Telemedicine Fraud During the Pandemic and Beyond
This Briefing is brought to you by AHLA’s Fraud and Abuse Practice Group.
- January 12, 2021
- Matthew Sitton , Butler Snow LLP
The adoption of telemedicine by health care providers has been accelerated throughout the COVID-19 pandemic, and a concerted effort on behalf of federal and state regulators to ensure access to medical care has either relaxed or suspended prior telemedicine requirements while increasing the breadth of reimbursement for telemedicine services. A push by legislators and health care providers has been made—and will continue to be made—to further expand telemedicine coverage by making permanent certain pandemic telemedicine waivers. The impact of these laxer restrictions may create conditions susceptible to fraud and abuse, and recent enforcement by the Department of Justice (DOJ) indicates telemedicine will be increasingly monitored in the post-pandemic world.
Loosening of Telemedicine Requirements
Prior to the pandemic, reimbursement for telehealth services was relatively limited, available only to certain practitioners providing specific services approved to be furnished via telehealth, usually to patients in rural areas at “originating sites.” Following the declaration of a public health emergency, these limitations were upended through passage of the Coronavirus Preparedness and Response Supplemental Appropriations Act and the Coronavirus Aid, Relief and Economic Security Act, which granted the Centers for Medicare & Medicaid Services (CMS) authority to broaden its telehealth coverage pursuant to Section 1135 waivers. CMS quickly expanded reimbursement for telehealth services to additional practitioners and certain audio-only telehealth services, and suspended limitations as to where a patient could receive telemedicine. Medicare licensing requirements for out-of-state practitioners were essentially waived, and increased flexibility regarding physician supervision provided via interactive telecommunications technology was given. The Department of Health and Human Services (HHS) also announced a policy of “enforcement discretion” for Medicare telehealth services furnished pursuant to the Section 1135 waivers, further encouraging the adoption of telehealth and telemedicine amongst providers.
States simultaneously increased their own state-specific telehealth coverage. Arizona required health insurers regulated by its Department of insurance to provide telemedicine coverage when services would otherwise be covered if performed in person. Connecticut modified its statutory definition of telehealth to include audio-only telehealth delivered to established patients under Medicaid and commercial health insurance. Tennessee, like many others, lifted licensing restrictions to allow out-of-state health care professionals to provide care in Tennessee, at its Commissioner of Health’s discretion. And states previously barring the provision of telehealth services without an existing patient-provider relationship suspended any such requirements.
The combination of these actions led to a rapid adoption of telemedicine by medical providers in the United States. From February to April of 2020, Medicare primary care visits conducted via telemedicine increased from 0.1% to 43.5%. Even after in-person primary care visits resumed in May, the use of telemedicine has remained exponentially elevated in comparison to pre-pandemic levels, giving providers and their patients ample time to observe telemedicine’s benefits.
The Push for Permanence
Given the success of telemedicine during the pandemic, lawmakers have made an increased effort to advocate for the permanent expansion of the telehealth waivers. Bills introduced in both the House and the Senate have sought to either extend suspensions of certain telehealth reimbursement requirements beyond the public health emergency or do away with them completely. One such bill, titled the “Protecting Access to Post-COVID-19 Telehealth Act of 2020,” called for the elimination of geographic restrictions for originating sites and restrictions relating to telehealth services furnished in a patient’s home. Others include a “Telehealth Modernization Act,” which would amend 42 C.F.R. § 1395m to allow the HHS Secretary discretion to include additional types of practitioners to be reimbursed for telehealth, and the “Ensuring Telehealth Expansion Act,” which, in addition to other changes, would extend Medicare’s current telehealth flexibilities until December 31, 2025.  Similar bills have been introduced at the state level to increase telehealth coverage for providers under Medicaid programs and state-regulated health insurance.
These legislatures are not acting alone. Various health care providers and provider groups have called for the expansion of telehealth over the course of the pandemic—and prior. The American Hospital Association created a fact sheet detailing the necessary actions to extend or maintain telehealth flexibilities implemented during the public health emergency, titled “Making Telehealth Flexibilities Permanent: Legislation or Regulation?” Another provider group—the American Psychiatric Association—put forth a white paper to “highlight effective and liberalizing changes to telehealth regulations that enabled healthcare to continue during the COVID-19 pandemic” and “provide the basis for the American Psychiatric Association’s advocacy on behalf of continuing and, in some cases, expanding further the changes made during the pandemic.” And a letter to congressional leaders signed by more than 340 groups in health care, ranging from the American Heart Association to various academic medical centers, requested permanent reform as to telehealth restrictions on patient location and the list of practitioners eligible to provide telehealth and for Federally Qualified Health Centers and Rural Health Clinics to be able to continue to provide virtual services post-COVID.
