How to Guard Your Lab from Telehealth Liability Risk

As its popularity and utilization grow, telehealth is becoming an increasing priority for federal enforcement. On July 20, the U.S. Department of Justice (DOJ) announced a National Health Care Fraud Enforcement Action across 13 jurisdictions, resulting in charges against 36 individuals involved in telehealth fraud schemes involving lab testing and other medical services generating over $1.2 billion in Medicare claims. On the very same day, the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services issued a Special Fraud Alert to help labs and other providers steer clear of potentially suspect arrangements with telemedicine companies.

The OIG Fraud Alert

This is the first Special Fraud Alert the OIG has issued in nearly two years. The alert first describes how telehealth fraud scams work. While varying in design and operation, they follow a common pattern under which telemedicine companies (which we’ll refer to as “telemeds”) pay kickbacks “to aggressively recruit and reward” providers to order or prescribe medically unnecessary items and services for what the OIG calls “purported patients” solicited by the telemedicine company. In many cases, the provider has limited or even no interaction with purported patients. Don’t worry, you don’t need to talk to the purported patient or review their medical record, the telemed assures the provider. Telemeds then sell the lab test order or prescription to third parties that fraudulently bill for the unnecessary items and services.

According to the OIG, these schemes potentially violate a number of federal laws, including the Anti-Kickback Statute (AKS) ban on knowingly and willfully soliciting or receiving (or offering or paying) any remuneration in return for or to induce referrals for, or orders of, items or services reimbursable by Medicare or other federal healthcare programs. Both sides of the telehealth kickback transaction face AKS liability, the OIG warns. Provider arrangements with telemeds that involve kickbacks can also lead to exclusions, civil monetary penalties (CMPs), treble damages under the False Claims Act (FCA), and criminal penalties.

6 Red Flags to Watch Out for in Telemedicine Arrangements

For lab compliance managers seeking to keep their company out of hot water, the most significant takeaway from the Special Fraud Alert are the six red flags suggesting that a provider arrangement with a telemed presents a “heightened risk of fraud and abuse.” Specifically, the OIG says labs should be on the lookout for the following "suspect characteristics” before entering into arrangements with telemeds:

1. The purported patients for whom the provider orders lab tests (or other items or services) were identified or recruited by the telemed telemarketing company, 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;
2. The provider doesn’t have sufficient contact with or information from the purported patient to make a meaningful assessment of whether the ordered tests (or other items or services) are medically necessary;
3. The telemed compensates the provider based on the volume of lab tests (or other items or services), which the telemed may describe to the provider as compensation based on the number of purported medical records the provider reviewed;
4.  The telemed only furnishes items and services to federal healthcare program beneficiaries and doesn’t accept insurance from any other payor;
5. The telemed 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
6. The telemed only furnishes one product or class of products, e.g., genetic testing, durable medical equipment, diabetic supplies, or various prescription creams, potentially restricting the provider’s treating options to predetermined courses of treatment.

Any one of the suspect arrangement red flags should be enough to raise your compliance antennae; the more red flags, the stinkier the arrangement should smell.

Takeaway

Many providers have appropriately used telehealth services to provide medically necessary care to their patients during the public health emergency, the OIG stresses. The point of the alert isn’t to discourage such legitimate arrangements, but to put labs and other providers on their guard as to the liability risks and ensure they exercise scrutiny and use the above six criteria before entering into arrangements with telemeds.