follow the correct protocol before you put your name behind anything. Be especially cautious when helping elderly or Medicare patients and pay special attention to the characteristics outlined above that could point to a scam.

If you are contacted by the OIG, state Attorney General, DOJ, or other enforcement agency or receive a Civil Investigative Demand requesting medical records or your testimony, contact the healthcare investigation attorneys at Hendershot Cowart P.C. immediately. We can help you gather data and evidence and prepare you to present oral testimony and respond to requests for information to limit the disruption, risk, and overall cost to your practice.

Experienced counsel is vital to protecting your interests. Contact Hendershot Cowart P.C. today to speak with one of our healthcare investigation attorneys.

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