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Telehealth Industry Beware: The DOJ Is Watching

Oct. 6, 2020, 8:00 AM

The coronavirus pandemic has opened the door for a dramatic increase in the number of physicians’ offices offering the remote delivery of medical services, including via interactive videoconference and telephone.

This rapid expansion of telemedicine has caught the attention of the Department of Justice and the potential for illegal kickbacks involving Medicare and Medicaid services. During these pandemic times, there are compliance steps that physicians should consider to stay on the right side of the law.

Prior to the pandemic, Medicare and Medicaid only paid for these services in limited circumstances, such as when they were being provided to rural communities that were considered Health Professional Shortage Areas or outside of any Metropolitan Statistical Area. Many other restrictions applied, including how such care could be delivered.

Now, to curb the spread of the Covid-19 by limiting face-to-face interactions, Medicare and Medicaid have waived many restrictions to allow beneficiaries access to a larger range of telehealth services in more geographic areas. As a result, Medicare beneficiaries’ use of telemedicine services has increased almost 4000% in the last six months, and experts estimate that telemedicine could skyrocket from a $3 billion annual business to more than $250 billion in annual revenues.

Increased Scrutiny Focusing on Kickbacks

With this expansion comes increased scrutiny and enforcement from the DOJ. Even prior to the pandemic, the government had already focused its attention on telemedicine and conducted audits reporting that almost a third of all telehealth claims did not meet the regulatory requirements.

One might suspect that billing fraud (i.e., billing for medically unnecessary services, submitting claims for phantom patients, and upcoding with higher reimbursement rates) related to physicians providing telehealth services would be the primary target of government investigators.

However, DOJ’s enforcement efforts have predominantly focused on telehealth arrangements that implicate the Anti-Kickback Statute (AKS), a statute that prohibits transactions designed to corrupt medical judgment by inducing or rewarding referrals for services reimbursed by federal health care programs.

Kickback Schemes Since February

Since the pandemic, the DOJ has focused on these types of schemes. For example, in one arrangement, a telehealth company allegedly used people’s fears surrounding the pandemic as a pretext for a cold call to TRICARE beneficiaries. The company promised the beneficiaries a free Covid-19 test in exchange for personal information and then used that information to prescribe medically unnecessary prescription drugs, creams and durable medical equipment (DME) in exchange for millions in kickbacks. The terrified citizens never received their Covid-19 tests and TRICARE paid massive sums for useless prescriptions.

In another Covid-19 related scheme, a telehealth company allegedly used the lure of coronavirus testing to bilk Medicare and Medicaid. Starting around February, as the virus spread across the U.S., the telemedicine company collected illegal kickbacks from laboratories in exchange for referring completed Covid-19 and Respiratory Pathogen Panel (RPP) tests, which reimburse at a much higher rate than standard Covid-19 tests. Often times, the prescriptions for Covid-19 testing were also paired with medically unnecessary testing for genetic markers for cancer.

Meanwhile, the government Sept. 30 announced a massive health-care fraud enforcement action, with the main target being telehealth providers. The physicians and nurse practitioners allegedly took payments in exchange for prescribing medically unnecessary DME, genetic testing, and pain medications for unsuspecting patients. The DOJ named 86 criminal defendants, suspended billing privileges for 256 medical providers, and alleged $4.5 billion in losses related to the scheme.

Although the telemedicine world has never been more ripe for growth and profit, the government has shown that it will vigilantly crack down on companies that achieve that increased revenue through kickbacks. In just the past eight months, the government has indicted more than 115 individuals related to more than $6 billion in alleged fraud.

Front-End Compliance Measures for Physicians

However, the government’s focus on AKS violations in telemedicine means there is a simple solution for physicians’ practices looking to get into this space without exposing themselves to criminal and civil liability: avoid entering into any third-party relationships involving the exchange of money for referrals. This basic rule should apply to traditional and telemedicine practices alike.

Moreover, telemedicine practices can still establish relationships with specific vendors and pharmacies while staying on the right side of the law.

Just as with traditional physicians’ services, those practices should:

  1. consult with counsel before entering into any outside business relationships;
  2. establish guidelines for physical examinations and prescribing practices;
  3. monitor the prescribing habits of their physicians and nurse practitioners; and
  4. adopt data analytic tools to identify any abnormal billing behavior.

Working through these compliance measures with counsel on the front end will no doubt limit liability on the back end.

Employing fraud prevention measures is a good idea for all providers—both traditional and those offering telemedicine services.

Assuming providers can steer clear of the problematic AKS arrangements described above and implement a few simple compliance practices, physicians should feel free to expand their practices and engage with their patients via interactive videoconferences.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

Michael Shaheen is a partner in the White Collar & Regulatory Enforcement and Health Care groups in the Washington, D.C., office of Crowell & Moring. A former trial attorney in the DOJ’s Fraud Section, he focuses on federal litigation, investigations, and enforcement actions, with an emphasis on health care fraud cases involving the False Claims Act.

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