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Telemedicine Fraud & Abuse

What is Telemedicine?

Telemedicine is the use of real time face to face telecommunication by a doctor or clinician to treat a patient at a distant site. The live patient communication software platform is designed and provided by companies that specialize in providing services to the medical field.

For telemedicine to occur three factors must be present:

Different locations of provider and patient at time of treatment
Treatments and services completed must be clinical in nature
Asynchronous (live two way) communication

Currently, for telemedicine to be lawful the physician must be at a “hub-site” (designated medical care location) and the patient at an “spoke-site” (distant origination location).

When medical coverage is available to patients at a distant location, doctors or licensed medical practitioners can treat them clinically. At-a-distance clinical medicine is also part of the telemedicine definition and is what differentiates it from telehealth.

Clinical vs Non-Clinical

Healthcare received by patients remotely must be clinical to be considered telemedicine. Direct clinical treatments are administered by physicians and medically licensed professionals.

Examples of a direct clinical treatment include:

Diagnosis
Treatment
Ongoing Care
Testing

Services outside this area of direct medical care are considered non-clinical. Non-clinical medical industry roles include hospital executives, sales reps, administrators, coders and medical billers.

Non-clinical personnel work outside the scope of telemedicine and are covered under the border definition of telehealth.

Telemedicine vs Telehealth

Those employed in the medical field are familiar with these terms, but the legal and general definition continues to evolve.

Telemedicine, as described above, refers to the direct clinical portion of medicine. Doctors are interacting with people to provide the healthcare they need.

Telehealth is the broader definition and includes all forms of technological medicine.

Examples of telehealth include:

Electronic communication
Medical software and hardware
Support services for at-a-distance care
Delivery mechanisms
Telecommunication technology

Telemedicine and telehealth are linked but are not the same. In simpler terms telehealth is the entire support system of telemedicine.

While different, both are the target of fraud and the scam usually involves both. Massive health care fraud schemes have been uncovered in this new sector of the medical industry.

Fraud & Abuse

The basic type of fraud being committed in telemedicine is no different than pre-technology medical fraud. In fact, it is prosecuted using the same laws as the FCA, Whistleblower Protection Act and by the Medicare Strike Force.

Types of Medical Reimbursement Fraud include:

Improper Coding / Upcoding – Incorrectly coding more expensive treatments
Kickbacks / Bribes – Receiving anything of value for referrals of business
Phantom Billing – Submitting bills for non-existent or unnecessary treatments
Unbundling – Billing individually for bundled services
Upselling Fraud – Medically unnecessary orders

The fraud types are the same, but the fraudulent methods used are new when it comes to telemedicine. For this reason, Federal and State governments advocate and reward the public for help identifying schemes. To identify telemedicine fraud, individuals should look for healthcare violations like the methods described below.

Common Fraud Scams

The methods used for defrauding the government through covered telemedicine treatments, service and medical devices is numerous and complex.

Examples of this can be found in every type of telehealth violation listed above.

Improper Coding / Upcoding

Inaccurate or false invoicing is the highest rate of fraud and abuse in telemedicine (HHS).

A lack of proper telemedical billing knowledge is the reason improper coding has the highest rate of fraud and abuse. A care facility’s team may know how to charge for in-person treatments, like an evaluation and management service (E/M), so they use the same medical coding to submit E/M telehealth service. This is a violation since the service was provided using asynchronous communication.

If there is no intent to defraud or negligence on the part of the provider a successful qui-tam case is more difficult. However, the telemedical coding problem is so great claims are successfully brought on behalf of whistleblowers.

The major issue is when these types of billing code errors change from an innocent one-off mistake, to a pattern of negligence or fraud. Negligence is when individuals knowingly disregard regulations for their own benefit.

Knowingly ignoring the complexity and nuance of telemedicine billing procedures and receiving payment for improper telehealth services is a violation of the FCA. An example of telemed upcoding would be submitting bills for an inflated diagnosis along with the more expensive services required for treating it.

