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OIG Alert And DOJ Enforcement Action Summary: Telemedicine Arrangements July 28, 2022 – White Collar Crime, Anti-Corruption & Fraud

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Two recent developments in healthcare fraud enforcement
spotlight the government’s continued focus on telehealth and
laboratory testing, and provide direction for life sciences and
healthcare companies as they continue their efforts to build
effective internal compliance programs. First, on July 20, 2022,
the U.S. Department of Health & Human Services Office of
Inspector General (OIG) issued its first Special Fraud Alert since
the agency’s “Speaker Program Guidance” alert from
November 2020, this time focused on the risks associated with
telemedicine and telehealth arrangements. Second, on the same day,
the U.S. Department of Justice (DOJ) announced a $1.2 billion
healthcare fraud takedown. We summarize each of these important
initiatives below.

OIG Special Fraud Alert: OIG Alerts Practitioners
to Exercise Caution When Entering Into Arrangements With Purported
Telemedicine Companies

The July 20, 2022 Special Fraud Alert describes findings from
what OIG describes as “dozens of investigations of fraud
schemes involving companies that purported to provide telehealth,
telemedicine, or telemarketing services” (collectively called
“Telemedicine Companies”) that “exploited the
growing acceptance and use of telehealth.” While the practices
that OIG criticizes vary in their design and operation, one common
component OIG cites is the use of kickbacks to recruit and reward
practitioners-both physicians and non-physicians-into the
purportedly fraudulent schemes. Specifically, in many of the
arrangements it investigated, OIG found that companies paid
practitioners in exchange for ordering or prescribing items or
services (1) for “purported patients” with whom the
practitioners had little or no interaction, and (2) without regard
to medical necessity. OIG further observed that in many instances,
the Telemedicine Companies would in turn sell the orders or
prescriptions to others who then fraudulently billed for the
unnecessary items or services.

OIG describes several “fraud concerns” it believes are
implicated by these arrangements, including: (1) an inappropriate
increase in costs to federal health care programs through the
ordering of medically unnecessary items and services; (2) potential
harm to beneficiaries through medically unnecessary care, harmful
items, or improperly delayed care; and (3) corruption of
providers’ independent medical decision-making.

According to OIG, these purportedly fraudulent schemes implicate
a number of federal laws, including the Federal Anti-Kickback
Statute, a criminal law that prohibits knowingly and willfully
soliciting, receiving, offering, or paying any remuneration to
induce or reward referrals for, or orders of, items or services
billable to a Federal health care program. Under the Federal
Anti-Kickback Statute, parties on both sides of an impermissible
kickback transaction can be liable. Practitioners involved in these
inappropriate arrangements may also be subject to criminal, civil,
or administrative liability under other federal laws, including
OIG’s exclusion authority related to kickbacks, the Civil
Monetary Penalties Law provision for kickbacks, the criminal health
care fraud statute, and the False Claims Act.

In OIG’s recent enforcement experience in criminal, civil,
and administrative fraud cases focused on these kinds of kickbacks,
Telemedicine Companies, practitioners, and other participants have
been held liable for paying or receiving a payment in violation of
the Federal Anti-Kickback Statute, causing a submission of claims
in violation of the False Claims Act, and/or other federal criminal
laws. While the specific facts and circumstances in these cases
varied, OIG identified certain common practices including (1)
practitioners ordering items or services for purported patients
they never examined or meaningfully assessed, and (2) Telemedicine
Companies paying practitioners a fee based on the number of
federally reimbursable items or services they ordered.

In the Special Fraud Alert, OIG also provides a list of
attributes of telehealth and telemedicine arrangements that may
indicate a heightened risk of fraud and abuse. OIG notes this list
of so-called “suspect characteristics” is solely
illustrative-the absence or presence of these characteristics is
not determinative of whether a specific arrangement is actually
improper. OIG identifies the following suspect characteristics of
inappropriate telemedicine arrangements:

  • The purported patients for whom the practitioner orders or
    prescribes items or services 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 does not have sufficient contact with or
    information from the purported patient to meaningfully 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, which may be
    characterized to the practitioner as compensation based on the
    number of purported medical records that the practitioner
    reviewed.

  • 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 a practitioner’s treating options to a
    predetermined course of treatment.

The OIG’s Alert concludes by noting that telehealth services
have been appropriately used by many practitioners to provide
medically necessary care during the COVID-19 public health
emergency, and that OIG does not intend to discourage legitimate
telehealth arrangements. However, OIG emphasizes that practitioners
should exercise caution before entering into arrangements with
telemedicine companies to avoid fraud and any related
liability.

Justice Department Charges Dozens for $1.2 Billion
in Health Care Fraud

Also on July 20, 2022, DOJ announced federal criminal charges
against 36 defendants for more than $1.2 billion in alleged
fraudulent telemedicine, genetic testing, and durable medical
equipment (DME) schemes. The defendants include a range of
healthcare stakeholders, including a telemedicine company
executive, clinical laboratories, DME companies, marketing
organizations, and medical professionals. Additionally, the Centers
for Medicare & Medicaid Services (CMS), Center for Program
Integrity (CPI) announced administrative actions against 52
providers involved in similar schemes.

Most of these investigations center on arrangements that the DOJ
alleged to involve illegal kickbacks and bribes for laboratory
owners and operators in exchange for patient referrals by medical
providers coordinating with fraudulent telemedicine and digital
medical technology companies. DOJ alleged that medical providers
referred patients for expensive and medically unnecessary genetic
tests and DME without any patient interaction or after only a brief
telephone conversation. Providers were also to have placed these
orders regardless of whether the patients actually needed them, and
in many cases the results or equipment were not actually provided
to the patients.

Telemedicine arrangements account for over $1 billion of the
total alleged intended losses associated with this enforcement
action. In one case, an operator of clinical laboratories allegedly
paid over $16 million in kickbacks to marketers who subsequently
paid kickbacks to telemedicine companies in exchange for physician
orders. These orders were allegedly used to submit over $174
million in false and fraudulent Medicare claims for genetic
testing.

This enforcement action comes after several prior telemedicine
enforcement actions involving over $8 billion in fraud, including
Operation Brace Yourself and Operation Double Helix in 2019,
Operation Rubber Stamp in 2020, and the telemedicine component of
the National Health Care Fraud Enforcement Action in 2021.

Maura Friedlander was a contributor author to this client
alert.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.


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