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The Justice Department announced charges against 36 people for $1.2 billion in alleged healthcare fraud Wednesday, with more than $1 billion of the total alleged losses stemming from telehealth schemes.
Federal prosecutors charged a telehealth company executive, owners of clinical laboratories, employees at durable medical equipment and marketing companies, and medical providers.
The charges come as the Centers for Medicare and Medicaid Services announced administrative actions against 52 providers, and the Health and Human Services Department issued a warning to providers against participating in telehealth fraud. Telehealth fraud efforts have led to more than $7 billion in fraudulent claims to the federal government, an HHS Office of Inspector General spokesperson wrote in an email.
The Justice Department alleges the labs paid kickbacks and bribes in exchange for referrals from providers working with telehealth and digital health companies, according to a news release
Some of the charges involve cardiovascular genetic testing, which the Justice Department described as a “burgeoning scheme.” in a news release. In one case, the operator of several clinical laboratories allegedly paid more than $16 million to marketers, who then paid kickbacks to telehealth companies in exchange for doctors ordering tests, according to the Justice Department.
Telemarketers were allegedly directed to deceive Medicare beneficiaries into agreeing to cardiovascular genetic testing. The Justice department claims telehealth companies arranged for providers to order tests and equipment with little to no patient interactions.
Providers should be cautious of telehealth fraud schemes, and could face liabilities if they get caught up in them, HHS cautions in a rare special fraud alert also issued Wednesday. According to the HHS OIG’s website, this is the first special fraud alert since 2020.
Providers participating in fraud could be held personally liable under the False Claims Act, anti-kickback statutes or other federal criminal laws, the alert says. Warning signs could include limited provider interactions with patients, compensation from telehealth companies based on prescription volume and companies that only accept payment from federal health programs.
The federal government has been investigating telemedicine fraud since 2019 and schemes have become more common as COVID-19 boosted telehealth utilization, an OIG spokesperson wrote in an email.
Federal and state policymakers are weighing post-pandemic telehealth policy. Twenty-one states now require health insurers to pay the same for telehealth visits as for in-person appointments, according to Manatt Health.
Medicare telehealth flexibilities will continue for 151 days after the whenever federal authorities allow the public health emergency declaration to expire. The designation is currently slated to end in October but could be extended. CMS has taken a cautious route on telehealth expansion so far, allowing greater access to telehealth for behavioral health after the pandemic as long as patients are seen in person every six months.
The alert is not meant to discourage telehealth use or arrangements, OIG said.
“OIG is aware that many practitioners have appropriately used telehealth services during the current public health emergency to provide medically necessary care to their patients,” the alert says. “However, OIG encourages practitioners to use heightened scrutiny, exercise caution and consider the above list of suspect criteria prior to entering into arrangements with telemedicine companies.”
Telehealth advocacy groups have pushed back on the notion that telehealth leads to more fraud than other types of care. In response to previous HHS OIG and Justice Department investigations into telehealth fraud, telehealth wasn’t the source of fraud itself, the trade group Alliance for Connected Care wrote in a 2021 letter to the inspector general.
Jessica Kim Cohen contributed to this story
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