Telehealth: A New Trend in both Healthcare and Healthcare Fraud
Prior to the COVID-19 pandemic, telehealth was extremely limited, with one study clocking these “virtual” doctors’ visits as rounding to zero percent before 2020. At the time, America’s largest insurer, Medicare, only covered telehealth in narrow circumstances that usually still involved a physical visit to a healthcare facility, like a telehealth visit with a specialist conducted at a primary care office. Medicare’s coverage limitations demonstrated the Department of Health and Human Services’ (HHS) concerns that expanding telehealth would lead to a proliferation of fraud schemes, costing taxpayers millions, or even billions, of dollars. Those concerns stemmed from Medicare’s first forays into telehealth, such as offering coverage when providers prescribed durable medical equipment like braces without physical visits, which led to a massive increase in fraud schemes. HHS had good reason to be wary.
But COVID-19 changed things. In 2020, with stay-at-home orders, concerns of contagion, and overloaded health systems, telehealth quickly became the most practical way to see a doctor while limiting exposure to COVID and other unnecessary health risks, or adding to the overburdened healthcare system. In response, HHS modified telehealth rules. Since then, Medicare visits conducted through telehealth increased from approximately 840,000 in 2019 to 52.7 million in 2020, a sixty-fold increase, according to a report by HHS.
Since the height of the pandemic, these numbers have somewhat come down, but new infrastructure developed to reduce in-person doctors’ visits, and shifting norms around conducting business virtually have meant that televisits still made up approximately one out of every eight doctors’ visits Medicare paid for in the third quarter of 2023. In monetary terms, that means Medicare spent over $3 billion on telehealth services that year alone..
Several of the 2020 Medicare rule changes concerning telehealth will are set to expire at the end of 2024. But telehealth is popular, convenient, and, according to some, cost efficient. Some version of expanded telehealth coverage paid for by Medicare is clearly here to stay.
The Fraud
As with nearly every new program where the government doles out massive amounts of money, expanded telehealth coverage is extremely prone to fraud schemes. One federal prosecutor has noted that scams are spreading “like wildfire.” By 2022, the HHS Inspector General had already conducted “dozens” of investigations into fraud schemes linked to telehealth providers, telemedicine, and telemarketing services. Kickbacks, billing for visits that never happened, and billing for unnecessary services or medications are among the issues already uncovered.
Enforcement actions since 2022 show there is no sign of telehealth fraud slowing down, especially in cases brought by whistleblowers. This March, for example, a durable medical equipment provider paid a settlement to resolve allegations of providing medically unnecessary equipment to telehealth patients. And in June, a behavioral health company settled allegations of improper medical coding for nursing home patients’ telehealth visits. The same month, indictments were handed down for executives of a company that distributed Adderall improperly via telehealth appointments. These are just isolated examples, but with billions in government money at stake, the schemes are sure to be creative, varied, and vast.
In 2022, HHS conducted a review of telehealth services during the first year of the COVID-19 pandemic. That study compared telehealth providers’ claims with a checklist of seven “program integrity risks” that HHS considers indicative of fraud, waste, or abuse, including things like billing two payors for the same service, billing at the highest level of complexity, or billing unusually high numbers of hours. Out of about 740,000 providers who billed Medicare for telehealth services during 2020, the study reviewed claims for about 1,700 of them, finding that 100% of providers reviewed “had concerning billing on at least one of seven measures that may indicate fraud, waste, or abuse.” The reviewed providers were paid approximately $128 million for telehealth services during the relevant time period.
Telehealth coverage expanded in extreme haste to adapt to the COVID-19 pandemic. It’s still a relatively new program covered by a quickly changing set of rules. But what’s clear is that it poses substantial risk for the Medicare trust fund and Medicare’s goals of program integrity.
Max Voldman is a Partner at Whistleblower Partners
