HIGH ALERT FOR TELEHEALTH: OIG Releases Special Fraud Alert Addressing “Suspect Characteristics” of Fraud

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On July 20, 2022, the Department of Health and Human Services Office of Inspector General (OIG) released a Special Fraud Alert addressing problematic arrangements observed to date following dozens of fraud investigations involving “Telemedicine Companies” ^[1] that have led to a material incidence of fraud. The significance of this Special Fraud Alert is emphasized by the fact that these alerts are rare – OIG has released only five Special Fraud Alerts since 2003.^[2] When OIG issues these types of alerts, it is an intentional warning as to suspect behavior or activity and acts as a rare glimpse into OIG’s position and focus on certain arrangements. As such, practitioners should pay close attention to the Special Fraud Alert and act accordingly.

It is not surprising that OIG’s fifth Special Fraud Alert addresses the rapidly expanding field of telemedicine, which has been primarily driven by the COVID-19 pandemic, and OIG announced in the Alert its collaboration with the Justice Department to combat the recent rise in telemedicine fraud. In an upcoming article, we will touch on the recent increase in enforcement actions reported by OIG arising out of investigations into payments for telehealth services

The July 20^th, 2022 Special Fraud Alert explains that while telemedicine fraud can take a number of different forms, the fraudulent schemes commonly involve Telemedicine Companies paying kickbacks to providers in exchange for physician orders or prescriptions for medically unnecessary services (for example, durable medical equipment, genetic testing, wound care items, or prescription medications)—the result of which is submission of fraudulent claims to federal and state government payors (Medicare and Medicaid).  OIG explains the foregoing tactics are commonly used to “aggressively recruit and reward” fraudulent conduct by practitioners.

Key takeaways are the seven “suspect characteristics” identified by OIG in healthcare arrangements involving Telemedicine Companies and providers, developed following the recent enforcement activity. OIG warns providers to consider whether one or more of these characteristics are present before agreeing to participate in any telemedicine arrangement, as criminal, civil, or administrative liability could be on the line. Though likely not exhaustive of all characteristics that may raise proverbial red flags, a high level summary of the seven “suspect characteristics” of telemedicine arrangements identified by OIG is as follows:

1. Advertisements for free or low out-of-pocket cost items or services by a telemedicine or telemarketing company, sales agent, recruiter, and/or through internet/TV/social media in order to identify or recruit or identify potential “patients”.
2. Providers that lack sufficient contact with the purported patient to meaningfully assess medical necessity of the items or services prescribed. For example, a telemedicine company may ask a practitioner to review medical records that contain only “cursory patient demographic information” or template-style medical history but fails to give the provider sufficient clinical information to allow for appropriate medical decision-making. OIG also identified instances where a telemedicine company requires providers to engage with purported patients only via telephone, without any other options for telehealth modalities and regardless of the patient’s preference.
3. Providers are paid based on the amount of items or services ordered, sometimes disguised as compensation to the provider based on the number of medical records the provider reviewed.
4. Only items and services for Medicare or Medicaid beneficiaries are offered, with no other type of insurance accepted by the telemedicine company.
5. In the alternative, items and services are purportedly not offered to Medicare/Medicaid patients, but the scheme may in fact still involve Medicare/Medicaid regardless of the alleged carve-out.
6. The telemedicine company offers only one product or type of product (i.e., genetic testing, diabetic supplies, prescription creams), potentially restricting the provider’s treatment options to a predetermined course of treatment.
7. Providers are not expected or required to follow up with the supposed patients or providers are not given the information necessary to follow up. (For example, the telemedicine company does not require providers to discuss genetic testing results with each supposed patient).

Importantly, while telemedicine fraud is on the front burner for OIG, the Special Fraud Alert is specifically not intended to discourage legitimate telehealth arrangements, and OIG is aware of the important role telehealth has played for many patients in receiving medically necessary care during the current and continuing public health emergency.

You can view the OIG Special Fraud Alert here: https://oig.hhs.gov/documents/root/1045/sfa-telefraud.pdf

<sub>[1] OIG includes telehealth, telemedicine, and telemarketing services under the broad definitional umbrella of “Telemedicine Companies.”
[2] The only other Special Fraud Alerts issued since 2003 involved the following topics:
- Speaker Programs by pharmaceutical and medical device companies (November 16, 2020)
- Laboratory payments to referring physicians and physician groups (June 25, 2014)
- Physician-owned entities that derive revenue from the sale of implantable medical devices ordered by their owners for use in procedures performed on their own patients (March 23, 2013)
- Telemarketing by suppliers of durable medical equipment (March 2003, updated in January 2010)</sub>