Federal Enforcers Crack Down on Telehealth Genetic Testing Scams

Any doubts as to the priority telehealth fraud has become for federal enforcers were put to rest on July 20 when the U.S. Department of Justice (DOJ) announced a massive National Health Care Fraud Enforcement Action targeting telehealth and telemarketing scams across 13 federal judicial districts. That very same day, the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services issued a new Special Fraud Alert, its first in nearly two years, warning providers to steer clear of suspect telehealth arrangements. Labs need to be extremely wary of what’s going on, especially if they provide genetic testing.

The New Enforcement Action

There has been a series of DOJ enforcement actions, started by the infamous Operation Rubber Stamp, targeting telehealth scams since the federal government issued waivers loosening the restrictions on Medicare coverage of telehealth services during the early weeks of the COVID-19 public health emergency. Under the latest action, criminal charges have been brought against 36 defendants in alleged telehealth fraud schemes involving over $1.2 billion in false claims. Labs figure prominently in many of these schemes, particularly those that provide cardiovascular and cancer genetic (CGx) testing.

False billing of CGx and other genetic tests has been on the government’s enforcement radar even before the telehealth surge. In December 2021, the OIG issued a data briefing finding that Medicare genetic test payments to labs quadrupled between 2016 and 2019, from $351 million to $1.41 billion. OIG also reported that, during those three years:

• The number of genetic testing procedure codes covered by Medicare increased by 161 percent;
• The number of genetic tests Medicare paid for increased by 230 percent;
• The average amount Medicare paid per beneficiary who received at least one genetic test increased by 75 percent;
• The average number of genetic tests paid per beneficiary increased by 43 percent;
• The number of laboratories that received more than $1 million in Medicare payments per year for genetic tests nearly tripled; and
• The number of providers ordering genetic tests for beneficiaries more than doubled.

Use of telehealth arrangements to further genetic testing schemes represents the perfect fusion of what the government considers to be suspicious activities. Under the typical modus operandi, telehealth companies pay kickbacks “to aggressively recruit and reward” providers to order medically unnecessary services for what the OIG calls “purported patients” solicited by the telehealth company. In many cases, the provider has limited or even no interaction with purported patients. The telehealth company then sells the lab test order to third parties that fraudulently bill for the unnecessary services.

Thus, while durable medical equipment was also involved, most of the alleged schemes in this latest DOJ enforcement action involve owners and operators of genetic labs paying illegal bribes and kickbacks to induce medical professionals, who were working with fraudulent telemedicine and digital medtech companies, to refer them patients for unnecessary testing. One departure from previous patterns is that the charges include some of the first prosecutions in the nation related to fraudulent cardiovascular genetic testing.

The OIG Special Fraud Alert

Accompanying the press release about the new DOJ enforcement action was the announcement of the new OIG Special Fraud Alert to help labs and other providers steer clear of potentially suspect arrangements with telehealth companies. The takeaways from the Fraud Alert are the “suspect characteristics,” or red flags, presenting a “heightened risk of fraud and abuse” that OIG says labs and other providers should be on the lookout for before entering into an arrangement with a telehealth company:

• The purported patients for whom the provider orders lab tests are identified or recruited by a telehealth company, telemarketer, 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 provider doesn’t have sufficient contact with or information from the purported patient to make a meaningful assessment of whether the ordered tests are medically necessary;
• The telehealth company compensates the provider based on the volume of lab tests ordered or medical records reviewed;
• The telehealth company only furnishes items and services to federal healthcare program beneficiaries and doesn’t accept insurance from any other payor;
• The telehealth company says it only furnishes items and services to individuals who aren’t federal healthcare program beneficiaries but may in fact bill federal healthcare programs; and/or
• The telehealth company only furnishes one product or class of products, e.g., genetic testing, durable medical equipment, or diabetic supplies, potentially restricting the provider’s treating options to predetermined courses of treatment.

Any one of the above suspect characteristics should be enough to raise your guard; the more you detect, the more hesitant you should be about entering into the arrangement.