The COVID-19 pandemic has opened the door for a dramatic increase in the number of physicians’ offices offering the remote delivery of medical services, including via interactive videoconference and telephone. Prior to the pandemic, Medicare and Medicaid only paid for these services in limited circumstances, such as when they were being provided to rural communities that are were considered Health Professional Shortage Areas or outside of any Metropolitan Statistical Area. Many other restrictions applied, including how such care could be delivered. Now, in order to curb the spread of the Coronavirus by limiting face-to-face interactions, Medicare and Medicaid have waived many restrictions to allow beneficiaries access to a larger range of telehealth services in more geographic areas. As a result of this expansion, Medicare beneficiaries use of telemedicine services has increased almost 4000%i in the last six months, and experts estimate that telemedicine could skyrocket from a $3 billion business to one that could generate annual revenues of more than $250 billion.ii
With this expansion may come increased scrutiny and enforcement from the Department of Health and Human Services (“HHS”) and the Department of Justice (“DOJ”) – and for community-based practices, an increased need to focus on compliance and fraud prevention measures. Even prior to the pandemic, the government had already focused its attention on telemedicine and conducted audits reporting that almost a third of all telehealth claims did not meet the regulatory requirements.iii
One might suspect that billing fraud (i.e., billing for medically unnecessary services, submitting claims for phantom patients, and upcoding with higher reimbursement rates) related to physicians providing telehealth services would be the primary target of government investigators. However, DOJ’s previous enforcement efforts have predominantly focused on telehealth arrangements that implicate the Anti-Kickback Statute (“AKS”),iv a statute that prohibits transactions designed to corrupt medical judgment by inducing or rewarding referrals for services reimbursed by federal health care programs.
For instance, in September of 2019, DOJ indicted 35 individuals related to one of the largest healthcare fraud schemes ever charged.v The government’s investigation targeted several physicians providing telehealth services that allegedly entered into illicit kickback arrangements with multiple laboratories specializing in testing to identify genetic markers for certain types of cancer.vi Through intermediaries, the laboratories purportedly delivered a list of Medicare and Medicaid beneficiaries to the telehealth physicians.vii The telehealth physicians would then prescribe the cancer genomic tests for the beneficiaries without ever treating, seeing, or speaking to those beneficiaries.viii In turn, the laboratories, through their intermediaries, supposedly funneled millions of dollars to the telehealth physicians.ix All told, the telehealth physicians allegedly prescribed more than $2.1 billion worth of tainted genetic testing between January 2017 and September 2019.x
Going forward, federal payors will certainly be hunting for these types of schemes and will specifically be on the lookout for remote prescriptions related to the pandemic. For example, in one scheme, telemarketers are allegedly using the pandemic as a pretext for a cold call to Medicare beneficiaries. The telemarketers promise the beneficiaries a free COVID-19 test in exchange for personal information. The telemarketers then bill Medicare for a test that is never actually provided as well as other medically unnecessary services.
Although the telemedicine world has never been more ripe for growth and profit, the government has shown that it will vigilantly crack down on companies that achieve that increased revenue through kickbacks. However, the government’s focus on AKS violations in telemedicine means that there is a simple solution for physicians’ practices looking to get into this space without exposing themselves to criminal and civil liability: avoid entering into any third-party relationships involving the exchange of money for referrals. This basic rule should apply to traditional and telemedicine practices alike.
Moreover, telemedicine practices can still establish relationships with specific vendors and pharmacies while staying on the right side of the law. Just as with traditional physicians’ services, those practices should: (1) consult with counsel before entering into any outside business relationships; (2) establish guidelines for physical examinations and prescribing practices; (3) monitor the prescribing habits of their physicians and nurse practitioners; and (4) adopt data analytic tools to identify any abnormal billing behavior. Working through these compliance measures with counsel on the front end will no doubt limit liability on the back end.
Employing fraud prevention measures is a good idea for all providers—both traditional and those offering telemedicine services. Assuming providers can steer clear of the problematic AKS arrangements described above and implement a few simple compliance practices, physicians should feel free to expand their practices and engage with their patients via interactive videoconferences.
Authored by Crowell & Moring, health policy consultants for Cardinal Health