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.