Whenever new technologies emerge or new pots of government funds for assistance are available, you can count on one thing (as the sun rises and sets) – fraudsters will figure out a way to steal money from innocent persons and taxpayers. 

While everyone has been chasing the cryptocurrency boom, fraudsters have embraced crypto technology to rip off unsuspecting investors with promises of wealth.  For every wealth crypto investor, there are hundreds who have lost their investments, sometimes even their retirement. 

During the Pandemic, the federal PPP Loan program was offered to keep businesses afloat in response to economic devastation.  And fraudsters quickly came out of the woodwork to steal money from the trough with unbridled greed. 

In the healthcare sector, we have witnessed the growing use of telehealth delivery of medical services.  Instead of driving to a physician’s office, patients can now consult using the benefit of telecommunications advances.  Federal, state and private insurance companies increased reimbursement, and quickly fraudsters targeted this new avenue for fraud.  In April 2020, nearly half of all primary care visits were conducted by telehealth systems.  And patients continue to demand use of telehealth alternatives.  By 2025, patients are expected to incur over $100 billion in telehealth costs.

In response to the rise of fraud, the Justice Department has taken notice and increased criminal prosecutions of telehealth fraud schemes. As noted in last week’s blog posting, DOJ executed a nationwide takedown, including a large case in Miami in which 11 defendants were arrested for their submission of over $2 billion in telemedicine fraudulent claims. 

The Health and Human Services Office of Inspector General (“HHS-OIG”) issued a fraud alert in July 2022, warning consumers and insurance providers of fraudulent schemes conducted by telehealth, telemedicine or telemarketing services (collectively referred to as “telemedicine companies”).  HHS-OIG noted, for example, that telemedicine companies paid physicians and non-physician 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.

Telemedicine companies employ a variety of means to execute their fraudulent schemes, using international and domestic telemarketing call centers, staffing companies, practitioners, marketers, brokers, and others. Telemedicine companies offer physicians lucrative bribes to order or prescribe items and services for patients with whom they have little to no contact and/or for medically unnecessary services.  In some cases, the physician only consults the patient on the telephone and makes no attempt to review the patient’s medical records. Often, telemedicine companies direct physicians to order a pre-designated items or service regardless of medical necessity or clinical need. Additionally, telemedicine companies may sell the specific order for items or services to other individuals or entities that then issue a fraudulent bill for the unnecessary items and services.

Under the Anti-Kickback statute (“AKS”), providers and physicians, both sides of the transaction are liable for such arrangements.  To assist practitioners in identifying risky telemedicine companies, HHS-OIG identified the following red flags:

• The practitioner meets with patients who were identified or recruited by the telemedicine company, telemarketing company, sales agent, recruiter, call center, health fair, and/or through internet, television, or social media advertising for free or low out-of-pocket cost items or services.

• The practitioner has minimal contact with or information from the so-called patient to assess the medical necessity of the items or services ordered or prescribed.

• The telemedicine company compensates the practitioner based on the volume of items or services ordered or prescribed.

• The telemedicine company only furnishes items and services to Federal health care program beneficiaries and does not accept insurance from any other payor.

• The telemedicine company claims to only furnish items and services to individuals who are not Federal health care program beneficiaries but may in fact bill Federal health care programs.

• The 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 treatment options to a predetermined course of treatment. In addition, a telemedicine company may provide a practitioner with purported “medical records” that reflect only cursory patient demographic information or a medical history that appears to be a template.

• The telemedicine company makes it clear that no follow up care is to be provided to the so-called patient, nor does it provide practitioners with information needed for such follow up. 

Typically, fraud cases involve at least one practitioner who orders or prescribes items or services for so-called patients they never examined or assessed for medical necessity of items or services ordered or prescribed.