U.S. DOJ and HHS-OIG Scrutiny of Telehealth Services and Arrangements at an All-Time High

HHS-OIG Special Fraud Alert on Arrangements With Telehealth Companies

Over the past several years, DOJ and HHS-OIG investigations of allegedly fraudulent schemes involving companies that purported to provide telehealth, telemedicine, or telemarketing services related to healthcare items and services (hereinafter “telehealth companies”) have led to numerous civil, criminal, and administrative resolutions of claims under the Anti-Kickback Statute (AKS), False Claims Act (FCA), and other laws with telehealth companies and others. In response, on July 20, HHS-OIG issued a Special Fraud Alert to help healthcare providers (HCPs) avoid being targeted by unscrupulous telehealth companies. The Special Fraud Alert describes the suspect characteristics of arrangements with telehealth companies that present a heightened risk of fraud and abuse.

One of the common elements of the schemes that have been the subject of enforcement actions is telehealth companies’ use of kickbacks, often described as a payment per review, per audit, per consult, or per assessment of medical charts, to aggressively recruit and incentivize HCPs to generate orders or prescriptions for healthcare items and services, including durable medical equipment (DME), genetic and other laboratory testing, wound care items, and prescription medications. In many cases, the HCPs ordered these items or services based on very limited or no interaction at all with the patients at issue and thus without a meaningful assessment of the patients’ medical condition. As such, the government has alleged that the items and services ordered often are not medically necessary or clinically appropriate, a factor that significantly ramps up enforcement risk in the already high-risk area of financial arrangements between providers and suppliers. In addition, the telehealth companies often sold the orders or prescriptions to other individuals or entities that then fraudulently billed federal healthcare programs (FHCPs), such as Medicare and Medicaid, for the unnecessary items and services in violation of the FCA. HHS-OIG notes that these schemes corrupt medical decision-making, drive inappropriate utilization, and result in patient harm.

To address these risks, HHS-OIG urges the industry to consider the following nonexhaustive list of risk factors when evaluating arrangements with telehealth companies:

1. The patients for whom the HCP orders or prescribes items or services were identified or recruited by the telehealth company, telemarketing company, or sales agent, recruiter, call center, health fair, and/or through the internet, television, or social media for free or low out-of-pocket cost items or services.
2. The telehealth company does not provide the HCP with sufficient contact with, or information from, the patient to permit the HCP to meaningfully assess the medical necessity of the items or services ordered or prescribed. For example, HHS-OIG specifically criticized telemedicine companies that require HCPs to use audio-only technology with patients, regardless of their preference.
3. The telehealth company will pay the HCP based on the volume of items or services ordered or prescribed, which the telehealth company may describe as payment based on the number of medical records the HCP reviews.
4. The telehealth company furnishes items and services only to FHCP beneficiaries and does not accept insurance from any other payor.
5. The telehealth company claims to furnish items and services only to individuals who are not FHCP beneficiaries but may in fact bill FHCPs. HHS-OIG further warns that attempts to carve out FHCP beneficiaries from such arrangements do not necessarily eliminate the fraud and abuse risk presented.
6. The telehealth company limits the HCP’s options to a predetermined course of treatment or furnishes only one product, such as genetic testing, DME, diabetic supplies, or prescription creams.
7. The telehealth company does not expect the HCP to follow up with patients and does not provide the HCP with the information required to follow up with the patient.

In the Special Fraud Alert, HHS-OIG states, as it often does in these types of guidance documents, that the “presence or absence of any one of these factors is not determinative” of whether an arrangement would give rise to legal sanctions.

Simultaneous DOJ Announcement of Criminal Charges Against Telehealth Companies and Providers

On the same day HHS-OIG issued its Special Fraud Alert, DOJ announced criminal charges against 36 defendants in which it will seek to recover more than $1.2 billion related to alleged fraud involving telehealth companies and arrangements with genetic testing labs and DME suppliers. The nationwide crackdown involves the same types of schemes highlighted in the Special Fraud Alert that involve kickbacks to induce medically unnecessary orders and prescriptions and includes charges against a telehealth company executive and its owners as well as some of the nation’s first charges related to allegedly fraudulent cardiovascular genetic testing. The Centers for Medicare & Medicaid Services (CMS), Center for Program Integrity also announced that it took adverse administrative actions against 52 providers involved in similar schemes. While not made public, such actions could include actions to recover overpayments and placing providers on prepayment review. DOJ’s latest telehealth crackdown also includes an indictment against a physician for soliciting and receiving kickbacks — in the form of the opportunity to bill Medicare under more flexible telehealth billing rules implemented during the COVID-19 public health emergency — in exchange for referring patients to particular clinical laboratories for genetic testing.

Implications for Healthcare Providers

During the public health emergency, CMS deliberately sought to encourage greater use of telehealth services in the FHCPs. As COVID-19 remains a threat to the public health, HCPs can and should continue to provide these important services to patients. However, both DOJ and HHS-OIG have made clear that they will carefully assess telehealth arrangements, and this scrutiny heightens the importance of compliance monitoring, including taking into account the red flags identified through enforcement actions and guidance. In light of the shifting enforcement landscape, HCPs should periodically survey their telehealth arrangements for any indications of HHS-OIG’s suspect characteristics, paying particularly close attention to arrangements that rely on the temporary flexibilities implemented by CMS through its waiver authority.

Further, as HHS-OIG’s guidance evolves — for example, HHS-OIG’s Work Plan features several open audits and evaluations investigating potential fraud and abuse involving telehealth services — HCPs should reassess their arrangements regularly. Parties to arrangements with telehealth companies should pay particularly close attention to financial relationships that could implicate the AKS’s incredibly broad prohibition on the offer or exchange of remuneration to induce reimbursable referrals.

Implications for Life Sciences Companies That Do Business With Telehealth Companies

While the Special Fraud Alert specifically addresses HCP arrangements with telehealth companies, HHS-OIG’s scrutiny should cause pharmaceutical and medical device manufacturer companies and clinical laboratories to similarly scrutinize arrangements they have with telehealth companies that could implicate the same concerns. This is particularly true for genetic testing, which is currently the subject of a wave of enforcement scrutiny both in the telehealth context and beyond. Manufacturers and genetic testing companies may not have full visibility into a contracted telehealth company’s downstream arrangements with HCPs. However, manufacturers and testing companies should conduct appropriate due diligence of their current and prospective telehealth company partners to assess whether such companies’ relationships with HCPs include any of the suspect factors identified by HHS-OIG and ensure that their contractual arrangements with telehealth companies have robust representations and warranties to this effect.

For example, manufacturers and testing companies should be wary of telehealth companies that, in fact, bill FHCPs even though they claim to furnish items, such as genetic tests, only to individuals who are not FHCP beneficiaries. On the flip side, telehealth companies that furnish items or services only to FHCP beneficiaries may also be suspect. Finally, manufacturers and laboratories should ensure when possible that the telehealth company does not limit the HCPs to only prescribing or ordering one of the manufacturer’s or laboratory’s medications or products and should carefully scrutinize the payment terms of their arrangement with the telehealth company in addition to the payment terms between the telehealth company and the HCP(s).