Hogan Lovellls published a synopsis of federal enforcement activity that lead to their conclusion that “the implementation of electronic health records (EHR) and rapid expansion of telemedicine has caught the attention of the Department of Justice (DOJ) and the qui tam relators’ bar, prompting rigorous enforcement actions and increasing False Claims Act (FCA) cases.”
DOJ has traditionally been wary of telemedicine. Even before the COVID-19 pandemic and the accompanying rapid expansion of telehealth, enforcement in the telemedicine industry was on the rise. In 2019, DOJ pursued enforcement actions in the telehealth space that involved claims for durable medical equipment (DME) and for compound medicines.
Through “Operation Brace Yourself,” DOJ targeted an alleged fraud and kickback scheme through which DME companies paid illegal kickbacks and bribes to medical professionals working for fraudulent telemedicine companies. In exchange, the medical professionals referred Medicare beneficiaries to the conspiring DME companies for back, shoulder, wrist, and knee braces that were medically unnecessary.
The DOJ investigation resulted in enforcement actions against 24 defendants associated with five telemedicine companies, as well as the owners of dozens of durable medical equipment companies and three licensed medical professionals. According to DOJ, the fraud schemes involved more than $1.2 billion in loss.
Traditionally, Medicare’s coverage of telemedicine has been extremely limited. As a result of the pandemic, telehealth service providers were granted broad flexibility to provide telemedicine services and this flexibility remains today. The easing of restrictions stemming from the COVID-19 pandemic has prompted a dramatic increase in the use of telehealth.
It seems unlikely that the federal government will reinstate pre-pandemic restrictions on telehealth services given the increased popularity and reliance on telehealth services. Indeed, Congress has introduced several bipartisan bills to address post-pandemic telehealth services, signaling that utilization of telehealth services will likely remain prevalent.
In October of 2020, DOJ announced a telehealth enforcement action for a fraudulent DME billings scheme dubbed “Operation Rubber Stamp.” The scheme involved allegedly paying medical professionals to order DME, genetic and other diagnostic testing, and pain medications without sufficient patient diagnostic interaction, resulting in $1.5 billion in fraudulent billings to government health care insurance programs.
False Claims Act (FCA) violations have been alleged and resolved in an ongoing investigation dubbed Operation “Happy Clickers,” which involves allegations that physicians “approved orders for medically unnecessary braces and cancer genetic testing despite many red flags that these items and services were illegitimate.”
In recent years, DOJ has pursued several FCA cases related to Electronic Health Records (EHR) that have led to large settlements and highlight various FCA risks.
For example, in 2020, Practice Fusion Inc, a health information technology developer, paid $145 million to resolve criminal and civil investigations relating to its EHR software, including a $118.6 million FCA settlement. The resolution addressed allegations that Practice Fusion “extracted unlawful kickbacks from pharmaceutical companies in exchange for implementing clinical decision support (CDS) alerts in its EHR software designed to increase prescriptions for their drug products.”
FCA and other fraud investigations relating to telehealth fraud and EHR are expected to continue. Brian M. Boynton, Acting Assistant Attorney General for the Civil Division at the Department of Justice, recently stated that he expects “a continued focus on telehealth schemes, particularly given the expansion of telehealth during the pandemic.” He also identified fraud relating to EHR as another area that is likely to be a focal point of future enforcement efforts.
The Department of Health and Human Services Office of Inspector General (OIG) has also made clear that it is “conducting significant oversight work assessing telehealth services during the public health emergency.”
Telemedicine and EHR technologies have rapidly changed patient care, introducing opportunities for potential fraud and abuse and exposing gaps in oversight. Claims administrators should expect increased fraudulent activities in these areas going forward and take steps to minimize their risk.