AMARILLO, TX – Telehealth is an increasingly important component of the nation’s health care delivery system. Health care in the United States, while technologically advanced, is expensive…and in many instances, can be inefficient. At the end of the day, most patients would prefer to receive health care in a home setting as opposed to taking the time to drive to a physician’s office or to a hospital-based outpatient clinic. And many aspects of health care can be handled virtually as opposed to in-person.

The pandemic showed the importance of telehealth. During the pandemic, an important goal was to keep as many non-COVID patients out of hospitals as possible. Doing so opened up beds for COVID patients. The increased use of telehealth helped achieve this goal. And during the public health emergency, CMS has relaxed many of its restrictions pertaining to telehealth. Hopefully, the relaxation of the restrictions will remain permanent post-pandemic.

But as the DME industry knows, there is a dark side to telehealth. We saw this during Operation Brace Yourself in which lead generation companies, telehealth companies, DME suppliers and physicians were targets of criminal and civil enforcement actions. The Department of Justice (“DOJ”) and Office of Inspector General (“OIG”) focused on scenarios in which sham telehealth arrangements were used to “game the system.” Specifically, the DME supplier would pay money to the lead generation company…that would, in turn, pay money to the telehealth company…that would, in turn, pay money to a physician … who, in turn, would have a two minute phone call with a patient suffering from back pain …and, in turn, the physician will send an order for a back brace to the DME supplier that started the chain of events to begin with. In reality, the DME supplier was paying the physician … with the money flowing through the telehealth company.

In addition to taking an active role in pursuing the bad actors involved with Operation Brace Yourself, on July 20, 2022, the OIG published a Special Fraud Alert (“SFA”) entitled “OIG Alerts Practitioners To Exercise Caution When Entering Into Arrangements With Purported Telemedicine Companies.” The OIG publishes a number of documents designed to educate health care providers on how to avoid entering into fraudulent arrangements. These documents include (i) SFAs, (ii) Special Advisory Bulletins (“SABs”), (iii) Advisory Opinions (“AOs”), and (iv) Corporate Integrity Agreements (“CIAs”).

• SFAs and SABs can be geared specifically to certain types of providers (physicians, labs, long term care facilities, DME suppliers, pharmacies, etc.). They also can be general in nature. Examples applicable to DME suppliers are (i) the OIG’s 1989 Special Fraud Alert entitled “Joint Ventures” and (ii) the OIG’s April 2003 Special Advisory Bulletin entitled “Contractual Joint Ventures.”
• When two or more parties want to enter into an arrangement that might implicate the federal anti-kickback statute (“AKS”), they can ask the OIG to (i) review the arrangement and (ii) issue an opinion on whether the OIG would bring an enforcement action under the AKS. Even though an AO is technically binding only on the parties that asked for it, the AO can provide guidance to other providers that may want to enter into similar arrangements.
• CIAs are interesting. When a provider enters into a civil settlement with the DOJ, the provider will usually be required to enter into a CIA with the OIG. A CIA normally has a five year term. It essentially places the provider on “probation” with the OIG. The CIA will impose a number of obligations on the provider, such as (i) implementing a formal compliance program; (ii) training employees on their compliance obligations, and (iii) having an Independent Review Organization (“IRO”) conduct a compliance audit every year. If one reviews the CIAs on the OIG’s website, he/she will be able to see the types of acts that result in DOJ enforcement actions.

This brings us to the July 20, 2022 SFA. It focuses on telehealth arrangements that can result in a violation of the AKS. The SFA provides the following:

The Office of Inspector General (“OIG”) has conducted dozens of investigations of fraud schemes involving companies that purported to provide telehealth, telemedicine, or telemarketing services (collectively, “Telemedicine Companies”) and exploited the growing acceptance and use of telehealth. For example, in some of these fraud schemes Telemedicine Companies intentionally paid physicians and nonphysician practitioners (collectively, “Practitioners”) kickbacks to generate orders or prescriptions for medically unnecessary durable medical equipment, genetic testing, wound care items, or prescription medications, resulting in submissions of fraudulent claims to Medicare, Medicaid, and other Federal health care programs. These fraud schemes vary in design and operation, and they have involved a wide range of different individuals and types of entities, including international and domestic telemarketing call centers, staffing companies, Practitioners, marketers, brokers, and others.

