HHS OIG Issues Special Fraud Alert for Telemedicine

On July 20, 2020, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a special fraud alert targeting remuneration paid to physicians and other practitioners by telemedicine companies. As telemedicine use has increased exponentially over the last two years, so too have the proliferation of telemedicine marketing arrangements and the prosecution of these arrangements by OIG and federal law enforcement. OIG issued the fraud alert in conjunction with the announcement of a new $1.2 billion enforcement action regarding alleged telemedicine fraud.

Generally, the arrangements at issue involve a telemedicine company that may recruit both patients and physicians (or other practitioners). The telemedicine company then pays the physician to review some form of medical record, possibly contact the patient, and order some product or service, generally durable medical equipment (DME) or laboratory testing. OIG has taken the position that the fees paid to physicians and practitioners under these arrangements may constitute unlawful “remuneration” meant to induce or reward referrals under the Anti-Kickback Statute (AKS). Pursuant to the AKS, it is unlawful to knowingly and willfully solicit, receive, offer, or pay any remuneration to induce or reward, among other things, referrals for, or orders of, items or services reimbursable by a federal health care program.

OIG drafted the alert as a notice to physicians and other practitioners to be wary of certain characteristics in these arrangements. OIG outlined several ‘suspect characteristics’ that it believes may increase the risk of fraud and abuse in 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 Telemedicine Company does not expect Practitioners (or another Practitioner) to follow up with purported patients nor does it provide Practitioners with the information required to follow up with purported patients (e.g., the Telemedicine Company does not require Practitioners to discuss genetic testing results with each purported patient).

Although OIG cautioned that it did not intend to discourage legitimate telemedicine arrangements, some of the characteristics that it describes as ‘suspect’ can also be characteristics of legitimate arrangements, such as payment for services personally rendered. In any event, a physician, practitioner, or other party considering such an arrangement should carefully analyze the arrangements and its risks under the AKS and other federal and state law, such as the Stark Law and Eliminating Kickbacks in Recovery Act (EKRA).

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in the Anti-Kickback Statute and Stark Law. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney  at 248-544-0888 or wapc@wachler.com