Federal Watchdog Raises Concerns About Increasing Telehealth Fraud During Pandemic

A federal government watchdog is sounding the alarm that Americans’ growing enthusiasm for telehealth services during the coronavirus pandemic has led to a worrying parallel: a “dramatic increase” in telehealth related fraud.

The health department’s independent inspector general criticized policymakers for failing to put regulatory safeguards in place when they expanded access to telehealth in the Medicare program. Michael Cohen, the OIG’s director of operations, said the changes created an “open season” for vulnerabilities.

They “should have taken a couple of years to think about before it got rolled out, not roll it out, and then try to walk it back,” Cohen said. “This was probably not the best way to implement telemedicine.”

Cohen said his office had seen a clear, measurable escalation of scams where providers might exploit the idea of a telehealth visit to get information out of patients that they could use to bill Medicare for unnecessary medical equipment or services, or telehealth companies paying providers to prescribe services without ever interacting with the patients themselves. He said the office was still studying whether other types of telehealth related fraud had increased during the pandemic, like legitimate companies overbilling or providing less effective care.

“There’s so many things that need to be protected [against fraud], not only the finances, but also potential patient harm,” he added.

Before the pandemic, most Medicare beneficiaries did not have access to virtual medical appointments or other telehealth services. Instead, patients needed to be at a provider’s office to receive reimbursement for telehealth or live in a designated rural area.

But in March, the Trump administration significantly expanded coverage to include a wider range of telehealth services like psychotherapy and nursing home discharge visits. During this temporary expansion, Medicare beneficiaries can pay for virtual visits at the same rate as an in-person visit. Some telehealth providers are also reducing or waiving copays.

The Trump administration also relaxed HIPAA requirements, allowing providers to use communication platforms like Facetime, Skype, and Zoom to conduct visits with their patients in good faith.

The moves led to a huge increase in telehealth visits. But the OIG worries it also opened the door for criminals to freely initiate contact with patients.

Right now, the federal government estimates that there were $4.5 billion worth of telehealth-related fraud losses in fiscal year 2020, the largest of any category and a record for Medicare fraud. More than 80 percent of the DOJ’s fraud recoveries in 2020 were health care related, the largest number of government-initiated cases against health entities ever reported.

Several of those major cases were telehealth related. In one case in Florida, the CEO of two telehealth companies pled guilty to soliciting bribes in exchange for encouraging telehealth providers to order unnecessary medical equipment. In another, a physician allegedly paid his friends to sign telehealth orders for medically unnecessary genetic testing and medical equipment.

The OIG is planning an investigation into the specific issues surrounding the relaxation of regulatory requirements during the pandemic; the reports on this will likely be made public over the next year, Cohen said.

The Center for Medicare Services is also assessing the regulations to determine whether to make permanent changes to telehealth services under Medicare after the pandemic, a spokesperson told STAT.

Still, some experts said that the benefits of expanded telehealth coverage outweigh the potential for abuse and fraud, especially when treating high-risk patients.

“Even those that are saying that there’s this great increase [in fraud], we have not heard the DOJ or the OIG say that they lack the tools or the resources or the capability under current rules and laws to effectively do their jobs,” said Kyle Zebley, director of public policy at the American Telehealth Association, which is lobbying Congress to make the policy shifts permanent.

Tina Hershey, assistant professor in the department of health policy and management at the University of Pittsburgh, said that going forward, providers should educate patients and beneficiaries about potential fraudulent schemes. “We just need to be vigilant,” Hershey said. “That vigilance will allow the expanded accessibility.”


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