Based on recent enforcement actions and increased scrutiny in telemedicine, the Office of Inspector General (OIG) recently published a Special Fraud Alert¹ regarding fraud concerns in arrangements between healthcare professionals (HCPs) and telemedicine companies (including telehealth and telemarketing companies), providing a list of suspect characteristics that may increase criminal, civil, or administrative liability to parties in such arrangements, depending on the facts and circumstances. The OIG noted that a common element among fraud schemes in the telemedicine space is the use of kickbacks to aggressively recruit and incentivize HCPs to order or prescribe medically unnecessary items and services for purported patients solicited and recruited by telemedicine companies, often delaying needed care or not providing opportunities for HCPs to meaningfully determine the medical necessity of such items or services. Examples of high-risk payments included paying HCPs fees based on the volume of federally reimbursable items or services ordered or prescribed by the HCPs to incentive utilization of medically unnecessary items or services; and payment per review, consult, or assessment of medical charts when HCPs were not given an opportunity to review the patient's real medical records.

While the list provided by the OIG is not exhaustive, arrangements that involve one or more of the suspect characteristics identified by the OIG are associated with a heightened risk of fraud and abuse and can implicate significant liabilities under federal and state healthcare laws, including the federal Anti-Kickback Statute (AKS), False Claims Act, and similar state anti-kickback and anti-referral laws. HCPs and companies should exercise caution and avoid these suspect characteristics in arrangements to ensure compliance with healthcare laws.

List of Suspect Characteristics:

• The purported patients for whom the HCP orders or prescribes items or services were identified or recruited by the telemedicine company, telemarketing company, sales agent, recruiter, call center, health fair, and/or through internet, television, or social media advertising for free or low out-of-pocket cost items or services.
• The HCP does not have sufficient contact with or information from the purported patient to meaningfully assess the medical necessity of the items or services ordered or prescribed.
• The telemedicine company compensates the HCP based on the volume of items or services ordered or prescribed, which may be characterized as HCP compensation based on the number of purported medical records that the HCP reviewed.
• The telemedicine company only furnishes items and services to federal healthcare program beneficiaries and does not accept insurance from any other payor.
• The telemedicine company claims to only furnish items and services to individuals who are not federal healthcare program beneficiaries but may in fact bill federal healthcare programs.
• The telemedicine company only furnishes one product or a single class of products (e.g., durable medical equipment, genetic testing, diabetic supplies, or various prescription creams), potentially restricting the HCP's treating options to a predetermined course of treatment.
• The telemedicine company does not expect HCPs to follow up with purported patients and does not provide HCPs with the information required to follow up with purported patients (e.g., the company does not require HCPs to discuss genetic testing results with each purported patient).

Multiple Federal Laws May Be Implicated

The AKS is a broad criminal law that prohibits the knowing and willful payment of any remuneration (or its offering, soliciting, or receiving) to induce or reward referrals or the generation of business involving any item or service payable by the federal healthcare programs, unless an exception or a safe harbor applies. Impermissible remuneration can include anything of value, provided directly or indirectly, such as free marketing services, excessive compensation to HCPs, certain revenue sharing arrangements, lavish meals, expensive hotel stays, and free products. The statute ascribes liability to parties on both sides of an impermissible kickback transaction. The government does not need to prove patient harm or financial loss to find a violation under the AKS, as parties can be guilty of violating the AKS even if a medically necessary service or item was provided. Therefore, in addition to the suspected characteristics noted above, HCPs and companies should be mindful of arrangements that involve any form of remuneration that can lead to the following AKS concerns:

• Overutilization
• Increased program costs
• Corruption of medical decision making
• Patient steering
• Unfair competition

Further, liability under the AKS can also give rise to liability under the False Claims Act and other federal laws.

[1] OIG, Special Fraud Alert: OIG Alerts Practitioners To Exercise Caution When Entering Into Arrangements With Purported Telemedicine Companies, available at https://oig.hhs.gov/documents/root/1045/sfa-telefraud.pdf (July 20, 2022).