Upcoding and improper coding will continue as the most common type of telemedicine fraud since it is a continuously evolving healthcare system. A more blatant violation is kickbacks.

Medical Kickbacks

Kickbacks are healthcare transactions that reward or induce referrals for services or items that are reimbursed by federally funded health benefit programs.

A telemedicine kickback scheme is responsible for one of the largest health care fraud cases in DOJ/OIG history. Accounting for more than $1.2 Billion in losses to Medicare (Justice.gov).

Anti-kickback regulations should be well defined in any health care, pharmaceutical or medical device business that utilizes telehealth services. Telemedicine services can raise kickback concerns when not properly outlined in a medical company’s policies.

An example would be large hospitals. Hospitals sometimes receive telemedical service equipment at a discounted price. When they provide that to a smaller distant care facility, to boost patient referrals, it can be considered a kickback. A legal argument can be made that larger hospitals are using their purchasing power to induce additional referrals of patients.

This example demonstrates how easily mistakes can occur in the complex system of telemedicine regulations.

Conversely, in the massive settlement case above, a telemedicine company was paying kickbacks to physicians for writing medically unnecessary orders for durable medical equipment (DME) orthopedic braces. This is a blatant violation of the law. The Anti-Kickback Statute (AKS) prohibits anything of value given to a medical company or individual that is intended to induce a referral of government funded medical business.

Incentivizing physicians or care facilities to recommend prescription drugs a common kickback violation and it is usually accompanied by phantom billing.

Fake / Phantom Billing

Phantom billing is submitting requests for reimbursement for services, medical devices or drugs that were never prescribed or completed.

Unlike Upcoding, where actual medical care was given and inflated invoices submitted, fake billing is done without any treatment ever occurring at all. This fraud is sometimes accompanied with monetary kickbacks to patients for going along with the scam. The patients are just as liable if they receive benefits for looking the other way.

In telemedicine live asynchronous communication is required (excluding Alaska and Hawaii). A form of telemed fraud is billing for reimbursement for recorded (not live) video communication as a normal two-way telemedical appointment. Live interaction between patient and doctor never took place. This is a phantom telemedical appointment.

When Medicare recipients receive their monthly benefits breakdown, they overlook the charges the government paid since they are receiving a kickback to ignore the medical facility’s fraudulent behavior. A large portion of fraudulent activity can be found in the medical billing and accounting departments. Another way to scam the taxpayers is through unbundling.

Unbundling

Unbundling is the bifurcation of services that are normally billed together. An easy way to understand this healthcare scam can be found in simple surgeries.

A biopsy commonly includes an incision and closure. Since these occur together Medicaid, Tricare and Medicare reimburse at a lower rate. Unbundling billing fragmentation occurs if providers bill for each of these procedures separately. This increases their profit at the expense of publicly funded healthcare programs and is considered fraud.

This illegal activity is not commonly found in telemedicine yet but as this technology becomes more widely used the potential for unbundling fraud will increase. While this type of scam is rare, telemarketing upselling is a key component in most telemedicine scam.

Upselling Fraud

Upselling fraud is when medical companies, typically telemarketers, solicit patients to use their medical coverage for items or treatments they have no medical reason to need. Patient’s typically are not aware of the scam being perpetrated on them.

This is how it works. Insurance coverage recipients receive phone or email communication which up-sells them on medical devices or services that are covered under their Medicare plans. The telemarketers present a “you’re missing out on benefits” approach to the patient.

The solicitors offer to put them in-touch with a medical facility or licensed medical practitioner that can help them. These companies are usually involved in the illicit activity.

The companies then submit fake invoices (phantom billing) for more expensive services or items (upcoding) and receive payment for their part in the scam (kickbacks). Upselling fraud is usually a combination of multiple telemedicine fraud processes and involves multiple companies. The companies use telemedicine technology to diagnose patients who are then up-sold unnecessarily.

