Doctor Walks Into DME Telehealth Fraud Scheme. Brace Yourself to Avoid the Same Fate.

October 31, 2022

Just in case, anyone needs a reminder, the use of telehealth doesn’t immunize against the consequences of prescribing medically unnecessary knee and ankle braces.

If you’re still not convinced, consider the story of Mangesh Kanvinde, M.D., of Batavia, Ohio, who, in a civil settlement of allegations of receiving illegal kickbacks and of the filing of false claims for Medicare reimbursement, paid $720,000 and agreed to be excluded from Federal Health Care Programs for fifteen years.

The government’s allegations against Dr. Kanvinde share elements in common with the prototypical telehealth/telemedicine scheme in that it was claimed that the doctor had improper financial arrangements with intermediaries, in this case, temporary physician staffing agencies and telehealth companies, that involved kickbacks in exchange for ordering medically unnecessary DME (as well as genetic tests and services) for Medicare beneficiaries with whom he had no physician-patient relationship.

Although without doubt the acts alleged to have been performed between 2016 and 2019 by Dr. Kanvinde occurred well after the enactment of the federal Anti-Kickback Statue and more then 150 years after the enactment of the False Claims Act, you’re in a position to be far better forewarned, both because you’re reading this and because in July 2022, the OIG issued a Special Fraud Alert on exercising caution when entering Into arrangements with purported telemedicine companies. You can read the full alert on the OIG’s website.

Here, in encapsulated form, is what you need to know:

  1. These schemes, which abound, exploit the public’s acceptance of remote treatment tech, and purport to use telehealth, telemedicine, or telemarketing services.
  2. In some of these schemes (for example, see the blog post Greasy Kickback Residue Is All That’s Left of Pain Cream Fraud) the companies intentionally pay physicians kickbacks to prescribe prescription medication. Other schemes involve unnecessary DME, genetic testing, and wound care. All result in fraudulent claims to Medicare, Medicaid, and other Federal health care programs.
  3. Although the breadth of scams is wide both in type, as mentioned above, and in operation, e.g., call centers, staffing companies, marketers, brokers, etc., the commonality is the use of kickbacks to recruit and reward the practitioners.
  4. Generally, the telemedicine companies solicit and recruit purported patients and shunt them to practitioners, with the aim of arranging for the order or prescription of medically unnecessary items and services for individuals with whom the practitioners have limited, if any, interaction, and without regard to medical necessity.
  5. Payments to practitioners are sometimes described as payment per review, audit, consult, or assessment of medical charts.
  6. The telemedicine companies often tell practitioners that they do not need to contact the purported patient or that they only need speak to the purported patient by telephone.
  7. Practitioners are not given an opportunity to review the purported patient’s real medical records.
  8. The telemedicine company may direct the practitioner to order or prescribe a preselected item or service, regardless of medical necessity or clinical appropriateness.
  9. In many cases, the telemedicine company sells the order or prescription generated by practitioners to other individuals or entities that then fraudulently bill for the unnecessary items and services.

The Special Fraud Alert includes a nonexclusive list of telehealth/telemedicine fraud scam characteristics for you to keep in mind:

  • The purported patients for whom the practitioner orders or prescribes items or services were identified or recruited by the telemedicine company, telemarketing company, sales agent, recruiter, call center, health fair, and/or through internet, television, or social media advertising for free or low out-of-pocket cost items or services.
  • The practitioner does not have sufficient contact with or information from the purported patient to meaningfully assess the medical necessity of the items or services ordered or prescribed.
  • The telemedicine company compensates the practitioner based on the volume of items or services ordered or prescribed, which may be characterized to the practitioner as compensation based on the number of purported medical records that the practitioner reviewed.
  • The telemedicine company only furnishes items and services to Federal health care program beneficiaries and does not accept insurance from any other payor.
  • The telemedicine company claims to only furnish items and services to individuals who are not Federal health care program beneficiaries but may in fact bill Federal health care programs.
  • The telemedicine company only furnishes one product or a single class of products (e.g., durable medical equipment, genetic testing, diabetic supplies, or various prescription creams), potentially restricting a practitioner’s treating options to a predetermined course of treatment.
  • The telemedicine company does not expect practitioners (or another practitioner) to follow up with purported patients nor does it provide practitioners with the information required to follow up with purported patients (e.g., the telemedicine company does not require practitioners to discuss genetic testing results with each purported patient).

The danger to physicians and other practitioners considering participation in these arrangements is that they potentially implicate multiple Federal laws, including the Federal anti-kickback statute (the “AKS”), the Federal criminal law that prohibits knowingly and willfully soliciting or receiving (or offering or paying) any remuneration in return for (or to induce), among other things, referrals for, or orders of, items or services reimbursable by a Federal health care program. Other triggered laws include the Civil Monetary Penalty Law, the criminal health care fraud statute, and the Federal False Claims Act. Penalties range from multi-year prison terms to significant fines to very large civil penalties.

Often lost on physicians is the fact that even though they might not be the moving party involved in the scam, liability falls on both sides of a kickback scheme. In other words, you can be personally liable, criminally and civilly, in connection with these scams, including for submitting or causing the submission of claims.

With lots of money at play, it’s not hard to see why the government is motivated to investigate and prosecute in order to obtain huge fines and the benefit of the forfeiture (generally to the investigating agency) of scores of millions of dollars.

Some final takeaways for you:

Any deal must be structured in compliance with the federal Anti-Kickback Statute, Stark, and various state law counterparts and other restrictions.

Money, big money, is tempting. I know because I’ve counseled many clients in connection with telemedicine “ventures” paying what they must have thought was money from heaven.

Yes, telemedicine has many valid applications. Violation of the AKS and committing fraud are not among them.

And, the money’s not from heaven. It’s from hell.

Let’s talk before you consider any telehealth or telemedicine arrangement.

Leave a Reply