HHS OIG Provides Clarity on Telemedicine Arrangements

The U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) published a Special Fraud Alert (Fraud Alert) on July 20, 2022, warning healthcare providers "to exercise caution when entering into arrangements with purported telemedicine companies." Specifically, the Fraud Alert identifies seven "suspect characteristics" of arrangements between healthcare providers and telemedicine companies that potentially create increased risk of fraud and abuse.

The Fraud Alert comes in the aftermath of a coordinated enforcement action with the U.S. Department of Justice (DOJ) and other government agencies that resulted in criminal charges against 36 defendants for more than $1.2 billion in fraudulent healthcare schemes involving telemedicine services. Similarly, the Centers for Medicare and Medicaid Services (CMS) Center for Program Integrity recently announced that it commenced administrative actions against 52 medical providers alleged to have participated in such schemes.

Background: Telemedicine Expands During COVID-19 Pandemic

In response to the COVID-19 pandemic, HHS, Congress and CMS have given life to numerous flexibilities aimed at expanding access to telemedicine services for Medicare beneficiaries and easing regulatory requirements for telemedicine providers. Many of these pandemic-era flexibilities are temporary and will expire when the public health emergency (PHE) ends. The PHE, which has been in place since January 2020, is currently set to expire on Oct. 14, 2022. Certain changes have been made permanent, such as allowing Medicare patients to receive at-home, audio-only services for mental/behavioral healthcare. However, other key flexibilities, such as Medicare reimbursement for audio-only visits for physical health encounters, coverage for telemedicine services regardless of the patient's location in the U.S., including the patient's home, and expansion of the scope of eligible telemedicine providers, have merely been given a 151-day extension beyond the PHE's expiration.

Unfortunately, according to OIG, the increased flexibilities surrounding access to and reimbursement for telemedicine services have led to a proliferation in investigations of fraudulent schemes involving telemedicine companies that have "exploited the growing acceptance and use of telehealth." While the schemes vary – charged defendants include telemedicine company executives and owners, executives of durable medical equipment (DME) companies and clinical laboratories, marketing companies and individual medical professionals – a common element involves the payment of illegal kickbacks and bribes in exchange for referrals by medical professionals working in conjunction with fraudulent telemedicine companies and digital medical technology companies. For example, in many of the arrangements, telemedicine companies allegedly paid individual providers to order expensive and unnecessary genetic tests and DME. Importantly, many of the ordering providers never interacted with the patients or had only a brief telephone call. In another alleged scheme, owners of a marketing company directed telemarketers to employ "deceptive techniques" to induce elderly and/or disabled Medicare beneficiaries to agree to receive genetic testing and equipment.

Laws that may be implicated by such fraudulent telemedicine arrangements include the federal anti-kickback statute, the Civil Monetary Penalties Law (CMPL), criminal healthcare fraud statute, Physician Self-Referral Law (Stark Law), False Claims Act (FCA) and state law corollaries to the foregoing. Penalties for violations of such laws can include civil, criminal and administrative remedies, including significant fines, jail time or exclusion from participation in state or federal healthcare programs.

Suspect Characteristics in Telemedicine Arrangements

The Fraud Alert is primarily intended to provide guidance to healthcare providers who wish to engage in, or are already engaged in, arrangements to provide services through telemedicine. In identifying the following seven suspect characteristics, OIG reinforced its concerns with arrangements that have the potential to result in 1) inappropriate increases in spending for federal healthcare programs and beneficiaries, 2) potential harm to patients through the provision of medically unnecessary care or 3) corruption of healthcare providers' medical decision-making.

• Patient Recruitment: The patients for whom the healthcare provider orders or prescribes items or services are identified or recruited by a telemedicine company using a telemarketing company call center, health fair and/or through internet, television or social media advertising for free or low out-of-pocket cost items or services. In a related webpage, OIG explains that federal healthcare program patients should be wary of being offered "free" or "no-cost" items or services, as "Medicare and the other Federal healthcare programs will never call you to offer free or no cost items and services."
• Insufficient Patient Information: The healthcare provider has insufficient contact with or information from the patient, which increases the likelihood that items or services ordered or prescribed are not medically necessary and may in fact be harmful to the patient. OIG called out telemedicine companies that did not provide sufficient or genuine medical records to providers, and instances where telemedicine companies required the provider to use audio-only technology regardless of patient preferences or the provider's judgment.
• Compensation Based on Referrals: The telemedicine company compensates healthcare providers based on the volume of items or services they order or prescribe but conveyed to the healthcare provider as payment based on the number of medical records reviewed.
• Federal Healthcare Program Patients Only: The telemedicine company only furnishes items and services to federal healthcare program beneficiaries and does not accept insurance from any other payer.
• Carving Out Federal Healthcare Program Patients: The telemedicine company claims to only furnish items and services to individuals who are not federal healthcare program beneficiaries, but the company may in fact bill federal healthcare programs. The OIG has long expressed concern about arrangements that carve out federal healthcare program beneficiaries.
• Limited Scope of Services: The telemedicine company only furnishes a single product or a single class of products (i.e., DME, genetic testing, diabetic supplies or various prescription creams). The OIG explained that this may restrict a provider's treatment options, which could result in care that is not medically necessary or in an interference with the provider's medical judgment.
• Lack of Follow Up: The telemedicine company does not expect healthcare providers to follow up with patients for whom they order or prescribe services. Particularly troublesome are arrangements where the company does not provide healthcare providers with sufficient information to follow up with patients, which may result in healthcare services that are valueless or not in line with the appropriate standard of care. OIG provided the example of a telemedicine company that does not require providers to discuss genetic testing results for genetic tests they have ordered.

OIG explained that the foregoing characteristics are not an exhaustive list of suspect arrangements but rather are "illustrative," and "the presence or absence of any one of these factors is not determinative of whether a particular arrangement with a Telemedicine Company would be grounds for legal sanctions." OIG further clarified that the Fraud Alert is "not intended to discourage legitimate telehealth arrangements," noting that many healthcare providers have appropriately used telemedicine services during the PHE to expand access and provide appropriate care to their patients. Instead, the Fraud Alert is aimed to help healthcare providers identify arrangements that could pose a threat to the integrity of the Federal healthcare programs and the best interests of patients.

Next Steps

Based on OIG's characterization of telemedicine as an enforcement priority and anticipated changes in requirements for Medicare coverage, healthcare providers that bill for telemedicine services should ensure they have appropriate compliance infrastructure in place and that telemedicine arrangements are reviewed and revised as necessary.

For more information and questions regarding legal and regulatory requirements for telemedicine, contact the authors or another member of Holland & Knight's Healthcare & Life Sciences Team.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.