The More Things Change, the More They Stay the Same: Healthcare Prosecutions in a Virtual World

The COVID-19 pandemic has changed the world in fundamental ways. One of the biggest changes is the increased access to, and reliance upon, telemedicine. The scope of that increase is astounding. In 2020, the number of Medicare visits conducted through telehealth increased 63-fold. From 2016 to 2022, the percentage of physicians using virtual visits grew from 14% to 80%. “What we saw during COVID was a real shift from the in-person visit to the phone visit or video visit with patients,” observed Mary Oseid, Senior Vice President of Regional Strategy at Dartmouth-Hitchcock Health, “[and] we did that out of necessity . . . we still needed to care for our patients, so we started seeing them through these other means. And we’re seeing that continuing.”

As the adage goes, the more things change, the more they stay the same. The Department of Justice (DOJ) has approached the changing world of healthcare by remaining focused on fraud and concentrating on the prescription of durable medical equipment (DME) via telemedicine as a key component of its prosecution strategy. This article highlights recent DOJ trends in these prosecutions and discusses how those utilizing telemedicine can mitigate the risks they now face. 

DME Must Be Medically Necessary and Reasonable 

Medicare covers a long list of DME, including things like hospital beds, blood sugar meters, and walkers. Broadly speaking, DME consists of supplies and equipment that medical providers order for everyday or extended use by their patients. From a legal standpoint, DME can be ordered if it is medically necessary and if the equipment is reasonable for a particular situation.¹ During the pandemic, the government issued various waivers concerning the provision of DME via telemedicine. A provider did not need to be licensed in the same state as the patient to offer telemedicine consultations or complete medical necessity documents to replace DME. These and other changes created greater opportunities to prescribe DME, but the DOJ has concluded that many providers have crossed the line of what is reasonable and medically necessary.

In July 2022, the DOJ announced that it had charged 36 defendants across 13 judicial districts with $1.2 billion of alleged fraud involving telemedicine, genetic testing, and DME schemes. That trend has continued in 2023. In January alone, the DOJ announced:

• A guilty plea in the Southern District of New York for conspiracy to commit healthcare fraud. The defendant and a co-conspirator illegally obtained and sold written DME orders by utilizing a call center in the Dominican Republic. The fraudulent DME orders were sold to pharmacies and suppliers who billed Medicare for more than $8 million in fraudulent claims.
• Guilty pleas of two individuals in the District of New Jersey for conspiracy to pay kickbacks and commit healthcare fraud. The defendants engaged in a scheme to provide DME orders for Medicare beneficiaries in exchange for kickbacks of approximately $1,500 per patient. In total, the pair received $547,310 in kickbacks for the DME orders.
• Guilty verdicts against two individuals for conspiracy to commit healthcare fraud, conspiracy to pay kickbacks, and false statements in the Southern District of Florida. The case involved a $31 million scheme to defraud Medicare. The defendants acquired patient referrals and signed doctors’ orders by paying kickbacks to marketers who used overseas call centers to solicit patients and telemedicine companies to obtain prescriptions for unnecessary braces for patients.

In addition to the above charges, the unlawful provision of DME can trigger other allegations based on the False Claims Act and the Stark Law. While each statute has different legal requirements, a central focus of the prosecution and defense is the knowledge or intent of the person(s) providing the DME. With the plan to end the COVID-19 Public Health Emergency on May 11, 2023, it is essential that businesses and individuals take steps to ensure continued compliance with the evolving laws and regulations.  

Mitigating the Risk

These prosecutions reveal several themes: obtaining signed orders for DME from a medical professional; finding patients through a (tele)marketing company; using kickbacks to monetize these efforts; and justifying the financial rewards of billing Medicare by overlooking the inherent risks. These cases also highlight the increased collaboration between federal law enforcement agencies across the country. In this legal environment, the risk to individual practitioners and to healthcare businesses is undeniable.

To protect against that risk, it is useful to consider the issues of medical necessity and reasonableness in the context of telemedicine. In a virtual world, the physical examination of a patient is quite different than in a hospital setting. For example, a doctor cannot manipulate a patient’s leg to see if they need a leg brace. In a virtual world, the patient is only a click away from seeing the doctor. This enables the doctor to see more patients on a given day. Due to these and other changes, there may be an increased temptation to cut corners, see more patients, and ultimately prescribe more DME. Given these realities, there is a critical need to document telemedicine visits in a way that reflects what can and cannot be done on a computer screen. That documentation will be essential to establishing why DME is medically necessary and reasonable given the patient’s specific complaints. Likewise, establishing a system of checks and balances to identify red flags, irregularities in prescribing practices, and/or inadequate documentation is essential to identifying vulnerabilities and, ultimately, avoiding civil and criminal exposure.

The sad reality is that some clients come to us unaware that they have stumbled across a tripwire making them the target of a criminal investigation. For example, individuals often mistakenly believe that if they did not have direct contact with the patient or the provider, they operate outside of the stringent regulatory framework of this industry. This could not be further from the truth. It is critical to know the details of your business partners and all entities involved. Smaller tech companies often fall into this category. For example, a company that provides marketing services to help telehealth providers identify patients is at risk. If a federal insurance provider covers those patients, payment for “marketing” or “data” may easily run afoul of the Anti-Kickback statute and constitute a federal felony.   

Takeaway

Healthcare is an ever-changing industry. The pace of change has never been as fast as during COVID-19. When the emergency protocols are lifted on May 11th, a “new normal” will emerge, prompting additional change. Now is the time to consult with legal counsel with experience in regulatory healthcare, enforcement, and government investigations. They can identify and avoid tripwires for individuals and companies involved in telehealth and/or DME at any stage in the process.

Counsel can help implement company-wide training programs, adequate reporting policies and robust compliance programs that not only can avoid risk, but can also stave off criminal charges. Time is of the essence when attempting to use voluntary self-disclosure as a remedial measure in dealing with the DOJ. The attorneys at Buchanan Ingersoll and Rooney are poised to effectively guide clients in these ever-changing times.