While each of these groups offers various ideas as to how telehealth and telemedicine should be expanded, some of the most common themes involve: (1) expansion of telehealth beyond patients located in rural areas; (2) the removal of certain geographic limitations as to where care can be provided, including Medicare’s requirements for “originating sites”; (3) the inclusion of new practitioner groups; and (4) reimbursement parity for telehealth health care services versus traditional in-person services. With vaccines now available and state legislatures set to convene in early 2021, demands like the above will continue to be amplified.
DOJ Telemedicine Takedown
On September 30, 2020, the DOJ announced the largest health care fraud enforcement in its history, charging over 345 defendants with submitting more than $6 billion in fraudulent claims. More than $4.5 billion of these fraudulent claims related to telemedicine, and 86 defendants in 19 federal judicial districts were charged for participating in schemes where “telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.” Suppliers then purchased the physician or nurse practitioner orders in exchanged for illegal kickbacks or bribes, and subsequently billed federal health care programs. This telemedicine takedown portion of the fraud enforcement, dubbed “Operation Rubber Stamp,” followed two similar initiatives aimed at telemedicine fraud in 2019,  and comments by the HHS Office of Inspector General (OIG) regarding the takedown make clear government regulators increasingly view telemedicine as an area ripe for fraud and abuse.
Although the conduct prosecuted under Operation Rubber Stamp occurred prior to the pandemic, it gives insight as to what the focus of federal enforcers will be following it. Cases show a common pattern of telemedicine being incorporated into traditional kickback schemes, in which “referrals,” or orders for federally reimbursable items or services, are paid for by unscrupulous providers. Beneficiary information was often accumulated by aggressive telemarketers, which were paid a kickback by telemedicine companies. Once a beneficiary’s information was received, the fraudulent telemedicine company would in turn give it to physicians it had employed or contracted with to provide “consultations” and ultimately write orders for health care items or services. However, according to the government, these consultations frequently did not occur, and rarely met Medicare standards for reimbursement.
In a New Jersey case, doctors allegedly paid by telemedicine companies “signed prescriptions and DME orders without ever having physically examined, seen or communicated . . . with the [patients].” The doctors, according to the government, “almost never” consulted the patients’ medical histories aside from information collected by marketing companies, and “rarely if ever” investigated to determine whether a beneficiary lived in a rural area or was at an appropriate site for telemedicine to be delivered. Physicians allegedly were paid on a fee basis for each consultation, and additional pay was included for orders written. The telemedicine consultation itself was not billed by either the provider or the telemedicine company, but only served as pretense for the medically necessity of a particular item in order to receive a kickback, the government alleged.
While failure to meet Medicare reimbursement standards for telemedicine is frequently cited in these cases, the bulk of the illegal conduct alleged still falls under the Anti-Kickback Statute’s general prohibition on payment for referrals. Telemedicine therefore serves to provide new avenues for fraudulent conduct within such schemes but is itself not the source of the fraud, given that the telemedicine visits are not billed. Thus, while the anticipated loosening of telemedicine reimbursement standards may provide federal agencies less authority to implicate dishonest providers, their focus will likely remain on egregious offenders who use telemedicine as a conduit to reach vulnerable beneficiaries across state lines in marketing schemes, which will remain illegal regardless of telemedicine reimbursement changes.
Fraudulent Billing and Coding
More common forms of telemedicine fraud involve provider billing and coding errors, which will only increase in volume as CMS continues to expand its list of reimbursable telehealth services. Such fraud often mirrors that seen in in-person care: upcoding, failing to meet reimbursement standards, providing medically unnecessary services, and submitting claims for services never rendered. However, some concerns seem particularly acute in telemedicine, given the absence of direct patient contact and lack of uniformity as to telemedicine reimbursement rules. Failure to use an appropriate interactive telecommunication system, billing despite technical issues with the interactive telecommunications system, up-coding time spent with a patient, misrepresenting the type of virtual service provided, and phantom billing for patients missing a telemedicine appointment are examples of conduct that may be increasingly scrutinized by third-party payers.
