The Department of Health and Human Services Office of Inspector General (OIG) issued a Special Fraud Alert^[1] (Alert) on July 20, 2022, to highlight areas of concern that OIG has identified in telemedicine relationships. The Alert notified providers and practitioners that they must use caution when entering into certain types of arrangements with telemedicine providers and vendors or risk criminal and civil sanctions for violations of the federal antikickback statute and other laws. OIG noted that telemedicine arrangements are a particular issue of concern following the increased use of telemedicine during the COVID-19 pandemic.

The OIG acknowledged that not all telemedicine companies and arrangements are suspicious. Still, the Alert is designed to help providers identify factors in arrangements that could incur liability under the federal fraud and abuse laws. It also detailed how some companies are using the emerging field of telehealth to organize kickback schemes involving fraudulent orders for items like medical equipment, prescriptions, and other supplies and tests.

The comprehensive nature of the Alert, which included enforcement examples and a “suspect list” of characteristics in an arrangement that may illustrate a heightened risk of abuse, demonstrates that the OIG is serious about investigating telemedicine fraud. We advise practitioners and providers with telemedicine arrangements to carefully read the Alert and analyze whether their existing agreements feature any of the compliance and enforcement risks identified by the OIG.

I. Suspect Arrangements

OIG described features of telemedicine arrangements that raise suspicions in its view. According to the Alert, OIG has found telemedicine companies that arrange with practitioners or providers to order or prescribe medically unnecessary items and services for “purported patients” who are solicited and recruited by the telemedicine company. The telemedicine companies then pay practitioners in exchange for prescribing items or services (1) for these purported patients, even though the practitioners may have limited interaction (if any) with them; and (2) without medical necessity.^[2]  In many instances, the telemedicine company also could sell the order or prescription generated by practitioners to other individuals, and then fraudulently bill for those unneeded items.

Such fraud schemes could cause significant damage to federal health care programs and their beneficiaries in the following ways:

(1) creating an inappropriate increase in costs to Federal health care programs for medically unnecessary items and services and, in some instances, items and services a beneficiary never receives;

(2) creating potential to harm beneficiaries by, for example, providing medically unnecessary care, items that could harm a patient, or improperly delaying needed care; and

(3) corrupting medical decision-making.^[3]

II. Characteristics of Suspect Arrangements

The telemedicine arrangements detailed in the Alert have the potential for violating numerous federal laws, including the federal anti-kickback statute. In the past few years, the OIG and Department of Justice have investigated criminal, civil and administrative fraud matters involving telemedicine companies for providing kickbacks to healthcare practitioners, who, in many instances, ordered medically unnecessary items or services reimbursed by federal healthcare programs.

Notably, a violation of the federal Anti-Kickback statute can lead to liability for both sides of the arrangement – the offeror and the recipient of the remuneration – and can implicate other federal fraud and abuse laws. Practitioners can be personally liable for certain violations.

The Alert described “suspect characteristics” of telemedicine arrangements, including:

• Recruitment of patients directly or through internet, television or social media advertising for “free or low out-of-pocket cost items or services;”
• Insufficient contact between the provider and patient to meaningfully assess medical necessity;
• Compensation paid to the provider based on the volume of items or services ordered or prescribed;
• A focus on federal health care program beneficiaries and exclusion of non-federal payors;
• Claims that federal payors are excluded when they are in fact included;
• Furnishing of a single class of products in a way that restricts the provider’s treatment options to a predetermined course; and
• No expectation of follow-up between the provider and patient or insufficient information given to provider to allow follow-up.^[4]

The Alert furthered cautioned that it was aware of schemes in which “Telemedicine Companies intentionally paid physicians and nonphysician practitioners (collectively, Practitioners) kickbacks to generate orders or prescriptions for medically unnecessary durable medical equipment, genetic testing, wound care items, or prescription medications, resulting in submissions of fraudulent claims to Medicare, Medicaid, and other Federal health care programs.”^[5]

III. Recent Enforcement Activities

The Alert also detailed how practitioners, telemedicine companies and other participants in schemes have been held civilly, criminally, and administratively liable for paying or receiving a payment in violation of the federal anti-kickback statute or for violating other federal laws. OIG provided three examples:

• In April 21, 2021, two nurse practitioners in Montana admitted they conspired to defraud Medicare of millions of dollars in a scheme in which they received money to sign fraudulent orders for orthotic braces. The government found that the nurses received money from certain telemedicine companies to sign brace orders that were prepared by telemarketers who had no medical training or certification. The nurses signed these brace orders for Medicare beneficiaries regardless of medical necessity.^[6]
• In August 2021, the United States Attorney for the Western District of Michigan announced convictions as part of Operation “Happy Clickers” in which providers plead guilty or agreed to civil penalties for signing orders for genetic testing for cancer screening and braces without reviewing medical records.^[7]
• In February 2022, a nurse practitioner in Georgia was found guilty of health care fraud, identity theft and other counts in a multi-million telemedicine fraud scheme. The nurse facilitated orders for more than 3,000 orthotic braces that generated more than $3 million in fraudulent charges to Medicare. She then took the identities of senior citizens, bundled through a telemarketing scheme, and signed her name to fake medical records where she falsely claimed she provided examinations of those patients – and created orders for orthotic braces for patients whom she never met or spoke with – in exchange for money. The nurse’s fraudulent orders were sold to companies that would generate reimbursement from Medicare.^[8]

IV. Conclusion

Providers must evaluate all arrangements in which patients are referred to or otherwise directed to the provider by an external entity. The above examples given by the OIG are not exhaustive. Any arrangement in which a provider gives anything of value to a source of referrals for supplies or services that are covered by a federal health care program – no matter how the arrangement is titled or described – could create antikickback statute or civil liability. Any supply or service that is billed to a federal health care program without proper consideration of whether the supply or service is medically necessary could result in False Claims Act or other criminal, civil, or administrative liability.

Similarly, not every arrangement involving external telemedicine providers is inherently suspect or risky. Providers can collaborate with telemedicine company as long as proper precautions are taken to ensure that any payment to the telemedicine company reflects only the fair market value of the services being rendered to the provider, without consideration for the value or volume of any referrals of federal health care business. Providers should also ensure that they are truly determining that any supplies or services are medically necessary and appropriate after an adequate examination of the patient and supporting laboratory results and records.

Providers would be wise to ensure that any arrangement with an external entity that involves shared patients or referrals is reviewed by competent legal counsel. If you have any questions regarding the Alert or any related contacts, please feel free to contact Michael Glomb at mglomb@feldesman.com, Mindy B. Pava at mpava@feldesman.com, or the FTLF attorney with whom you typically work.

^[1] HHS OIG, Special Fraud Alert:  OIG Alerts Practitioners to Exercise Caution When Entering Into Arrangements With Purported Telemedicine Companies (July 20, 2022)

^[2] Id. at 1.

^[3] Id. at 1-2.

^[4] Id. at 4-5.

^[5] Alert at 1.

^[6] Two Montana Nurse Practitioners Admit Telemedicine Scheme to Defraud Medicare of More than $18 Million

^[7] U.S. Attorney Announces Criminal And Civil Enforcement Actions Against Medical Practitioners For Roles In Telemedicine Fraud Schemes

^[8] Georgia Nurse Practitioner Convicted of Health Care Fraud in Complex Telemedicine Fraud Scheme