DOJ Gets Aggressive in Pursuit of Telehealth Fraud

It was only a matter of time before cases involving telehealth fraud/False Claims Act cases became public.  This week, two press releases from the DOJ illustrated how aggressive the agency has become in the pursuit of telehealth related fraud. I suspect more, larger in implication (dollar value, geographic spread), will drop publicly in the next few months.

Telehealth became extremely popular and widely used during the pandemic.  Its popularity has remained and as the public health emergency (COVID 19) expired, telehealth authorization (via CMS) remained and expanded.  Through December 31, 2024, patients have the flexibility to access telehealth services from any location; they are not required to be at an originating site and there are no geographic limitations. A distant site refers to the location from which a physician or practitioner delivers telehealth services.  I’ve attached a Medicare Learning Network (MLN) on telehealth services (access, payment, CPT codes, etc.). It is available here: MLN901705 Telehealth

I also have the complete list of covered telehealth services under Medicare by HCPCS code and a short descriptor for anyone interested.  The list is effective for 2024.  It is available here: CY 2024 PFS Final Rule List of Medicare Telehealth Services_V13Nov2023

The two cases I referenced in the opening paragraph are classic circumstances of fraudulent billing, concentrated on over-billing and in some instances, billing for services not actually provided.

In the case of mental health provider Supportive Care Holdings, LLC, the U.S. Attorney’s office in Connecticut claims to have investigated the provider for billing activity between 2019 and 2023. Allegations were settled between the provider and government for $4.6 million.

Supportive Care is accused of submitting years of “telehealth originating site facility fees” in addition to billing for services rendered to skilled nursing facility residents. According to a report from the US Attorney’s Office for the District of Connecticut, these fees should have been billed solely by the nursing homes. Moreover, there are allegations that services billed to nursing homes were actually provided to patients who had been moved to different healthcare facilities, like hospitals. The U.S. Attorney’s Office report is here: District of Connecticut | Behavioral Health Companies, CEO, Pay Nearly $4.6 Million to Settle Allegations Related to Telehealth Services for Nursing Home Residents | United States Department of Justice

In another case, unrelated, the Justice Department announced a criminal prosecution involving prescription drug distribution via telehealth. The founder and CEO of a California-based digital health company, along with its clinical president, were arrested for their alleged roles in a scheme involving the distribution of Adderall over the internet, conspiracy to commit health care fraud through submitting false and fraudulent claims for reimbursement for Adderall and other stimulants, and obstruction of justice.

Per the DOJ, this is the first case it has pursued involving telehealth and criminal drug distribution. From the press release, available here: Office of Public Affairs | Founder/CEO and Clinical President of Digital Health Company Arrested for $100M Adderall Distribution and Health Care Fraud Scheme | United States Department of Justice

“As alleged, these defendants exploited the COVID-19 pandemic to develop and carry out a $100 million scheme to defraud taxpayers and provide easy access to Adderall and other stimulants for no legitimate medical purpose,” said Attorney General Merrick B. Garland. “Those seeking to profit from addiction by illegally distributing controlled substances over the internet should know that they cannot hide their crimes and that the Justice Department will hold them accountable.”

“The individuals charged today allegedly disregarded the first rule of medical care—do no harm—in order to maximize profits, and there is no place for such fraud in our healthcare system,”

In July 2022, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a special fraud alert. This alert cautioned healthcare practitioners about entering into agreements with certain telemedicine companies. Such alerts are important as they signal the OIG’s intent to intensify efforts in prosecuting fraud cases involving violations of federal laws like the anti-kickback statute and the False Claims Act.

The alert dated July 20th specifically highlighted fraudulent activities where telemedicine companies were paying kickbacks to physicians and other practitioners for generating unnecessary orders or prescriptions. This included durable medical equipment, genetic tests, wound care supplies, or medications, leading to fraudulent claims being made to Medicare, Medicaid, and other federal health programs.

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