The frequency of such errors—whether purposeful or accidental—can be difficult to ascertain, though the OIG has addressed fraudulent telemedicine billing in three audits of telemedicine services provided prior to the pandemic. In 2018 the OIG released a report auditing a stratified random sample of 100 professional telemedicine claims billed in 2014 and 2015 without an associated originating-site facility fee from a total of 191,118 such claims. The OIG concluded that 31 claims did not meet Medicare requirements, with the primary error (24 claims) being payment for services received by beneficiaries at nonrural originating sites. Additional errors included claims billed by ineligible providers, services provided at unauthorized originating sites, services provided by an unallowable means of communication, and a claim for an uncovered service as well as a claim for a service provided by a physician located outside the United States.
Similar reports were released this year concerning audits of telemedicine services provided under Texas and South Carolina’s Medicaid programs, with strikingly dissimilar results. The South Carolina audit determined that 97 of the 100 sampled payments were made in error, with 95 of these errors resulting from the failure of providers to document their “start and stop times” for services and the “consulting site” location where the services were rendered. Notably, these documentation requirements came from neither statute nor regulation, but instead South Carolina’s Physician Services Provider Manual. In contrast, the Texas audit found 39 of the 40 claims sampled were made in accordance with Texas Medicaid requirements, with the OIG offering no recommendations for improvement.
Although the results of the 2018 audit likely skewed the error rate for improper originating sites given no facility fee was billed, they do indicate that the suspension of certain statutory telemedicine requirements pushed for by legislators and provider groups—such as the rural area requirement—could decrease provider fraud in billing. This is further demonstrated by the discrepancy in the audits of Texas and South Carolina’s Medicaid programs, in which state-specific telemedicine requirements led to drastic differences in billing error. While arguments can be made as to the merits of individual telemedicine requirements at both the state and federal level, the removal of some of these requirements may reduce fraud for honest providers who have provided an otherwise legitimate telemedicine service.
The Telemedicine Fraud of Tomorrow
COVID-19 has permanently changed the delivery of health care. As utilization of telemedicine grows, so does the momentum to make permanent certain aspects of federal and state telehealth waivers. The loosening of certain restrictions, such as Medicare’s requirements for originating sites, may reduce fraudulent billing errors. However, marketing schemes aimed at vulnerable patient populations that employ telemedicine will likely become more prevalent, and enforcement by federal regulators regarding the use of telemedicine in otherwise traditional kickback schemes will increase in the post-COVID world.
 “Telemedicine” is usually defined as a type of “telehealth” involving the provision of remote clinical services via a telecommunications infrastructure over a distance. See, e.g., Am. Academy of Family Physicians, What’s the Difference Between Telemedicine and Telehealth?, https://www.aafp.org/news/media-center/kits/telemedicine-and-telehealth.html (last accessed Dec. 21, 2020). These terms are at times used interchangeably by the Centers for Medicare & Medicaid Services. See, e.g., Ctrs. for Medicare & Medicaid Servs., Medicare Telemedicine Health Care Provider Fact Sheet (Mar. 17, 2020), https://www.cms.gov/newsroom/fact-sheets/medicare-telemedicine-health-care-provider-fact-sheet) (“Telehealth, telemedicine, and related terms generally refer to the exchange of medical information from one site to another through electronic communication to improve a patient’s health.”) (hereafter, “Medicare Telemedicine Fact Sheet”).
 42 U.S.C. § 1395m(m)(1); 42 U.S.C. § 1395u(b)(18)(C).
 42 C.F.R. § 410.78(b), (f).
 42 U.S.C. § 1395m(m)(4)(C); Medicare Telemedicine Fact Sheet, supra note 1 (“Prior to this waiver Medicare could only pay for telehealth on a limited basis: when the person receiving the service is in a designated rural area and when they leave their home and go to a clinic, hospital, or certain other types of medical facilities for the service.”).
 H.R. 6074, 116th Cong. § 102 (2020). Portions of this Act requiring telehealth during the public health emergency be furnished via a “qualified provider” with a preexisting relationship to the patient were subsequently deleted by the Coronavirus Aid, Relief and Economic Security Act.
 H.R. 748, 116th Cong. § 3703 (2020).
 See 42 U.S.C. § 1320B-5(b)(8).
