When the U.S. Department of Justice (DOJ) announced in July it had levied criminal charges against 36 defendants across the country for more than $1.2 billion in alleged fraudulent telemedicine and other health care schemes, it became the latest in an ongoing series of criminal behavior by scammers in this arena caught by the federal government. 

Before the COVID-19 pandemic, reimbursement for telehealth services was relatively limited, and technology was used only for specific services or for patients in rural areas. As coverage broadened and increasingly more people used telehealth during the public health emergency, there have been concerns about an increase in fraud. The Department of Health and Human Services’ Office of Inspector General (OIG) released a special fraud alert this summer urging practitioners to remain cautious about entering into business arrangements with telehealth companies, Becker’s Hospital Review reported. Government insurers such as Medicare are among the payers most frequently targeted.

Journalists can find local or other stories about fraud to investigate or get ideas for trend stories by following the DOJ announcements about telemedicine fraud, which include names and ages of the defendants and links to case summaries and court documents. The July 2022 roundup, for example, included one case in which the operator of several clinical laboratories was charged in connection with a scheme to pay over $16 million in kickbacks to marketers. In turn, they paid kickbacks to telemedicine companies and call centers in exchange for doctors’ orders.

In another example, a Florida man was charged with an approximately $21 million scheme. He owned three marketing companies through which he and his co-conspirators allegedly targeted Medicare beneficiaries for genetic testing. He paid bribes and kickbacks to telemedicine companies to obtain signed doctors’ orders prescribing the tests and then sold the patient referrals to laboratories in exchange for kickbacks. The laboratories then billed Medicare for genetic tests that patients did not need and were not used to treat them.

Overall, telemedicine schemes accounted for more than $1 billion of the total alleged intended losses from the 2022 cases.  

“I think what you’re seeing is groups that were already exploiting telemarketing, especially in the Medicare space, like calling and telling individuals about genetic cancer testing or other tests. What the expansion of telemedicine has done is allow them to expand their operations,” Melissa Berry, the lead compliance attorney editor for Thomson Reuters, told AHCJ. “It’s not so much that individual providers are engaging in fraud, it’s that the relaxed standards and requirements [around telehealth] are allowing those criminal organizations that were already operating to exploit telehealth more.”

But some individual providers are being caught as well. In April, a New York orthopedic surgeon was charged with health care fraud in connection with a $10 million telemedicine scheme involving the submission of fraudulent claims to Medicare and Medicare Part D plans. He allegedly submitted claims to Medicare on behalf of beneficiaries without examining them or based on phone conversations lasting less than three minutes, according to a DOJ press release. He also purported to practice telemedicine with companies that paid him for each consultation with a beneficiary, signing prescriptions and order forms for equipment such as orthotic braces that were not medically necessary. 

“Dishonest doctors who think Medicare is a cash cow and connect with telemedicine companies to brazenly steal from this vital taxpayer-funded program will find themselves arrested, prosecuted and their scheme disconnected,” said Breon Peace, U.S. attorney for the Eastern District of New York, in the press announcement.

Types of telehealth fraud

Telehealth schemes vary and change, but here are a few examples of activities that can be held liable under the False Claims Act, which states that any person knowingly submitting false claims to the government is liable for triple the government’s damages plus a penalty linked to inflation for each claim. This list below is culled from an April 2022 blog post by Goldberg Kohn law practice in Chicago and a 2020 blog post by the Association of Certified Fraud Examiners:

• Upcoding means inflating the time spent on telemedicine services and the complexity of those services in efforts to receive more payment than should be made. 
• Misrepresenting virtual services is representing that a virtual service meets the criteria for qualified services under CMS when it doesn’t. Not all telehealth services qualify for reimbursement. For example, office visit evaluations require audio and video interactions with a patient; if the service provided is only telephonic, it does not qualify.
• Billing for services not provided is billing for “ineffective” telehealth appointments, such as ones in which the patient cannot fully see or hear the provider, or services not rendered.
• Kickback and bribery schemes is the incorporation of telemedicine into traditional kickback schemes. For example, telemedicine companies can obtain personal information of government health insurance program beneficiaries from their call centers or telemarketers. After a brief phone call to a beneficiary, or even no patient interaction, the companies pay doctors to give prescriptions or referrals for tests or services to these beneficiaries. With these authorized prescriptions or referrals for testing or medical equipment, companies can bill Medicare and pay kickbacks to the telemedicine companies for their contributions to the scams.

Examples of kickback schemes 

• Compounding pharmacy schemes — Compounding pharmacies combine or alter ingredients of drugs to create a unique product for a particular patient. In a scheme, a compounding company conspires with a telehealth company to prescribe medically unnecessary compounded drugs to patients. The company then bills the government or private insurers for the unnecessary drugs and pays kickbacks to the telehealth company. 
• Durable medical equipment (DME) schemes — Health care providers and DME companies conspire to bill the government or private insurers for medically unnecessary braces, wheelchairs, or other medical equipment.

Warning signs from OIG

The OIG special report included a list of behaviors that should alert practitioners to potential fraud, such as the telemedicine company identifying patients for whom the practitioner should order or prescribe medical items; the practitioner not having enough contact or information about the patient to assess whether the items are necessary; and the telemedicine company paying the practitioner based on the volume of items prescribed. Other warning signs include that the telemedicine company only works with patients who are beneficiaries of federal health care programs or only provides one type of product or service.

Fraudulent cases come to light by different means, said Berry. Sometimes people report them. Other times Medicare staff will observe spikes, such as when a provider goes from one or two recommended genetic screenings per quarter to hundreds or thousands, she said.

You can report telehealth fraud to CMS by calling 1-800-MEDICARE or the Office of the Inspector General at 1-800-HHS-TIPS or online at www.oig.hhs.gov.           

Additional resources

• Department of Justice Telemedicine 2022 Enforcement Action — has an infographic and links to court documents, case summaries and a press release from this year’s crackdown.
• OIG issues alert urging caution around telemedicine arrangements — an article from Becker’s Hospital Review
• Telehealth expansion provides new opportunities for fraud — a blog post from Thomson Reuters
• Telehealth fraud concerns, whether ‘overblown’ or not, could impact the industry’s future — a story from STAT+
• Telehealth fraud —a blog post from Goldberg Kohn law firm
• Common telehealth fraud schemes you should know about — a blog post from the Association of Certified Fraud Examiners (ACFE)
• Telemedicine fraud during the pandemic and beyond — a blog post from the American Health Law Association