Special Fraud Alert on Telemedicine Company Arrangements Issued by OIG

August 5, 2022

The Office of Inspector General (“OIG”) has issued a Special Fraud Alert covering potential fraudulent arrangements involving companies providing telemedicine services.  This Special Fraud Alert comes at a time telehealth is seeing a great deal of expansion on the heels of the COVID pandemic.  In the Special Fraud Alert, the OIG focuses on fraud schemes it has investigated involving telehealth, telemedicine, or telemarketing services it claims have exploited the growing acceptance and use of telehealth.

The OIG uses Special Fraud Alerts to warn the provider community they may be asked to participate in these schemes and asked to describe the characteristics of illegitimate programs.  This gives providers, and the public, awareness of arrangements that might seem too good to be true oftentimes are actually fraudulent.  The OIG encourages practitioners to exercise caution and use heightened scrutiny when entering into telehealth arrangements that include “suspect” elements.

The OIG describes some of the fraudulent telehealth arrangements it considers fraudulent to include telehealth companies intentionally paying physicians and nonphysician practitioners kickbacks to generate orders or prescriptions for medically unnecessary durable medical equipment, genetic testing, wound care items, or prescription medications.  The OIG describes a broad variety of fraud schemes varying in design and operation involving a wide range of different types of entities, including international and domestic telemarketing call centers, staffing companies, practitioners, marketers, brokers, and others.

Aggressive Use of Kickbacks

The OIG states various telehealth companies are using kickbacks to aggressively recruit and reward practitioners to order or prescribe medically unnecessary items and services for patients the telehealth company recruits and solicits.  These companies often pay kickbacks to providers to induce them to order or prescribe their products or services.

Some characteristics of these fraudulent arrangements involve the payment to practitioners where the practitioner has little or no actual interaction with the patient, with low regard for whether the products or services the practitioner is asked to order are medically necessary.  These suspect programs may describe the payments in apparently legitimate terms such as per review payments, consultation fees, assessments of medical charts, or other seemingly legitimate terms.  Some go so far as to tell practitioners there is no need to contact the patient or contact is only required by telephone with no real opportunity to review the patient’s medical chart or assess their condition in a legitimate manner.  These suspect arrangements may be focused on the practitioner’s ordering of a predetermined product or service.  Oftentimes, the product to which the practitioner is directed is sold by the telehealth company.

The OIG expresses concern over potentially fraudulent programs and identifies the potential harm to federal health care programs and beneficiaries in many ways:

  • Inappropriate increase in costs to federal health care programs for medically unnecessary items and services.
  • Potential to harm beneficiaries by providing unnecessary products or care that could, in some cases, actually be harmful to patients.
  • Corrupting the practitioner’s medical decision-making.

Characteristics of Fraudulent Telehealth Arrangements

The OIG provides a useful list of the types of characteristics that practitioners should be aware of when they are approached by one of the many fraudulent telehealth schemes circulating in the market.  The OIG identified the following “suspect characteristics” (which it takes special pains to point out is not by any means an exhaustive list):

  • Patients are recruited by the telehealth company, a telemarketing company, sales representative, recruiter, call center, on the Internet, television advertising, or social media.
  • Patients are promised free or low-cost products or services or no “out-of-pocket” expense.
  • The practitioner is not given sufficient time with the patient to exercise their own professional judgement or discretion.
  • The practitioner is not given access to information regarding the patient and is not given sufficient time to adequately assess the needs of the patient.
  • The arrangement compensates the practitioner based on the volume or value of the items or services the practitioner orders or prescribes.
  • Mischaracterization of what the provider is actually compensated for, such as basing compensation on the number of patient records reviewed, when payment is more realistically based on products ordered.
  • The program is focused on beneficiaries of federal programs and does not offer the program to patients with private insurance.
  • The program focuses on a limited set or category of products and does not permit the practitioner to step outside the box and use their professional judgement to order what they believe the patient actually needs.
  • The telehealth company does not provide means or opportunity for the practitioner to follow up with the patient.
  • The arrangement does not permit the practitioner to meet their ethical responsibilities to the patient.

The OIG encourages practitioners to avoid these suspect arrangements.

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