Enforcement Trends

Feds Bust Labs for Telemedicine Testing Scams

So much for the pandemic’s dulling the momentum of federal fraud enforcement. Dubbed “Operation Rubber Stamp,” the new nationwide enforcement action revealed by the Department of Justice (DOJ) on September 30 is the largest “takedown” in Department history involving 51 federal districts, 345 defendants, including over 100 doctors, nurses and other licensed medical professionals, and $6 billion in false claims. And, while not necessarily the primary target, medical labs have been pulled in to the “Rubber Stamp” dragnet.

 The Takedown Target

Of the $6 billion in false and federal claims submitted to federal health care programs and private insurers involved in Operation Rubber Stamp, $4.5 billion is connected to telemedicine. And that makes perfect sense. Long touted as the future of health care, telemedicine utilization has taken off during the public health emergency by enabling care to continue without breaching the walls of social distancing. Public and private payors immediately recognized this and have temporarily expanded coverage of telemedicine services, with the expectation that coverage will become permanent before too long.

But as other segments of the health care industry can attest, with profit and payment comes scrutiny. While it may be the biggest, Operation Rubber Stamp isn’t the first major federal enforcement action targeting telemedicine. For example, in April 2019, the DOJ announced the indictments of 24 individuals and telemedicine companies for allegedly accepting kickbacks from durable medical equipment (DME) suppliers and using telemedicine visits to persuade Medicare beneficiaries to accept DME that wasn’t medically necessary. Similar charges were filed against other telemedicine providers in August 2019.

As Operation Rubber Stamp reveals, federal and state health care law enforcement has been stepping up the scrutiny of telemedicine since very early in the COVID-19 public health emergency.

Telemedicine Fraud and Lab Services

Nor is Operation Rubber Stamp the first time that telemedicine abuse has been connected to ordering of lab tests. One notable case concluded on Jan. 10, 2020, when the owner of two genetic testing labs in Pennsylvania pleaded guilty to conspiring with the operator of a Florida-based telemedicine company to carry out schemes to submit false claims to Medicare for cancer genomic testing (CGx) and pharmacogenetic testing (PGx). The labs paid the operator kickback fees based on the percentage of Medicare reimbursement to obtain CGx and PGx prescriptions from physicians who were contracted by the telemedicine company to review the beneficiaries’ personal and familial medical histories. According to the DOJ, the contract physicians authorized testing for greater than 95% of beneficiaries even though they didn’t conduct a proper telemedicine visit, weren’t treating the beneficiaries for cancer or cancer symptoms, didn’t use the test results for treatment of the beneficiaries, and generally weren’t qualified to understand and interpret the test results.

Not surprisingly, many of the defendants in Operation Rubber Stamp are labs and telemedicine operators charged with paying kickbacks to doctors to order medically unnecessary tests for patients with whom they never actually had televisits.

The Other Targets of “Rubber Stamp”

Although 75% of the ill-gotten gains came from telemedicine abuses, Operation Rubber Stamp also targeted two other forms of more traditional fraudulent activity:

Illegal Opioids Distribution and Prescription

The takedown resulted in charges against 240 defendants for allegedly participating in illegal schemes to prescribe and distribute more than 30 million doses of opioids resulting in over $800 million in false claims. In addition to billing for services that weren’t medically necessary or actually provided, in many cases, patient recruiters, beneficiaries and others received cash kickbacks in return for providing beneficiary information to providers, which the providers then used to submit fraudulent claims to Medicare. Urine and other drug testing labs were named as defendants in a number of these cases.

“Sober Homes” Abuses

More than a dozen criminal defendants were also charged in connection with more than $845 million of allegedly false and fraudulent claims for tests and treatments for vulnerable patients seeking treatment for drug and/or alcohol addiction. Prosecutors contend that physicians, labs, owners and operators of substance abuse treatment facilities and patient recruiters, aka “body brokers” participated in schemes involving the payment of illegal kickbacks for referring patients to substance abuse treatment facilities, where they were prescribed medically unnecessary opioids and subjected to medically unnecessary drug testing. In many cases, payors were billed thousands of dollars for a single test. The patients were then often discharged and admitted to other treatment facilities, or referred to other labs and clinics, in exchange for further kickbacks.

Takeaway

Health care fraud is huge business even in the midst of a global pandemic. Thus, while utilization of routine and non-COVID medical treatment has slowed down, fraudsters have effectively pivoted their business models to take advantage of the newly expanded telemedicine and coverage rules adopted in response to the public health emergency. Operation Rubber Stamp makes it clear that the enforcers are onto the scammers and determined to bring them to justice. It also represents continuation of pre-pandemic patterns of massive joint federal-state takedown campaigns targeting specific forms of fraud. Rubber Stamp is the biggest takedown so far. But don’t be surprised if that distinction ends by an even bigger campaign in the months or even weeks ahead.

 

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