The U.S. Department of Health and Human Services issued a special fraud alert on July 20, 2022, relating to potential fraud concerns in the telehealth industry. Special fraud alerts are rare—this newest alert is only the fourth issued in the last decade. A special fraud alert notifies industry players that there are potentially fraudulent and abusive health care practices that the government has identified and intends to investigate and prosecute. The purpose of the alert is to notify the relevant players of the issue and encourage providers to review their own practices and take immediate actions to improve compliance if necessary.

The telehealth industry has grown exponentially in recent years, especially due to the COVID-19 pandemic. The new special fraud alert identified several suspect characteristics that may be indicative of fraud or abuse:

  • The purported patients for whom the practitioner orders or prescribes items or services were identified or recruited by the telemedicine company, telemarketing company, sales agent, recruiter, call center, health fair, or through internet, television or social media advertising for free or low out-of-pocket cost items or services.
  • The practitioner does not have sufficient contact with or information from the purported patient to meaningfully assess the medical necessity of the items or services ordered or prescribed.
  • The telemedicine company compensates the practitioner based on the volume of items or services ordered or prescribed, which may be characterized to the practitioner as compensation based on the number of purported medical records that the practitioner reviewed.
  • The telemedicine company only furnishes items and services to federal health care program beneficiaries and does not accept insurance from any other payor.
  • The telemedicine company claims to only furnish items and services to individuals who are not federal health care program beneficiaries but may in fact bill federal health care programs.
  • The telemedicine company only furnishes one product or a single class of products (e.g., durable medical equipment, genetic testing, diabetic supplies or various prescription creams), potentially restricting a practitioner’s treating options to a predetermined course of treatment.
  • The telemedicine company does not expect clinicians to follow up with purported patients nor does it provide clinicians with the information required to follow up with purported patients (e.g., the telemedicine company does not require practitioners to discuss genetic testing results with each purported patient).

According to the government, some telehealth companies appear to believe that they can skirt federal enforcement by operating on a cash-pay basis, as some federal statutes require payment to a federal healthcare program as an element of a claim, such as the False Claims Act or Anti-Kickback Statute. However, other federal laws, such as the Travel Act, potentially apply to commercial payors, and some states have anti-kickback and self-referral laws that apply to cash-pay models as well. This notice will also draw the attention of state attorneys general, insurance commissioners, and other agencies. 

Considering the rarity and seriousness of a special fraud alert, all players in the telehealth industry should undertake to review internal practices and procedures now in order to ensure compliance with all relevant laws. 

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection to health care litigation and health care fraud investigations. If you need assistance with such a matter, please contact us today.