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Trends in Telehealth Fraud Enforcement During the COVID-19 Pandemic


Bill Morrison

Neil Issar

Haynes and Boone, LLP

The need for physical distancing during the COVID-19 pandemic brought telehealth to the forefront almost overnight. The Health Resources and Services Administration of the Department of Health and Human Services (HHS) defines telehealth as the use of electronic information and telecommunications technologies to support and promote long-distance clinical health care, patient and professional health-related education, and public health and health administration. Telehealth technologies can include texting, telephone, the internet, videoconferencing, streaming media, and store-and-forward communication.

The pandemic spurred legislative and regulatory changes to reduce barriers to telehealth access and fund increased reimbursement of telehealth services. But increased adoption and more reimbursement opportunities also mean more potential for fraud, including violations of the False Claims Act (FCA), 31 U.S.C. §§ 3729 et seq., and the Anti-Kickback Statute (AKS), 42 U.S.C § 1320a-7b. Accordingly, the Department of Justice (DOJ) has made telehealth fraud an enforcement priority during the pandemic. This article provides an overview of telehealth initiatives implemented as a response to the pandemic and the corresponding trends in government enforcement of telehealth fraud.

 I. Initiatives to Promote Telehealth

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted on March 27, 2020, authorized millions of dollars in telehealth resource grant programs, boosted support for expanded broadband services, incentivized the use of remote patient monitoring for Medicare home health services, and funded new telehealth initiatives for the Indian Health Services and Department of Veterans Affairs. The CARES Act also provided $200 million to fund the FCC’s COVID-19 Telehealth program, which helps provide connected care services to patients at their homes or mobile locations.

On December 27, 2020, the Consolidated Appropriations Act of 2021 expanded access to mental health services furnished through telehealth and provided an additional $250 million for the FCC’s COVID-19 Telehealth program, $3.2 billion to establish an FCC Emergency Broadband Benefit program, and $300 million to support broadband infrastructure development in rural areas. Additional bills are being debated in Congress to further expand connected access and coverage during or even beyond the pandemic.

Federal agencies have also taken actions to facilitate and promote telehealth in response to the pandemic. For instance, the Centers for Medicare & Medicaid Services (CMS) added coverage for nearly 100 eligible telehealth services, gave providers flexibility in waiving copays, and expanded the list of eligible types of providers who can deliver telehealth services. CMS also reduced frequency limitations on telehealth utilization; waived originating site and other requirements to allow Medicare to reimburse telehealth services rendered to both new and established patients in their homes (or any other setting of care); and allowed health home agencies to use telecommunications technology or audio-only services.

In addition to its efforts to facilitate several of the aforementioned initiatives, HHS also recently awarded $6.5 million to the National Telehealth Technology Assessment Resource Center and $1.5 million to the Telehealth-Focused Rural Health Research Center to expand broadband connectivity in rural parts of Alaska, Michigan, Texas, and West Virginia where lack of resources is a significant barrier to telehealth adoption.

State governments have taken similar actions. All fifty states and Washington D.C. have issued guidance expanding telehealth for their Medicare and Medicaid populations, and states that previously did not require payment parity for telehealth services in commercial plans have issued temporary guidance requiring payment parity. Further, many states have waived or modified existing requirements to permit out-of-state healthcare providers to provide qualifying COVID-19-related telehealth services without needing to obtain a license or other authorization from the state.

 II. Recent Trends in Telehealth Fraud Enforcement

The legislative and regulatory changes have dramatically increased telehealth utilization during the pandemic. Data released by CMS shows that providers delivered more than 34.5 million services to Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries via telehealth between March and June of 2020—an increase of over 2,600% when compared to the same period in 2019.

However, greater use of telehealth means more potential for fraud. HHS Operations Officer Michael Cohen explained, “There are unscrupulous providers out there, and they have much greater reach with telehealth. . . . Just a few can do a whole lot of damage.” And on September 30, 2020, former Assistant Attorney General Brian Rabbitt said, “[T]elemedicine offers great promise to Americans, especially during this difficult time, and [the Department of Justice] remain[s] committed to ensuring that that promise is not undermined by fraud and abuse.”