Repayment for services and medical devices, DME orthopedic braces for example, is made by Medicare, Tricare or Medicaid programs. This makes it a violation of the False Claim Act.

Fraudulent Telemedicine: Victims & Whistleblowers

Telemedicine is a rapidly growing industry that has seen a 300% increase since 2001. Expectation is that number will increase even more as the medical world evolves to the new reality of pandemics.

The COVID-19 outbreak will greatly expand the field of telecare throughout the medical industry. Insurance companies and government programs will allow more remote care and diagnosis to be covered. Changes in policy and coverage will continue to expand and evolve at an exponential rate.

Along with this expansion in healthcare comes the fraudsters looking to take advantage of an unprepared system.

There are three key groups involved in most fraud cases brought before the US Federal Court.

Fraudsters – People and companies that intentionally or negligently profit from Government funded programs through illegal means.
Victims – Those taken advantage of by the fraudulent tele-scheme. This group includes the Federal Government, i.e. taxpayers.
Whistleblowers – Individuals who come forward to report fraud and abuse happening within the telemedical services.

Who is Defrauding Telemedicine?

Telemedicine Fraudsters are those looking to take advantage of an vulnerable system by using their in-depth knowledge of the processes to profit illegally. They gather a group of likeminded influential co-conspirators together to start and telemedicine fraud conspiracy.

Understanding the current rules and regulations of telemedicine will help individuals identify and report fraud. Medicaid’s guide to telemedicine can be found here (Medicaid).

In the next decade telemedicine has the potential to become a multi-billion dollar fraud liability to taxpayers and the Federal Government. They will not be the only victims.

Victims of Telemedicine Fraud

The first victim of medical tele-fraud are the taxpayers and Federal/State medical programs. Laws passed and expanded by Congress attempt to protect these groups from being taken advantage of.

More importantly these laws allow for retribution after the fact because fraud scams are difficult to uncover and prove. Therefore, the statute of limitations to file an FCA claim is 6 years if the Federal government knew about the unlawful acts or 3 years for a known scheme.

These first victims of fraud have the means to recover some of the damages that occur from telehealth violations. Other victims have a more difficult road ahead.

The second group of victims are Doctors, licensed practitioners and honest medical companies. They are essentially collateral damage from schemes they may have no idea they were a part of. Additional scrutiny, liability and loss of business can occur. Sometimes even their medical license is put in danger.

Those in the medical field need to be diligent in their efforts to understand current regulations to avoid telemedicine fraud. Reviewing these periodically with your legal counsel is recommended.

This group of victims also represents the most important group in the fight against telemedicine corruption – the whistleblowers.

Blowing The Whistle

A whistleblower (relator) is someone who informs the authorities about a fraudulent scam used to obtain benefits through government funded programs. Typically, they work with or are part of the organization committing fraud.

Federal authorities, like the DOJ and OIG, rely on those with knowledge of fraud to come forward. Insider information is difficult to obtain without help. They offer them two crucial benefits for assistance.

Benefits to Whistleblowers

Protection – The Whistleblower Protection Act forbids exposure and retaliation against those who come forward in good faith to report fraud.
Rewards – To lower financial risk for relators, a reward of 15%-35% of the recovered sum is awarded to them in successful claims.

People can report anonymously if they choose but the protection and reward may not be available to them. They are risking “going it alone” in a workplace under investigation.

To avoid this, and potentially being embroiled in the telemedicine investigation, whistleblower’s should seek legal counsel from an experienced qui-tam or FCA attorney. Telehealth indictments and claims are more successful with a whistleblowers active involvement.

Attorneys will provide guidance and give you options risk free. This guidance can be valuable because a medical fraud attorney will be able to assess the quality of claim you can bring to the table. Whistleblower representatives also provide another layer of protection from workplace retaliation. They will ensure your rights during the Government investigation. For a free consultation reach out today.