This is why we can’t have nice things: fraud follows widespread introduction of telehealth

In many ways, the COVID-19 pandemic accelerated implementation of telemedicine[i] in health care. On January 31, US Department of Health and Human Services (HHS) Secretary Alex Azar declared a public health emergency (PHE). Later, on March 13, President Trump issued an emergency declaration, which directs HHS to waive certain restrictions covering Medicare, Medicaid, and the State Children’s Health Insurance Program (SCHIP), among other provisions, for the duration of the PHE.   

On March 17, CMS announced it would loosen some restrictions and expand Medicare telehealth coverage. The Trump administration previously allowed for some Medicare telehealth flexibilities, but Medicare generally covered telehealth services under very specific circumstances. Under the PHE, CMS allows many providers (not just doctors) to offer telehealth services for a broad range of specialties and with newly approved modalities, such as phones with audio and video capabilities.

In September, the US Department of Justice (DOJ) launched the largest health-care fraud takedown in the agency’s history. DOJ charged 345 people across 51 federal districts—including 100 medical professionals—with health care fraud and opioid abuse. In a prepared statement, DOJ said the HHS Office of the Inspector General (OIG), Federal Bureau of Investigation (FBI), US Drug Enforcement Agency (DEA), and various US attorneys’ offices assisted with the takedown. The fraud scheme’s participants submitted over $6 billion total in false claims to federal payers and private insurers—$4.5 billion of which were connected to fraudulent telemedicine claims.

The telemedicine scheme involved 86 participants throughout 19 districts. According to DOJ, companies paid physicians and nurse practitioners to order unnecessary durable medical equipment (DME), diagnostic tests, and pain medication for patients the clinical staff either hadn’t seen or had brief interactions via telehealth modalities. The test and DME suppliers, manufacturers, and laboratories then purchased the orders in exchange for illegal kickbacks and submitted fraudulent claims to Medicare and other government payers. The CMS Center for Program Integrity also separately terminated Medicare billing privileges from another 256 medical professionals because of their participation in fraudulent telemedicine activities.

“Fraud” can mean anything from theft (intentional) to documentation inaccuracies (accidental). According to 2018 audit reports from OIG, between 2014 and 2015, nearly one third of all Medicare telehealth claims did not meet necessary regulatory requirements. Prior to the pandemic, the government paid close attention to telemedicine. Now, with COVID-19 rapidly becoming the largest public-health crisis in a generation, DOJ’s efforts targeting telehealth fraud are more critical than ever—as telehealth grows more ubiquitous, the risk for fraud also increases. While fraud might be dismissed as a victimless crime, it is important to note that Medicare is funded in part via payroll taxes, meaning it’s not just the federal government getting defrauded—stealing from Medicare means stealing from taxpayers, too.

More money in telemedicine—combined with loosened regulations—could invite bad actors to engage in fraud. According to CMS, virtual health visits for Medicare beneficiaries rose from roughly 14,000 per week pre-pandemic to nearly 1.7 million in the last week of April. In the last six months, Medicare beneficiaries’ utilization of telehealth services increased by almost 4000%, and some experts estimate annual telehealth revenues could rise from $3 billion to over $250 billion, Bloomberg Law wrote earlier this month. Though many commercial health plans covered telehealth services before the PHE, CMS’ coverage increase is significant because Medicare’s rates and policies tend to influence those found in private insurance plans.

These expanded telehealth benefits have shown to be very popular among patients—and lucrative for providers. In June, 340 organizations—representing stakeholders throughout the health care landscape—signed a letter urging Congress to make these expanded benefits permanent. Following the president’s August 3 Executive Order on Improving Rural Health and Telehealth Access, CMS released proposed rules that would permanently add more services to Medicare’s telehealth list. CMS has gradually increased telehealth coverage, most recently in its October 14 announcement that it permanently added 11 new telehealth services to Medicare. In a prepared statement, HHS Deputy Inspector General Gary Cantrell explained how “[telemedicine] can foster efficient, high-quality care when practiced appropriately and lawfully. Unfortunately, bad actors attempt to abuse telemedicine services…and bill the government for illegitimate services.” Though telehealth has shown to be a necessity during a pandemic, as with any initiative relying on trust, persons with nefarious intent can take advantage of this flexibility—leaving taxpayers with the bill.

[i] The American Academy of Family Physicians defines telemedicine as “the practice of medicine using technology to deliver care at a distance” and telehealth as “electronic and telecommunications technologies and services used to provide care and services at-a-distance.”