By Vrushab Gowda
The exponential growth of telehealth in recent years has revolutionized the delivery, access, and cost of care. Unfortunately, it is not immune to the fraud and abuse that divert nearly $70 billion from the health care system annually.
A rise in suspect practices has been accompanied by a concomitant escalation of Department of Justice (DOJ) enforcement, sending a clear signal to would-be fraudulent actors.
The ongoing Operation Rubber Stamp is one such enforcement thrust. A joint initiative of the of the Federal Bureau of Investigation (FBI) and the Department of Health and Human Services (HHS), it targeted an extensive network of telemedicine fraud totaling over $4.5 billion in false claims and yielding thirty guilty pleas to date.
Previous Initiatives: Double Helix and Brace Yourself
Operation Rubber Stamp is the third in a series of coordinated DOJ-HHS actions recently brought against telemedicine players. Operations Double Helix and Brace Yourself halted record-breaking health care fraud schemes in 2019, respectively totaling $2.1 billion and $1.2 billion.
The operations bear a number of common elements, namely demonstrating robust enforcement of the Anti-Kickback Statute (AKS) in action. In both cases, a tight nexus existed between telemedicine providers and manufacturers of medical devices, durable medical equipment (orthotic braces in the aptly named Operation Brace Yourself), and laboratory assays (cancer genetic tests in Operation Double Helix).
After providing minimal to no medical consultation, physicians would order the aforementioned equipment for their remotely located patients, submit claims for Medicare reimbursement, and, in turn, receive illegal kickbacks from manufacturers. These kickbacks were sometimes laundered through foreign shell corporations and implicated a vast network of offshore telemarketing call centers.
Owing to the bidirectional nature of AKS liability, virtually all participating stakeholders were charged, from the leadership of telemedicine service providers to marketing executives, diagnostic laboratory personnel, medical equipment suppliers, and ordering physicians and nurses.
Operation Rubber Stamp: Case Studies
Operation Rubber Stamp appears to follow suit. Two publicly released indictments of major defendants in cases filed in the Southern District of Georgia provide further insight.
In one, a compliance officer was charged with Conspiracy to Commit Health Care Fraud for her role in brokering transactions between telemedicine providers, medical equipment manufacturers, and marketing agencies in furtherance of the scheme.
Her employer, a middleman of sorts, customized a medical order template “prepopulated with insurance beneficiary demographics” and geared to “maximize the likelihood that Medicare and other insurers would pay claims” based on the information submitted. The template further attempted to obscure the telemedicine nature of the preceding patient encounter, suggesting that the authorizing provider physically examined each patient and developed a tailored treatment plan thereafter. These orders for expensive medical equipment were then “assigned” to telemedicine providers for Medicare beneficiaries whose insurance information was obtained in advance by call centers. The defendant’s employer would receive fees for each order (1) at the time it was signed by the physician and (2) when it was received by the purchaser.
The other, a twelve count indictment, contends with a nurse practitioner engaged in ordering large quantities of durable medical equipment from variety of manufacturers. Charges include Conspiracy to Commit Wire and Health Care Fraud, Health Care Fraud (five counts), and six counts of false statements relating to multiple attempts to conceal her involvement in the conspiracy.
The defendant received information on Medicare beneficiaries from unnamed medical equipment companies across a variety of states, signed orders for medically unnecessary hardware — in many cases without having evaluated or even established contact with said beneficiaries, and received payment-per-order kickbacks from the companies in question. Across the span of just over one year, this activity culminated in orders of 3,000 separate items billed to Medicare for over $3 million.
Through the aforementioned Operations, the DOJ has indicated both its capacity to monitor telemedicine transactions as well as its willingness to assertively enforce AKS.
What truly distinguishes these cases from “brick and mortar” health care fraud is the DOJ’s construction of “necessary” medical care; it has pronounced said practices illegal as the providers “failed to establish a legitimate doctor-patient relationship.” Although the examples above are particularly egregious (e.g., ordering equipment after a brief audio-only encounter, or without any patient communication whatsoever), it is not necessarily clear how extensive telemedicine encounters must be in order to justify particular courses of clinical action. Caselaw is unsettled and, as yet, there is no clear standard of care articulated by federal statute or regulation.
Further investigations are likely as telemedicine continues to develop as a mode of health care delivery. The DOJ’s aggressive enforcement in recent months serves as a strong warning to telehealth providers, who would be well-advised to tread lightly when engaging device manufacturers and commercial laboratories.