Correspondingly, DOJ and other government agencies have made telehealth fraud an enforcement priority. Two statutes implicated by the government’s enforcement efforts are the FCA and the federal AKS. The FCA imposes liability for knowingly presenting a false or fraudulent claim or making a false record or statement material to a false or fraudulent claim. The AKS prohibits transactions intended to induce or reward referrals for items or services reimbursed by federal healthcare programs. The FCA and AKS often work in tandem because a claim resulting from an AKS violation constitutes a false or fraudulent claim for purposes of FCA liability.

Former Acting Assistant Attorney General Ethan Davis explained that DOJ’s Civil Division “will make it a priority to use the False Claims Act to combat fraud” related to programs created by the CARES Act. Similarly, Deputy Assistant Attorney General Michael Granston expected the FCA to continue to be “an important vehicle for ensuring compliance with the Anti-Kickback Statute” and to “play a central role in the Department’s pursuit of COVID-19 related fraud.”

Typical fraud schemes during the pandemic may include payments of kickbacks in exchange for physicians prescribing or ordering medical tests or equipment; promoting or selling fake COVID-19 testing or unapproved treatments through telemarketing calls and online platforms; and submitting false or fraudulent claims for medically unnecessary services, services that were never provided, more expensive services or procedures than were actually provided or performed, or services furnished under the telehealth flexibilities enacted in response to the pandemic without complying with regulatory requirements.

We have already seen examples of DOJ cracking down on these types of schemes. On February 4, 2020, DOJ unsealed indictments against owners of two telemedicine companies that had locations in New Jersey, Florida, and Georgia. The owners allegedly violated the AKS through a $56 million nationwide scheme in which they arranged for doctors to order medically unnecessary orthotic braces for Medicare beneficiaries in exchange for kickbacks and bribes from patient recruiters, pharmacies, and brace suppliers. They pleaded not guilty and a jury trial is set for September 9, 2021.

On January 11, 2021, DOJ announced the conviction of the owner of a telemarketing call center in Orlando, Florida on several counts of violating the AKS and other healthcare fraud statutes for his role in a $2.8 million kickback scheme. The owner targeted Medicare beneficiaries with telemarketing phone calls falsely stating that Medicare covered expensive cancer screening genetic tests. After beneficiaries agreed to take the test, he paid bribes and kickbacks to telemedicine companies to obtain doctors’ orders authorizing the tests—often without the doctors even speaking with the beneficiaries. He then sold the tests and orders to laboratories in exchange for kickbacks. The owner will be sentenced on April 14, 2021.

Most recently, on January 25, 2021, DOJ announced that five individuals pleaded guilty after being charged with conspiring to defraud pharmacy benefit managers out of $174 million by billing over $931 million for fraudulent prescriptions purchased from a telemarketing company. The telemarketing company was improperly soliciting patient information through fraudulent internet ads. The individuals and the telemarketing company then deceived physicians into writing prescriptions for those patients using a telehealth platform that automatically populated medication information and made it appear that patients had requested those medications. They then submitted claims to pharmacy benefit managers for those prescriptions and misrepresented that they had collected patients’ copays. The individuals will be sentenced in October of 2021.

As the COVID-19 pandemic continues, we are likely to see increased scrutiny of telehealth activities, especially those might involve fraud, remuneration for referrals, or the submission of false or fraudulent claims. DOJ and other government actors have shown that they will vigilantly target both individuals and companies that attempt to take advantage of the increased and necessary reliance on telehealth as millions of Americans isolate, quarantine, or otherwise restrict their face-to-face interactions. Federal and state governments’ responses to the pandemic remain ongoing, and new legislative and regulatory changes may bring about additional changes to enforcement trends.

Please feel free to contact the authors directly with any questions.

Bill Morrison: 214-651-5018 | bill.morrison@haynesboone.com

Neil Issar: 214-651-5281 | neil.issar@haynesboone.com

For more information on the False Claims Act and recent and noteworthy FCA decisions from across the country, check out Bill Morrison’s False Claims Act: 2020 Year in Review program, available from PLI Programs On Demand.

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Disclaimer: The viewpoints expressed by the authors are their own and do not necessarily reflect the opinions, viewpoints and official policies of Practising Law Institute.

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