Massive Telehealth Fraud Charges May Be First Of Many

The US Department of Justice has filed charges against 345 defendants, including more than 100 medical professionals, accusing them of engaging in healthcare fraud schemes.  And while this batch of alleged fraud may be pretty old-school, telemedicine’s growth now offers a big fat target which may spark new types of telehealth-specific schemes in the future.

The charges, which detail $6 billion in false and fraudulent claims submitted to federal healthcare programs and private insurers, include more than $4.5 billion connected to telehealth. Under the terms of the scheme, the telehealth executives allegedly got the providers to order unnecessary durable medical equipment, genetic and other diagnostic testing and medications, either without patient interactions whatsoever or only conducting a short phone call.  Executives participating got kickbacks after the pharmacy, lab or DME firm billed Medicare or Medicaid.

Some observers have suggested that these deceptions might have been in response to the relaxation of HIPAA rules and the DEA permission for providers to prescribe controlled substances in the wake of COVID. However, according to analysts from Credit Suisse, a number of these frauds may well have emerged prior to the onset of the pandemic.

It’s also worth noting, the analysts write, that similar schemes have been tried in the past by telemedicine companies. For example, they point out, in February 2020, two telemedicine companies were charged with fraud for participating in a massive effort going on between March 2017 and April 2019. Also, In February 2019, DOJ charged a network of telehealth companies, physicians and patient recruiters with conducting a massive $1.2 billion Medicare fraud scheme.

Regardless, while the current frauds alleged by the DOJ are of a type that has hardly changed in decades, the COVID-19 fueled explosion of telehealth use has significantly upped the ante. As the industry has exploded, providers have been adapting at a frantic pace. By this point, some norms have been established, but the industry is still evolving.

Unfortunately, the rapid pace of change is likely to generate new opportunities to game the system which didn’t exist before, and there’s little doubt that criminal entrepreneurs will seize them. As these charges point up, there are billions to be made in insurance fraud, which offers a tremendous incentive to risk prosecution.

Clearly, both CMS and private payors will need to develop telehealth-specific fraud detection models and systems. The last thing they need is to begin playing whack-a-mole with a new category of claims fraudster.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

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