 Ctrs. for Medicare & Medicaid Servs., Covid-19 Emergency Declaration Blanket Waivers for Health Care Providers, at 1, 38 (Dec. 1, 2020), https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf. Those additional professionals allowed to bill for Medicare telehealth services include physical therapists, occupational therapists, speech language pathologists, and others.
 Id. at 2. CMS waived the requirement for an out-of-state practitioner to be licensed in the state where the practitioner is providing services when the provider: (1) is enrolled in the Medicare program; (2) possesses a valid license to practice in the state that which to his or her Medicare enrollment; (3) is furnishing services—whether in person or via telehealth—in a state in which the emergency is occurring in order to contribute to relief efforts in his or her professional capacity; and, (4) is not affirmatively excluded from practice in the state or any other state that is part of the 1135 emergency area.
 Ctrs. for Medicare & Medicaid Servs., Physicians and Other Clinicians: CMS Flexibilities to Fight Covid-19, at 6-7 (Nov. 4, 2020), https://www.cms.gov/files/document/covid-19-physicians-and-practitioners.pdf.
 Medicare Telemedicine Fact Sheet, supra note 1.
 Expansion of Telemedicine, State of Arizona Executive Order 2020-15, at ¶ 1 (Mar. 25, 2020), https://azgovernor.gov/sites/default/files/eo_2020-15_expansion_of_telemedicine_0.pdf.
 Protections of Public Health and Safety During COVID-19 Pandemic and Response - Presidential Primary Postponement and Additional Public Health Measures, State of Connecticut Executive Order No. 7G, at ¶¶ 5a., 5b. (Mar. 19, 2020), https://portal.ct.gov/-/media/Office-of-the-Governor/Executive-Orders/Lamont-Executive-Orders/Executive-Order-No-7G.pdf?la=en.
 An Order Suspending Provisions of Certain Statutes and Rules and Taking Other Necessary Measures in Order to Facilitate the Treatment and Containment of COVID-19, State of Tennessee Executive Order No. 15, at ¶ 2 (Mar. 19, 2020), https://publications.tnsosfiles.com/pub/execorders/exec-orders-lee15.pdf.
 See, e.g., State of Hawaii Executive Order No. 20-02, at ¶ 1.n. (Mar. 29, 2020), https://governor.hawaii.gov/wp-content/uploads/2020/03/2003219-ATG_Executive-Order-No.-20-02-distribution-signed.pdf.
 U.S. Dep’t of Health & Human Servs., Assistant Secretary for Planning and Evaluation, Medicare Beneficiary use of Telehealth Visits: Early Data From the Start of the COVID-19 Pandemic at 1 (July 28, 2020), https://aspe.hhs.gov/system/files/pdf/263866/HP_IssueBrief_MedicareTelehealth_final7.29.20.pdf.
 See J.D. Power, Press Release, Telehealth Patient Satisfaction Surges During Pandemic but Barriers to Access Persist, J.D. Power Finds (Oct. 1, 2020), https://www.jdpower.com/sites/default/files/file/2020-09/2020124%20U.S.%20Telehealth%20Study%20v2.pdf.
 H.R. 7663, 116th Cong. § 4 (2020).
 S. 4375 116th Cong. § 2 (2020).
 H.R. 8156, 116th Cong. § 2 (2020).
 See, e.g., Am. Sub. H. B. No. 679, 133rd Gen. Assembly (Ohio 2020) (as passed by the House of Representatives, June 10, 2020) (expanding telehealth coverage to additional practitioners and prohibiting telehealth cost-sharing from exceeding that for comparable in-person health care services).
 Am. Hosp. Ass’n, Making Telehealth Flexibilities Permanent: Legislation or Regulation (June 2020), https://www.aha.org/system/files/media/file/2020/06/fact-sheet-making-telehealth-flexibilities-permanent-legislation-or-regulation.pdf.
 Am. Psychiatric Ass’n, Support for Permanent expansion of Telehealth Regulations After COVID-19, at 2 (2020), https://www.psychiatry.org/File%20Library/Psychiatrists/APA-Guidance-Permanent-Expansion-COVID-19-Telehealth-Regulations.pdf (last accessed Dec. 21, 2020).
 Letter to Representatives Nancy Pelosi and Kevin McCarthy and Senators Mitch McConnell and Charles Schumer, and Kevin McCarthy (June 29, 2020), https://www.aafp.org/dam/AAFP/documents/advocacy/health_it/telehealth/LT-Congress-PostCOVIDTelehealthPriorities-062920.pdf.
