Department of Justice (DOJ) Indictments Involving Telemedicine $1.2 Billion Medicare Fraud Scheme

On April 9, 2019, one of the largest healthcare fraud schemes brought about charges against 24 individuals.

This list includes CEOs, COOs and others associated with five telemedicine companies, owners of many durable medical equipment (DME) companies and three licensed medical professionals, for their claimed participation in a healthcare fraud scheme involving more than $1.2 billion in loss for prescribing medically unnecessary durable medical equipment to Medicare beneficiaries. More indictments and investigations are expected to come.

In a collaborative effort between agencies, the Center for Medicare Services and Center for Program Integrity (CMS/CPI) announced that it had taken adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million.

The charges announced mark an alleged scheme spanning nationally and internationally via call centers in the Philippines and throughout Latin America involving the payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist and knee braces that were medically unnecessary. Not only is paying for Medicare patient referrals a clear violation of the federal Anti-Kickback Statute, but the DME companies allegedly paid doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.

The telemedicine providers that were involved were allegedly not in compliance with applicable Medicare rules that govern the practice of telemedicine. These providers were alleged to have written DME prescriptions without ever actually examining or in some instances, even talking to a patient. Not only were they violating federal laws but also state laws governing the practice of telemedicine. In general, telemedicine standards for patient encounters can be considered a fairly straightforward requirement.

In the state of Georgia telemedicine providers must meet the following requirements:

• Have a valid Georgia license if treating patients physically in Georgia
• Examine a patient in person by a Georgia-licensed physician, physician’s assistant or nurse practitioner prior to the telemedicine treatment unless the telemedicine treatment is "equal or superior" to in-person treatment
• Have the patient’s medical history available, plus document and keep valid medical records.

Given the heightened level of scrutiny on the practice of telemedicine, this indictment should serve as a reminder to undertake a comprehensive review of federal and state regulations applicable to one’s practice or business to ensure continued compliance. It is also essential to keep in mind that reimbursement rules for telemedicine may vary between private payers, Medicare and Medicaid programs. Overall the hope is that misconduct and enforcement efforts like the one recently announced will not deter the growth and expansion of telemedicine which can have tremendous benefits such as expanding access to healthcare and reducing hospital admissions.

To read the entire Department of Justice press release click here.

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