Tele-Tuesday: OIG Clarifies Stance on Telehealth Fraud Scrutiny

Morgan Lewis - Health Law Scan

Morgan Lewis - Health Law Scan

The US Department of Health and Human Services Office of Inspector General (OIG), the Department of Justice (DOJ), and other federal regulators have grown increasingly concerned about the use of telehealth technologies by perpetrators of various fraud schemes. While this is in part due to the meteoric rise in use of telehealth services during the past year and the need to quickly formalize permanent policy around the technology, the federal government’s concern extends well before the COVID-19 public health emergency (PHE). As part of this increased scrutiny, OIG has made a number of statements critical of the telehealth industry and the perceived lack of controls over virtual services. Telehealth stakeholders, meanwhile, have pushed back that OIG’s concerns about so-called “telefraud” are overly broad. In light of these concerns, OIG issued a statement on February 26, 2021 clarifying its perspective with respect to this new technology. OIG’s statement should be welcome relief for telehealth providers.

Recent enforcement background is critical for understanding OIG’s perspective. For instance, on September 30, 2020, DOJ, with the assistance of OIG, executed a nationwide takedown that primarily targeted various telehealth schemes. These schemes allegedly involved purported telehealth companies paying kickbacks to physicians to prescribe unnecessary orthotics, other DME, lab tests, and pharmaceutical products without performing a substantive exam of a patient. This takedown effort sent waves through the healthcare industry, and many organizations that were looking at telehealth as the next standard for medical care began to rethink their perspective, including Congress and other policymakers. Nevertheless, as we described previously, the fraud schemes at issue in DOJ’s takedown did not involve what stakeholders think of as telehealth services but rather simply used an internet connection as a means to expedite other forms of traditional healthcare fraud.

OIG affirmed this perspective in its recent statement, explaining that:

We are aware of concerns raised regarding enforcement actions related to "telefraud" schemes, and it is important to distinguish those schemes from telehealth fraud. In the last few years, OIG has conducted several large investigations of fraud schemes that inappropriately leveraged the reach of telemarketing schemes in combination with unscrupulous doctors conducting sham remote visits to increase the size and scale of the perpetrator's criminal operations. In many cases, the criminals did not bill for the sham telehealth visit. 

That distinction is important: if an organization is not seeking reimbursement or payment for the telehealth services it is providing, this may indicate to OIG that it is using telehealth technologies for illicit purposes. While OIG’s statement is supportive of the expansion of telehealth generally, telehealth companies that use a “light touch” approach to render medical services should view OIG's message with caution, particularly if their orders or prescriptions may be used to bill Medicare or Medicaid. With the expansion of telehealth services a likely outcome at this point, all telehealth providers should reassess their operations, compliance, and approach to patient encounters to ensure that they are meeting expectations of federal regulators when furnishing services or ordering items, tests, and prescription drugs.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Morgan Lewis - Health Law Scan

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