Based on recent enforcement actions and increased scrutiny of telemedicine, the Office of Inspector General (OIG) recently issued a Special Fraud Alert1 regarding issues of fraud in agreements between healthcare professionals (HCPs) and telemedicine companies (including telehealth and telemarketing companies), provide a list of suspicious characteristics that may increase criminal, civil or administrative liability of the parties to these agreements, depending on the facts and circumstances. The OIG noted that a common element of telemedicine fraud schemes is the use of bribes to aggressively recruit and induce healthcare professionals to order or prescribe items and medically unnecessary services to purported patients solicited and recruited by telemedicine companies, often or not delaying needed care. provide healthcare professionals with the ability to meaningfully determine the medical necessity of such items or services. Examples of high-risk payments included payment of healthcare professional fees based on volume of federally reimbursable items or services ordered or prescribed by healthcare professionals to induce use of items or medically unnecessary services; and payment per examination, consultation or assessment of medical records when healthcare professionals have not had the opportunity to review the patient’s actual medical records.
Although the list provided by the OIG is not exhaustive, arrangements that involve one or more of the suspicious characteristics identified by the OIG are associated with an increased risk of fraud and abuse and may involve significant liabilities under the federal and state health care laws, including the Anti-Kickback Statute (AKS), False Claims Act, and similar state anti-kickback and anti-referral laws. Healthcare professionals and businesses should exercise caution and avoid these suspicious features as part of arrangements to ensure compliance with healthcare laws.
List of suspicious characteristics:
- The purported patients for whom the healthcare professional is ordering or prescribing items or services have been identified or recruited by the telemedicine company, telemarketing company, sales agent, recruiter, call center, salon healthcare and/or via the Internet, television or social media advertising for free or low-cost items or services.
- The healthcare professional does not have sufficient contacts 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 healthcare professional based on the volume of items or services ordered or prescribed, which may be referred to as healthcare professional compensation based on the number of purported medical records that the healthcare professional has examined.
- The telemedicine company provides items and services only to recipients of the federal health care program and does not accept insurance from any other payer.
- The telemedicine company claims to only provide items and services to people who are not federal health care program recipients, but who can actually bill federal health care programs.
- The telemedicine company only provides a single product or class of products (e.g., durable medical equipment, genetic testing, diabetic supplies, or various prescription creams), potentially limiting the healthcare professional’s treatment options to a predetermined treatment.
- The Telemedicine Company does not expect healthcare professionals to follow up purported patients and does not provide healthcare professionals with the information necessary to follow up purported patients (for example, the Company does not does not require medical professionals to discuss genetic test results with every alleged patient).
Multiple Federal Laws May Be Involved
The AKS is a general criminal law that prohibits the knowing and willful payment of any compensation (or the offering, solicitation, or receipt thereof) to induce or reward referrals or the generation of business involving any item or service payable by Care Programs federal health authorities, unless an exception or safe harbor applies. Ineligible compensation may include anything of value, provided directly or indirectly, such as free marketing services, excessive compensation for healthcare professionals, certain revenue-sharing agreements, lavish meals, expensive hotel stays and free products. The law assigns liability to parties on both sides of an impermissible bribe transaction. The government does not need to prove patient harm or financial loss to find a breach of the AKS, as parties may be guilty of breaching the AKS even if a medically necessary service or item has been provided. Therefore, in addition to the suspected characteristics noted above, healthcare professionals and companies should be alert to agreements involving any form of compensation that may result in the following AKS issues:
- Increase in program costs
- Corrupt medical decision-making
- Patient management
- Unfair competition
In addition, liability under the AKS may also give rise to liability under the False Claims Act and other federal statutes.
For more information
For questions regarding the OIG Special Fraud Alert and health law compliance, please contact David Hoffmeister, James Ravitz, Georgia Ravitz, Eva Yin, or any member of Wilson Sonsini’s FDA Regulatory, Health, and Consumer Products practice.
Eva F. Yin contributed to the preparation of this Wilson Sonsini Alert.
 BIG, Special Fraud Alert: OIG Urges Practitioners to Exercise Caution When Entering into Agreements with Purported Telemedicine Companiesavailable at https://oig.hhs.gov/documents/root/1045/sfa-telefraud.pdf (July 20, 2022).