PATIENTS BEWARE: COVID-19 and The Rise of Telehealth Fraud
by Graham White, graham@mccabe-lawfirm.com
The proliferation of telehealth services during the COVID-19 pandemic has allowed many patients increased access to the care they need, but it has also led to rampant fraud on government health programs. What role do whistleblowers have to play in identifying and redressing this fraud? A major one.
Large-scale fraud upon government funded health programs like Medicare and Medicaid is nothing new. The National Health Care Anti-Fraud Association estimated that healthcare fraud costs the federal government as much as $230 billion annually—some 10 percent of the United States’ annual expenditures on healthcare.[1] The False Claims Act, or FCA, has solidified itself as a quintessential tool to assist the United States in recovering sums from this fraud. It provides for whistleblowers dubbed “Relators”—oftentimes employees of companies involved in the fraudulent schemes who have knowledge of its innerworkings— to file and pursue what are known as qui tam actions on behalf of the United States in order to recover defrauded sums. The recovery in many False Claims Act cases, both for the government and the Relator, is substantial due to the breadth of the schemes and the Act’s treble damages provision. Relators can receive between 10 and 30 percent of the total award.
In the past two years, telehealth’s popularity has exploded. According to the Department of Health and Human Services, “the share of Medicare visits conducted through telehealth in 2020 increased 63-fold, from approximately 840,000 in 2019 to 52.7 million.”[2] In response, the Centers for Medicare and Medicaid Services, or CMS, a federal agency that promulgates regulations related to the administration of Medicare and Medicaid, has significantly expanded what telehealth services are reimbursable and relaxed various other billing requirements.[3]
All of these changes have led to a significant increase in the share of Medicare dollars used to pay telehealth claims, and with that, a roughly proportional increase in the amount of fraud perpetrated using telehealth as its basis. Qui tam cases are filed under seal and generally take longer to progress through the early stages of litigation than more conventional causes of action, so most of the largest fraudulent schemes that have been exposed publicly so far have been so through federal criminal prosecutions. For example, last September, the Department of Justice announced criminal charges against 138 defendants, including 42 doctors, alleging that they were involved in a fraudulent telemedicine scheme “that resulted in approximately $1.4 billion in alleged losses.”[4]
Some rudimentary information about the type of conduct prohibited by the False Claims Act may be helpful in understanding how it creates liability for those involved in these types of schemes. The FCA creates liability where, among other scenarios, a person “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval”, or “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.”[5] A straightforward example of the former would be a doctor billing Medicare for a patient that they did not actually treat. As for the latter, a demonstrative example would be a doctor representing that his office has the proper equipment to perform medical procedures when it in fact does not, and then billing for such services.
As Medicare dollars used to pay for telehealth claims increases, so also the amount of fraud perpetrated through telehealth increases.
Oftentimes, telemedicine fraud schemes are simple. They might involve a provider’s submission of a Medicare claim for a visit with a patient that they never actually conducted or their use of a billing code indicating that the visit was longer or more complicated than it really was. Much of the fraud, however, is more complex. In many cases, it involves telehealth companies that provide logistical and technology services to providers to facilitate telemedicine appointments. These companies will solicit unscrupulous medical providers who will write sham prescriptions or sham orders for unnecessary equipment and services for the patients the telemedicine company sends them. These sham orders are routed through “suppliers” like pharmacies, labs, and medical equipment vendors who bill government health programs and give a cut to the telehealth company for orchestrating the arrangement. In some cases, the patient never even receives the prescription, equipment, or services.
Still yet in other cases, the provider never actually sees the patient, but “rubber stamps” intake forms making it appear as though they had. These schemes also often run afoul of the Anti-Kickback statute, a criminal law targeting any person who:
[K]nowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind…in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program….[6]
These schemes require a steady flow of patients in order to work, so telemarketing companies are often used as recruiters of sorts. Fraudulent telemedicine companies also frequently advertise aggressively online. These sham companies also tend to target elderly patients with the promise of being able to provide cheaper or more efficient care without having to leave the home.
As medicine evolves, fraud on the federal government through its healthcare programs evolves with it. While telemedicine has provided a needed solution to many of the problems with healthcare administration during the pandemic and is sure to retain a large part of its utility even afterwards, it has also provided a wide new avenue for nefarious actors to take advantage of hapless patients, the federal government, and the American taxpayer. Luckily, the FCA has proven to be highly adaptable in rooting out new forms of fraud and providing a path for recovery. But for an FCA case to work, it needs a whistleblower/relator, a brave individual who is willing to come forward and share the knowledge they have. The healthcare system depends on people like these in order to ensure that innovations like telehealth can flourish and are not bogged down by abuse.
The healthcare system depends on whistleblowers or relators to bravely come forward to expose fraud and ensure that innovations like telehealth can flourish and are not bogged down by abuse.
Please contact us at the McCabe Law Firm if you suspect fraud either in telehealth practices or otherwise involving federal or state government funds. You can reach attorneys Jim McCabe or Graham White directly by email (jim@mccabe-lawfirm.com or graham@mccabe-lawfirm.com) or by phone (404-250-3233) to provide a free consultation to discuss your potential case.
[1] Healthcare Fraud Statistics, Blue Cross Blue Shield, https://www.bcbsm.com/health-care-fraud/fraud-statistics.html.
[2] New HHS Study Shows 63-Fold Increase in Medicare Telehealth Utilization During the Pandemic, Dep’t of Health and Human Services (December 3, 2021), https://www.hhs.gov/about/news/2021/12/03/new-hhs-study-shows-63-fold-increase-in-medicare-telehealth-utilization-during-pandemic.html#:~:text=Taken%20as%20a%20whole%2C%20the,Island%2C%20New%20Hampshire%20and%20Connecticut.
[3] See Telehealth for Providers: What You Need to Know, Ctrs. for Medicare and Medicaid Services, https://www.cms.gov/files/document/telehealth-toolkit-providers.pdf
[4] National Health Care Fraud Enforcement Action Results in Charges Involving over $1.4 Billion in Alleged Losses, Dep’t of Justice (September 17, 2021), https://www.justice.gov/opa/pr/national-health-care-fraud-enforcement-action-results-charges-involving-over-14-billion
[5] 31 U.S.C. §3729(a)(1)(A-B).
[6] 42 U.S.C.S. § 1320a-7b.