AMARILLO, TX – Telemedicine is no longer a temporary response to COVID-19; it has become a permanent and widely accepted part of healthcare delivery. For Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (“DMEPOS”) suppliers, however, telemedicine arrangements continue to present a meaningful compliance risk.
Recent enforcement activity and public statements from the Department of Justice (“DOJ”) and the Department of Health and Human Services Office of Inspector General (“HHS OIG”) make clear that DME claims generated through telehealth relationships remain under scrutiny, and suppliers are expected to ensure strict adherence to Medicare requirements.
Telemedicine itself is not inherently problematic. When used appropriately, it expands access to care and supports legitimate clinical decision-making. Regulators are concerned when telehealth is used to generate large volumes of DME orders without meaningful clinical oversight. Enforcement actions frequently involve arrangements in which there is little or no real interaction between practitioner and patient, prescribing patterns that reflect high volumes of similar or identical items, aggressive direct-to-consumer marketing, and financial relationships that are tied to the volume of orders. In those circumstances, telehealth can become a mechanism for producing orders rather than a legitimate mode of care delivery.
Many enforcement cases follow a relatively consistent pattern. A telemedicine company advertises free or low-cost medical products to Medicare beneficiaries, often through online campaigns, call centers, or television advertising. A practitioner then approves or signs orders generated through that platform, sometimes with minimal patient engagement. Those orders are transferred to a DMEPOS supplier, which furnishes the equipment and bills Medicare.
The supplier may, in turn, compensate the telemedicine company based on the number of orders or referrals generated. These arrangements raise concerns under the federal False Claims Act (“FCA”) and the federal Anti-Kickback Statute (“AKS”), particularly where compensation is linked to the volume or value of business.
Although telehealth can satisfy Medicare face-to-face requirements, the underlying physician-patient interaction must still be sufficient to establish medical necessity for the item provided. A signed order alone is not enough. Encounters that are extremely brief, highly scripted, or limited to checkbox-style forms may not support a legitimate clinical determination. Additional concerns arise when a single practitioner generates unusually high volumes of orders, when documentation appears substantially similar across patients, or when the practitioner’s specialty bears little relationship to the prescribed equipment. These factors can undermine the validity of the underlying relationship and expose the resulting claims to challenge.
Documentation remains a primary focus in enforcement activities. Even where an item is provided, a claim can be deemed non-payable if the documentation does not adequately support medical necessity. Regulators via audits examine whether records are templated or cloned, whether they were created after the fact rather than at the time of the encounter, whether they contain meaningful clinical detail explaining why the specific item was ordered, and whether they go beyond conclusory statements or attestations. Deficiencies in any of these areas can serve as the basis for liability under the FCA.
DMEPOS suppliers are not insulated from these risks simply because a practitioner issued the order. Enforcement agencies expect suppliers to exercise independent judgment and to recognize obvious warning signs. Liability can arise where a supplier knew or should have known that an arrangement was improper, or where it ignored red flags such as repetitive documentation, abnormal prescribing patterns, or questionable referral sources. Reliance on third-party-generated orders without adequate review or verification is a recurring theme in enforcement actions.
Upstream marketing practices also play a significant role in many cases. Telemedicine arrangements are often coupled with lead generation models that involve direct advertising to beneficiaries, offers of free equipment, or the collection and sale of patient information. When compensation is tied to leads or orders, these arrangements can implicate the AKS and affect every participant in the chain, including the supplier. Even if a supplier is not directly involved in the marketing activity, it can still face exposure if it furnishes items that result from improper referrals.
In this environment, DMEPOS suppliers must take a proactive approach to compliance when engaging with telemedicine partners. This begins with a clear understanding of how patients are sourced, how practitioners are engaged, and how orders are generated. It requires careful review of the documentation to ensure that each claim is supported by individualized, contemporaneous clinical records demonstrating medical necessity. It also involves monitoring prescribing patterns and utilization trends to identify anomalies that may signal underlying issues. Financial arrangements must be structured to avoid any linkage to the volume or value of referrals, and contracts should reflect compliance expectations and allow for oversight.
Conclusion
Telemedicine is now a permanent feature of healthcare delivery, but its use in the DMEPOS space continues to draw sustained regulatory scrutiny. For suppliers, the central issue is not whether an order originates from a telehealth encounter, but whether the underlying clinical interaction and documentation meet Medicare’s medical necessity requirements and comply with federal law. Regulators have made clear that reliance on a signed order alone is insufficient.
Suppliers are expected to evaluate the legitimacy of the relationships that generate their claims, recognize warning signs in prescribing patterns and documentation, and avoid financial arrangements that tie compensation to the volume or value of orders. Those who fail to do so risk being viewed as participants in improper schemes, even where the initial interaction occurs upstream.
Jeffrey S. Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national healthcare practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].
Jacque K. Steelman, Esq., is a member of the Health Care Group at Brown & Fortunato, PC, a law firm with a national healthcare practice based in Texas. She represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Ms. Steelman can be reached at (972) 684-5789 or [email protected].
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AAHOMECARE’S EDUCATIONAL WEBINAR
Asset vs. Stock Purchase of a DME Supplier
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Jason M. Temple, Esq., Brown & Fortunato
Tuesday, June 2, 2026
1:30-2:30 p.m. CENTRAL TIME
It is common in the DME industry for DME suppliers to be purchased…and sold. This program will discuss the steps to be taken to successfully purchase and sell a DME supplier. In particular, the program will discuss the difference between an asset purchase and a stock purchase…including dispelling common misperceptions such as “the purchaser of the stock of a DME supplier assumes the liabilities of the supplier.” Whether a transaction is an asset or stock purchase is particularly relevant in light of (i) the 36-month rule addressing change in majority ownership and (ii) the moratorium against the issuance of new PTANs. In addition, the program will discuss the mechanics of achieving a successful sale or purchase, including (i) execution of a Mutual Nondisclosure Agreement, (ii) transmittal of financials from the seller to the buyer, (iii) execution of a letter of intent, (iv) conduct by the buyer of “due diligence,” (v) negotiation and execution of the Asset Purchase Agreement/Stock Purchase Agreement and related closing documents, and (vi) providing notification to government agencies, third-party payors, and others.
Register for Asset vs. Stock Purchase of a DME Supplier on Tuesday, June 2, 2026, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq. and Jason M. Temple, Esq., of Brown & Fortunato.
