27 May 2021

DOJ Announces “First in the Nation” Fraud Charges for Abuse of Pandemic Telehealth Flexibilities

Yesterday DOJ announced another round of coordinated law enforcement actions to combat healthcare fraud related to COVID-19.  One of these indictments features “first in the nation charges for allegedly exploiting the[] expanded” opportunities to receive Medicare reimbursement for telehealth services during the COVID-19 public health emergency.

Prior announcements of coordinated takedowns have featured cases broadly characterized as telemedicine fraud, even though they did not involve fraudulent claims for telehealth services.  Instead, they presented traditional fraud and abuse concerns like medically unnecessary prescriptions that just happen to have been facilitated through a phone call.  But this indictment is the first announcement of a case involving allegedly fraudulent medical services provided through abuse of CMS’s pandemic telehealth flexibilities.

Before the pandemic, Medicare by statute could cover telehealth services in very narrow circumstances: only a small set of office and hospital visits could be performed through telehealth, all telehealth services had to use audio-visual technology, and the beneficiary had to be located in a rural or health professional shortage area.  But beginning in March 2020, CMS was able to invoke unique authority to waive the statutory restrictions and significantly expand telehealth services to all Medicare beneficiaries.  The result has been tremendous uptake of telehealth by the Medicare population, with corresponding warnings from the government that they will be closely scrutinizing telehealth fraud, as discussed further here.

According to DOJ’s press release, the defendants in this case allegedly “exploited temporary waivers of telehealth restrictions enacted during the pandemic by offering telehealth providers access to Medicare beneficiaries for whom they could bill consultations.  In exchange, these providers agreed to refer beneficiaries to [defendants’] laboratories for expensive and medically unnecessary cancer and cardiovascular genetic testing.”  The indictment further states that the healthcare providers “often did not conduct a telemedicine consultation as represented to Medicare,” and where they did, these telemedicine visits were tainted by kickbacks.

Although the primary allegations in this case related to medically unnecessary lab tests, DOJ’s specific characterization of the alleged misconduct as an abuse of CMS telehealth waivers underscores that addressing fraud on CMS regulatory flexibilities is an enforcement priority for DOJ.

A copy of the indictment is available here.

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