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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

November 1, 2021

Federal Government Takes Aggressive Stance on Money Tied to Telehealth Services

On September 17, 2021, the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) announced one of the largest fraud enforcement actions related to the COVID-19 pandemic. The civil and criminal enforcement action targets $1.1 billion stemming from telemedicine services signaling renewed scrutiny of telemedicine providers. This enforcement action is likely the first of many brought to recover funds related to telemedicine services provided during the COVID-19 pandemic. This enforcement action includes charges against 138 defendants including 42 doctors, nurses, and other medical professionals. Examples of fraudulent behavior implicated by the enforcement actions include a $784 million scheme to solicit illegal kickbacks and bribes from durable medical equipment suppliers and a $73 million kickback scheme involving medically unnecessary testing services. 

Regulators and prosecutors have taken aggressive steps to rein in fraud related to relaxed guidelines and emergency COVID-19 pandemic funding. These include establishing the COVID-19 Fraud Enforcement Task Force and the creation of the Department of Justice’s (DOJ) Special Inspector General for Pandemic Relief. Because many telehealth services were provided under the HHS 1135 emergency waiver of traditional regulatory requirements applicable to telehealth, it is likely the DOJ and HHS will begin targeting these services for audit and enforcement as we transition into a post-pandemic regulatory environment.

In early 2021, HHS OIG initiated a number of audits with the goal of identifying trends related to fraud, waste, and abuse tied to telemedicine services. The results, which OIG began releasing in September of 2021, will form the basis for additional enforcement actions. Its September 2021 audit findings note that, while most states are concerned about fraud, waste, and abuse related to telemedicine, states are unequipped to properly monitor these services. Interestingly, three states were unable to distinguish which services are provided via telehealth versus those delivered in person. OIG specifically recommended that CMS monitor telehealth service providers for fraud, waste, and abuse in order to supplement minimal state efforts. Due to lacking state oversight of telemedicine and scathing reviews by federal regulators, providers should prepare for increased scrutiny by both state and federal authorities as they attempt to rectify gaps in oversight of telemedicine services. Entities that will likely be targeted as a result of these audits include behavioral health providers and home health agencies, both of which have become increasingly dependent upon telemedicine modalities.

With the HHS 1135 waivers and relaxed New York Department of Health guidance expiring on January 13, 2022, (unless the federal public health emergency is extended) providers must be prepared to convert to a post-pandemic environment without the benefit and flexibility of the relaxed regulatory provisions that governed during the pandemic. During this “calm before the storm” of expected enforcement, providers should take time to bolster their compliance efforts and provide training on proper billing and patient documentation practices, including proactive measures to identify possible overpayments.

Barclay Damon’s Health Care Controversies Team is comprised of cross-trained health care attorneys who stand ready to assist providers in this challenging environment.

If you have questions regarding the content of this alert, please contact Linda Clark, Health Care Controversies Team Leader, at lclark@barclaydamon.com; Samuel Chubb, associate, at schubb@barclaydamon.com; or another member of the firm’s Health Care Controversies Team.

We also have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates related to COVID-19 and who are prepared to assist clients. Please contact Yvonne Hennessey, COVID-19 Response Team leader, at yhennessey@barclaydamon.com, or any member of the COVID-19 Response Team, at COVID-19ResponseTeam@barclaydamon.com.

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