 U.S. Dep’t of Justice, National Health Care Fraud and Opioid Takedown Results in Charges Against 345 Defendants Responsible for More than $6 Billion in Alleged Fraud Losses (Sept. 30, 2020), https://www.justice.gov/opa/pr/national-health-care-fraud-and-opioid-takedown-results-charges-against-345-defendants.
 U.S. Attorney’s Office for the Southern District of Georgia, Operation Rubber Stamp: Major Health Care Fraud Investigation Results in Significant New Charges (Oct. 7, 2020), https://www.justice.gov/usao-sdga/pr/operation-rubber-stamp-major-health-care-fraud-investigation-results-significant-new.
 U.S. Dep’t of Health and Human Servs., Office of Inspector Gen., 2020 National Health Care Fraud Takedown Factsheet (Sept. 30, 2020), https://oig.hhs.gov/documents/root/230/2020HealthCareTakedown_FactSheet_9dtIhW4.pdf (“Since 2016, HHS OIG has seen a significant increase in telefraud.”).
 See, e.g., United States v. Hill, No. 4:20-cr-00067-BMM, Doc. 4 at ¶¶ 18-20 (D. Mont. Sept. 3, 2020), https://www.justice.gov/criminal-fraud/file/1322586/download.
 Id. at ¶ 21.
 See id. at ¶ 26.f. (“Defendant would sign these brace prescriptions for pre-selected braces for Medicare beneficiaries regardless of medical necessity, in the absence of a pre-existing medical provider-patient relationship, without a physical examination, and frequently based solely on a short telephonic conversation with the beneficiary or without any conversation with the beneficiary at all.”).
 United States v. Welwart, et al., No. 2:20-mj-12359-JBC, Doc. 1 at ¶¶ 11-12 (D.N.J. Sept. 2, 2020), https://www.justice.gov/criminal-fraud/file/1322121/download.
 Id. at ¶¶ 1.o., 10.
 Id. at 13.
 Some Medicare contractors take the position that failure to comply with telehealth requirements during a consultation evidences a lack of medical necessity for any subsequently ordered equipment or services. See United States v. Gupta, No. 2:20-cr-00773-MCA, Doc. 1 at ¶ 1.t. (D.N.J. Sept. 11, 2020), https://www.justice.gov/criminal-fraud/file/1321876/download (“Medicare regulations regarding telehealth concerned payment for telehealth consultation services only and did not prohibit ordering DME where the consultation itself was not billed to Medicare. However, some Medicare contractors took the position that the failure to comply with these requirements could inform their determination of medical necessity for DME ordered.”).
 CMS added over 60 telehealth services in its 2021 Physician Fee Schedule final rule. See Medicare Program: CY2021 Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment Policies; Medicare Shared Savings Program; etc., https://public-inspection.federalregister.gov/2020-26815.pdf (last accessed Dec. 21, 2020).
 42 C.F.R. 410.78(a)(3) (“Interactive telecommunications system means multimedia communications equipment that includes, at a minimum, audio and video equipment permitting two-way, real-time interactive communication between the patient and distant site physician or practitioner.”).
 The three primary types of virtual services reimbursed by Medicare include telehealth visits, virtual check-ins, and e-visits. See Medicare Telemedicine Fact Sheet, supra note 1.
 U.S. Dep’t of Health and Human Servs., Office of Inspector Gen., CMS Paid Practitioners for Telehealth Services that Did Not Meet Medicare Requirements, Report No. A-05-16-00058, at 1, 5 (Apr. 2018), https://oig.hhs.gov/oas/reports/region5/51600058.pdf.
 Id. at 5.
 U.S. Dep’t of Health and Human Servs., Office of Inspector Gen., 96 Percent of South Carolina’s Medicaid Fee-For-Services Telemedicine Payments Were Insufficiently Documented or Otherwise Unallowable, Report No. A-04-18-00122, at 5, 6 (Apr. 1, 2020), https://oig.hhs.gov/oas/reports/region4/41800122.pdf.
 Id. at 4.
 U.S. Dep’t of Health and Human Servs., Office of Inspector Gen., Texas Telemedicine Services Were Provided in Accordance with State Requirements, Report No. A-06-18-05001, at 4 (June 3, 2020), https://oig.hhs.gov/oas/reports/region6/61805001.pdf.