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Telehealth Expansion is Here to Stay, We Must Be Wary of Fraud

Posted  May 15, 2020

Telemedicine, or the provision of medical services through virtual means, has been rapidly expanding for the past several years. In 2010, barely a third of hospitals were offering telehealth services; by 2017, over three-quarters of hospitals were doing so. 

Telemedicine has a lot of potential for good. It’s becoming increasingly accessible and affordable thanks to technological advancements. Innovations such as smartphones, Zoom, and Skype have allowed millions of new patients to access these services. Aside from the obvious cost savings, there are numerous potential benefits to expansion. For example, patients too sick to get themselves to the doctor can avoid expensive medical transportation while still receiving needed care. Telemedicine is especially attractive for patients in rural areas, which have lost 170 hospitals since 2005. Virtual delivery of medical services in such areas would allow rural patients to see certain specialists without needing to traveling hundreds of miles. 

In the current pandemic, with healthcare providers overwhelmed and patients not wanting to risk ER visits, telehealth has become an even more attractive option. Medicare, which has been hesitant to expand its coverage of telehealth services, did so in March, as a direct result of the COVID-19. Prior to the pandemic, Medicare generally only covered telemedicine when a patient receiving the service in a specifically designated rural area, and the patient left their home to receive the service, for example, patients might go to a local clinic and speak to a distant specialist from there. Under the new, expanded rules, Medicare will cover telehealth visits occurring from patients’ homes, and this coverage will be available to almost all beneficiaries, not just those in rural areas. 

Many of these changes are likely long-last or even permanent. Seema Verma, the head of the Centers for Medicare & Medicaid Services, the agency within DHHS that oversees the programs, said: “I think it’s fair to say that the advent of telehealth has been just completely accelerated, that it’s taken this crisis to push us to a new frontier, but there’s absolutely no going back.” 

Despite telehealth’s many efficiencies, it also comes with the potential for large-scale fraud. The recent expansion will likely exacerbate this problem. Telehealth is vulnerable to several common schemes, several of which the Department of Justice has already begun to combat. Like other fraud on publicly-funded healthcare programs, telehealth fraud can be prosecuted through the False Claims Act. The False Claims Act is a law that allows private citizens, whistleblowers, to bring lawsuits in the name of the government, against those who are defrauding the government and share in up to 30% of the final recovery. Billions are recovered under the law annually. 

Last year, the Department of Justice indicted two dozen defendants in a kickback scheme involving five telehealth companies and over $1.2 billion. The allegations centered around durable medical equipment companies, specifically companies that produced and sold knee, back, and shoulder braces, paying bribes to telehealth providers to proscribe medically unnecessary braces to patients they had never seen, or only had brief phone conversations with. Telehealth’s efficiencies gave the alleged fraudsters a system to reach more patients faster and allowed them to scale the fraud with surgical efficiency. In 2018, another $65 million kickback scheme involving telehealth was busted and prosecuted. There, a team of alleged fraudsters recruited Marines and former Marines, all of whom were TRICARE (a federally funded program providing healthcare coverage to military members and veterans) beneficiaries and signed them up for bogus telehealth appointments. These appointments consistently resulted in the prescribing of medically unnecessary, and very expensive, compound medications. 

Another recent enforcement action resulted from telehealth’s unique, technological aspects. Telehealth providers are sometimes eligible for financing of high-speed internet, video conferencing equipment, and similar technologies. A recent FCC fine of $18.7 million shows how fraudsters can arrange rigged bids to benefit from these funds. 

As the pandemic has continued, Medicare is now allowing providers other than medical doctors to provide their services remotely. Rule changes at the end of April have also allowed physical, occupational, and speech therapists to work with patients via telemedicine. This will allow for even more, new angles of fraud. Scams such as providing therapy to multiple patients at once, but billing Medicare as if each was a one-on-one visit, will become easier to execute. Scams involving the providing of medically unnecessary services will become harder to detect. And, as in all times of crises, new scams will develop.

Because telehealth is a new and expanding field that handles billions of government dollars, the specific schemes and frauds will take many forms that we can’t predict. Medicare’s recent expansion of coverage will make these schemes more lucrative, appealing, creative, and widespread. Both vigorous government oversight and perspectives of whistleblowers will be necessary to keep these schemes in check, even during a pandemic.

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Tagged in: COVID-19, Government Programs Fraud, Healthcare Fraud, Medicare,


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