One common element of these schemes is the way Telemedicine Companies have used kickbacks to aggressively recruit and reward Practitioners to further the fraud schemes. Generally, the Telemedicine Companies arrange with Practitioners to order or prescribe medically unnecessary items and services for individuals (referred to here as “purported patients”) who are solicited and recruited by Telemedicine Companies. In many of these arrangements, Telemedicine Companies pay Practitioners in exchange for ordering or prescribing items or services: (1) for purported patients with whom the Practitioners have limited, if any, interaction; and (2) without regard to medical necessity. Such payments are sometimes described as payment per review, audit, consult, or assessment of medical charts. Telemedicine Companies often tell Practitioners that they do not need to contact the purported patient or that they only need speak to the purported patient by telephone. In addition, Practitioners are not given an opportunity to review the purported patient’s real medical records. Furthermore, the Telemedicine Company may direct Practitioners to order or prescribe a preselected item or service, regardless of medical necessity or clinical appropriateness. In many cases, the Telemedicine Company sells the order or prescription generated by Practitioners to other individuals or entities that then fraudulently bill for the unnecessary items and services.

These schemes raise fraud concerns because of the potential for considerable harm to Federal health care programs and their beneficiaries, which may include: (1) an inappropriate increase in costs to Federal health care programs for medically unnecessary items and services and, in some instances, items and services a beneficiary never receives; (2) potential to harm beneficiaries by, for example, providing medically unnecessary care, items that could harm a patient, or improperly delaying needed care; and (3) corruption of medical decision-making.

OIG encourages Practitioners to exercise caution and use heightened scrutiny when entering into arrangements with Telemedicine Companies that have one or more of the suspect characteristics described below. This Special Fraud Alert provides information to help Practitioners identify potentially suspect arrangements with Telemedicine Companies.

Multiple Federal Laws Implicated
The schemes described above may implicate multiple Federal laws, including the Federal anti-kickback statute. The Federal anti-kickback statute is a criminal law that prohibits knowingly and willfully soliciting or receiving (or offering or paying) any remuneration in return for (or to induce), among other things, referrals for, or orders of, items or services reimbursable by a Federal health care program. One purpose of the Federal anti-kickback statute is to protect patients from improper medical referrals or recommendations by health care professionals and others who may be influenced by financial incentives. When a party knowingly and willfully pays remuneration to induce or reward referrals of items or services payable by a Federal health care program, the Federal anti-kickback statute is violated. By its terms, the statute ascribes liability to parties on both sides of an impermissible kickback transaction. Practitioner arrangements with Telemedicine Companies may also lead to criminal, civil, or administrative liability under other Federal laws including, for example, OIG’s exclusion authority related to kickbacks, the Civil Monetary Penalties Law provision for kickbacks, the criminal health care fraud statute, and the False Claims Act. Practitioners may be personally liable for these types of arrangements, including for submitting or causing the submission of claims if they are involved in ordering or prescribing medically unnecessary items or services.

Recent Enforcement Experience
In recent years, OIG and the Department of Justice (“DOJ”) have investigated numerous criminal, civil, and administrative fraud cases involving kickbacks from Telemedicine Companies to Practitioners who inappropriately ordered or prescribed items or services reimbursable by Federal health care programs in exchange for remuneration. In those cases, Practitioners, Telemedicine Companies, and other participants in schemes have been held civilly, criminally, and administratively liable for: (1) paying or receiving a payment in violation of the Federal anti-kickback statute, (2) causing a submission of claims in violation of the False Claims Act, and/or (3) other Federal criminal laws.

While the facts and circumstances of each case differed, often they involved at least one Practitioner ordering or prescribing items or services for purported patients [the Practitioner] never examined or meaningfully assessed to determine the medical necessity of items or services ordered or prescribed. In addition, Telemedicine Companies commonly paid Practitioners a fee that correlated with the volume of federally reimbursable items or services ordered or prescribed by the Practitioners, which was intended to and did incentivize a Practitioner to order medically unnecessary items or services. These types of volume-based fees not only implicate and potentially violate the Federal anti-kickback statute, but they also may corrupt medical decision-making, drive inappropriate utilization, and result in patient harm.

