Telehealth Fraud

Telehealth refers to medical practices, especially appointments, conducted remotely. Using technologies like video conferencing and secure messaging, patients and providers can interact without meeting in person. Telehealth has proven especially beneficial during the COVID-19 pandemic, reducing patients’ exposure to COVID-19 while maintaining pre-pandemic quality of care in many cases. In the early months of the pandemic, the United States Department of Health and Human Services (HHS) encouraged states to relax longstanding restrictions on telehealth [1]. These relaxations might cause a long-term expansion of telehealth in the United States, bringing its benefits to more patients. However, they also raise new questions about regulations and compliance, especially around telehealth fraud.

To protect the federal government and healthcare providers from fraud, the HHS defines five fraud laws that apply to physicians and healthcare providers. Among these is the False Claims Act, which penalizes knowingly submitting a false claim to Medicare or Medicaid. There is also the Anti-Kickback Statute, which bars providers from knowingly paying a reward (“kickback”) to induce or reward patient referrals or similarly lucrative business deals. For example, if a medical device company pays a doctor to refer devices to patients, and if the doctor accepts such payment, both parties would be charged under the Anti-Kickback Statute. Other laws include the Physician Self-Referral Law, which governs how physicians with certain vested interests can refer their patients, and the Exclusion Statute [2]. Because telehealth is a recent development, legal and policy stakeholders have had fewer opportunities to craft laws about telehealth fraud, but current laws remain applicable to recent telehealth cases.

Under these laws, federal institutions like the Department of Justice have prosecuted telehealth fraud. For example, healthcare firm Regency, Inc. was involved in submitting over $400 million in fraudulent medical equipment claims. The company created sham storefronts, paid unlawful kickbacks, and disguised the high volume of claims by pretending they were due to telehealth appointments [3]. In a similar incident, medical laboratory Panda Conservation Group LLC paid kickbacks to a telehealth company to authorize unnecessary genetic testing, which directly benefited the laboratory [4]. A much larger scheme was uncovered in September 2021, when 43 people were charged with defrauding Medicare using sham telehealth consultations [5]. The general pattern is that bad actors attempt to use telehealth to cover up cases of fraud. These kinds of fraud directly harm stakeholders in the medical industry, but the second-order effects on perceptions about telehealth are currently unknown.

Despite these instances of fraud, stakeholders generally agree that telehealth is beneficial. A wide variety of medical literature supports the benefits of telehealth. Citing peer-reviewed literature, the American Academy of Neurology (AAN) has published a statement in favor of telehealth services alongside in-person care. Cited benefits include improved access, reduced travel time, early interventions, and reduced spread of infectious diseases [6]. Yet, the AAN acknowledges challenges like fraud, cybersecurity, and costs. Each month, hundreds of thousands of patients across the US are harmed when their provider falls victim to a cybersecurity incident [7]. Policymakers and providers should be mindful that new care options will open new pathways for fraud, and new compliance mechanisms are needed to maximize patient outcomes and minimize abuse.

References 

[1] V. A. Canady. Survey Finds Telehealth Services Raise Potential for Fraud. Mental Health Weekly 2020; 30: 43. DOI:10.1002/mhw.32577.  

[2] Fraud & Abuse Laws. HHS Office of Inspector General. URL: https://oig.hhs.gov/compliance/physician-education/fraud-abuse-laws/.  

[3] K. Jercich. Florida Woman to Pay $20.3M after Using Telemedicine to Shield Alleged Fraud. Healthcare IT News. URL: https://www.healthcareitnews.com/news/florida-woman-pay-203m-after-using-telemedicine-shield-alleged-fraud.  

[4] K. Jercich. Florida Man Pleads Guilty in Scheme Exploiting Amended Telehealth Restrictions. Healthcare IT News. URL: https://www.healthcareitnews.com/news/florida-man-pleads-guilty-scheme-exploiting-amended-telehealth-restrictions.  

[5] K. Jercich. DOJ Charges Dozens in $1.1B Telehealth Fraud Crackdown. Healthcare IT News. URL: https://www.healthcareitnews.com/news/doj-charges-dozens-11b-telehealth-fraud-crackdown.  

[6] J. M. Hatcher-Martin, et al. American Academy of Neurology Telehealth Position Statement. Neurology 2021; 97. DOI:10.1212/WNL.0000000000012185.  

[7] Cases Currently under Investigation. HHS Office for Civil Rights. URL: https://ocrportal.hhs.gov/ocr/breach/breach_report.jsf.