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Telehealth Fraud

What is Telehealth?

The Health Resources & Services Administration defines telehealth as "the use of electronic information and telecommunication technologies to support long-distance clinical health care, patient and professional health-related education, health administration and public health." As a subcategory of telehealth, telemedicine is limited to clinical services. Remote care and other telehealth services have the potential to increase access to health care and improve health care outcomes. Patients can use telephone, video, monitoring devices, and other telehealth tools to communicate with practitioners and receive care.

COVID-19 and Telehealth

The COVID-19 pandemic has greatly accelerated the development of telehealth. During the early months of the pandemic, the number of weekly medical visits via telemedicine was 23 times the pre-pandemic level. Centers for Medicare & Medicaid Services ("CMS") also revealed that over 24.5 million out of 63 million Medicare beneficiaries and enrollees received Medicare telemedicine service between mid-March and mid-October 2020. This spike in telemedicine uses is partly due to the high transmissibility of the virus. Services such as consultation, patient screening, and low-risk urgent care for non-COVID-19 conditions may all be conducted virtually, potentially reducing staff and patient exposure to the virus. 

Another reason behind the increase in telehealth services is the expanded CMS reimbursement policy. In response to the COVID-19 pandemic, CMS has issued multiple policies to make telehealth services more available and accessible. Starting on March 6, 2020, and for the duration of the COVID-19 Public Health Emergency ("PHE"), the 1135 waiver authorizes Medicare to reimburse for an expanded list of telehealth services such as emergency department visits and initial inpatient and nursing facility visits. CMS has also lifted geographical limitations on certain telehealth services – previously, CMS would only reimburse for certain telehealth services if the beneficiary resided in rural or other designated areas.

In addition, the Department of Health and Human Resources Office of Inspector General ("HHS-OIG") announced that for the duration of the PHE, physicians and other health care practitioners may reduce or waive "any cost-sharing obligations Federal health care program beneficiaries may owe for telehealth services furnished consistent with the then-applicable coverage and payment rules" under certain conditions. "Cost-sharing obligations" typically include coinsurance and deductibles whose reduction and waiver may constitute a violation of the Anti-Kickback Statute before the HHS-OIG’s new policy.

Telehealth Fraud

Along with the increase in telehealth activity are rising concerns for fraud. The DOJ expects "a continued focus on telehealth schemes, particularly given the expansion of telehealth during the pandemic."

In fact, even before the pandemic, telehealth was highly prone to fraudulent acts due to the absence of direct contact with patient. Health care practitioners who have engaged in any of the below fraudulent activities may be held liable under the False Claims Act ("FCA")

  • Upcoding. In telehealth settings, fraudsters may inflate the time spent on telemedicine services and the complexity of such services so as to receive more payment than should be made. Additionally, as CMS adds more reimbursable items to make telehealth services more accessible during the pandemic, chances for billing and coding errors rise as well.
  • Misrepresenting virtual services. Although CMS has relaxed telehealth reimbursement restrictions, not all telehealth services qualify for reimbursement. Representing that a virtual service meets the criteria for qualified services when in reality it does not can constitute a false claim. For example, in order to be reimbursed by CMS, certain telehealth services such as office visit evaluation require both audio and video interactions. If the service consists of telephonic communication alone, the service does not qualify for reimbursement.
  • Billing for services not provided. Just as billing government health programs for services not rendered at all can result in potential FCA liability, billing for "ineffective" telehealth appointments can result in the same. An appointment where the patient cannot fully see or hear the practitioner is an example of ineffective appointments.
  • Kickback and bribery schemes. Telemedicine can be incorporated into traditional kickback schemes. For example, telemedicine companies can obtain the personal information of government health insurance program beneficiaries from either outside telemarketers or its own call centers. Then, after a brief phone call or no patient interaction at all, the telemedicine companies can pay doctors to give prescriptions or referrals to these beneficiaries. With authorized prescriptions or referrals, pharmacies, testing labs, and medical equipment companies can bill Medicare for such services and pay kickbacks to telemedicine companies for their contribution to the scam. Such scams are made even worse if the services were never provided or did not meet reimbursement requirements.

Recent Cases Involving Telehealth Fraud

In May 2021, DOJ announced first-in-the-nation charges for alleged exploitation of the expanded Medicare telehealth reimbursement policies during the COVID-19 pandemic. Michael Stein and Leonel Palatnik, both of Florida, face charges connected to "an alleged $73 million conspiracy to defraud the United States and to pay and receive health care kickbacks." They allegedly exploited the telehealth waivers, referred beneficiaries for medically unnecessary testing services, and submitted false claims to Medicare for telemedicine encounters that never occurred. In November 2021, laboratory owner Palatnik was sentenced to 82 months in prison. Although this is not an FCA case, similar allegations, if raised by a whistleblower, could be part of an FCA case.

In February 2021, Florida businesswoman Kelly Wolfe pleaded guilty to conspiracy to commit health care fraud and could face up to 13 years in federal prison. Wolfe also entered a civil settlement of up to around $20 million to resolve FCA allegations including falsifying documents to bill for medically unnecessary services and violating the Anti-Kickback Statute.

Allegedly, Wolfe and her co-conspirators established dozens of Durable Medical Equipment ("DME") supply companies under false names, and thus concealed the true ownership of these companies. Through these companies, the conspirators bribed doctors to approve $400 million of DME claims that were then submitted to federal health insurance programs. The conspirators claimed that their abnormally high volume of payment requests is reflective of the increase in telemedicine uses. However, the doctors who approved the claims almost never had telehealth interaction with the beneficiaries. 

In September 2020, the HHS-OIG participated in the largest health care fraud and opioid enforcement action in Department of Justice history. Among the accused, more than 86 criminal defendants allegedly submitted false and fraudulent claims involving telemedicine. These claims added up to a total alleged fraud loss of $4.5 billion. Telemedicine executives engaged in illegal kickback and bribery schemes with doctors, who in turn ordered medically unnecessary services, equipment, and medications for patients with whom they had, at best, only a brief telephonic conversation. While these investigations were initiated by the government and were not connected to an FCA case, a whistleblower may bring forth similar allegations (pertaining to different parties) under the FCA.

What should you do if you encounter telehealth fraud?

If you observe telehealth fraud in conjunction with the submission of false or fraudulent claims to Medicaid, Medicare, or other federal health insurance programs, you can file a qui tam lawsuit on behalf of the government under the False Claims Act. Whistleblowers who sue on behalf of the government may receive between 15 to 30 percent of the money recovered by the government, if the suit is successful.

The whistleblower attorneys at Goldberg Kohn are familiar with cases involving telehealth fraud. If you are aware of telehealth fraud practices, call Goldberg Kohn at 312-284-3258 or contact us online. We are always willing to provide you with a free, confidential consultation to discuss a potential case.

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