Suspect Characteristics

Based on OIG’s and DOJ’s enforcement experience, we have developed the below list of suspect characteristics related to Practitioner arrangements with Telemedicine Companies which, taken together or separately, could suggest an arrangement that presents a heightened risk of fraud and abuse. This list is illustrative, not exhaustive, and the presence or absence of any one of these factors is not determinative of whether a particular arrangement with a Telemedicine Company would be grounds for legal sanctions.

• The purported patients for whom the Practitioner orders or prescribes items or services were identified or recruited by the Telemedicine Company, 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.
• The Practitioner does not have sufficient contact with or information from the purported patient to meaningfully assess the medical necessity of the items or services ordered or prescribed. For example, we have seen instances in which a Telemedicine Company requires the Practitioner to use audio only technology to facilitate engagement with purported patients, regardless of their preference, and does not provide the Practitioner with other telehealth modalities. Additionally, a Telemedicine Company may provide a Practitioner with purported “medical records” that reflect only cursory patient demographic information or a medical history that appears to be a template but does not provide sufficient clinical information to inform the Practitioner’s medical decision-making.
• The Telemedicine Company compensates the Practitioner based on the volume of items or services ordered or prescribed, which may be characterized to the Practitioner as compensation based on the number of purported medical records that the Practitioner reviewed.
• The Telemedicine Company only furnishes items and services to Federal health care program beneficiaries and does not accept insurance from any other payor.
• The Telemedicine Company claims to only furnish items and services to individuals who are not Federal health care program beneficiaries but may in fact bill Federal health care programs. An attempt to carve out Federal health care program beneficiaries from arrangements with Telemedicine Companies may still result in criminal, civil, or administrative liability for a Practitioner’s role in any resulting fraudulent activity that involves Federal health care program beneficiaries.

• The Telemedicine Company only furnishes one product or a single class of products (e.g., durable medical equipment, genetic testing, diabetic supplies, or various prescription creams), potentially restricting a Practitioner’s treating options to a predetermined course of treatment.

• The Telemedicine Company does not expect Practitioners (or another Practitioner) to follow up with purported patients nor does it provide Practitioners with the information required to follow up with purported patients (e.g., the Telemedicine Company does not require Practitioners to discuss genetic testing results with each purported patient).

Conclusion
Seven years ago, when back brace commercials started blanketing the airways, it was obvious (i) as to what was really going on and (ii) that the back brace phenomenon was going to end badly. The OIG has memorialized this in its July 20, 2022 SFA. However, the SFA is not limited to back braces … or to orthotics … or even to DME. Rather, it applies across the board to all providers and suppliers. At the end of the day, providers/suppliers cannot use telehealth as a subterfuge designed to funnel money to physicians who write orders/prescriptions.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care 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].

AAHOMECARE’S EDUCATIONAL WEBINAR

Offering Value-Added Services While Avoiding Prohibited Inducements

Presented by: Jeffrey S. Baird, JD, Brown & Fortunato

Tuesday, August 16, 2022

 1:30-2:30 p.m. CENTRAL TIME

The federal Stark physician self-referral statute (“Stark”), the federal anti-kickback statute (“AKS”), and the federal beneficiary inducement statute (“inducement statute”) came into existence when health care was primarily operating under a fee-for-service (“FFS”) model that did not encourage the provision of value-added services to patients, collaboration among providers, nor tie reimbursement to achieving certain metrics. The FFS model can be costly and inefficient. As a result, third party payors (including Medicare) are pushing health care delivery into a value-add/collaborative care/value-based model. To facilitate the shift of health care towards this new approach, CMS and the OIG modified Stark, the AKS, and the inducement statute with the goal of ensuring that these statutes do not unnecessarily impede the provision of value-added services, nor the transition to collaborative/value-based care. This program will discuss how a DME supplier can provide value-added services to patients with the twin goals of (i) providing preventative health care and (ii) lowering socio-economic barriers to receiving health care. The program will present examples of value-added services that are legally acceptable, and those that should be avoided. This program will further discuss proper … and improper … collaborative arrangements between a DME supplier on the one hand, and physicians, hospitals and other providers on the other hand.

Register for Offering Value-Added Services While Avoiding Prohibited Inducements on Tuesday, August 16, 2022, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq. of  Brown & Fortunato.

Members: $99
Non-Members: $129