The Office of the Inspector General issued a special fraud alert in July concerning telehealth fraud, only the fourth special fraud alert in the last decade. The fraud alert cautioned against misleading marketing practices and emphasized how important transparency is. Jeremy Sherer, co-chair of Hooper, Lundy & Bookman’s digital health practice group describes what this means for telehealth companies. 

MedCity News: What do GCs need to know to advise clients who are healthcare companies in light of this fraud alert? 

Sherer: There’s a clear focus on how companies are marketing right now, and that’s not just from the OIG. We’ve seen attention from the FTC recently as well. The big takeaway is the importance of transparency about who is advertising and what their relationship is to a medical practice, or a management services organization (MSO) that provides services to a medical practice. 

And then, while it’s nothing new, physician compensation needs to be consistent with fair market value and documented. It’s clear based on this special fraud alert that there are concerns about compensation based on the volume or value of referrals or business otherwise generated between the parties, which of course is “fraud and abuse 101.” There are and will continue to be bad actors in the healthcare space, that isn’t new.  GCs need to do everything they can to avoid their company being mistaken for a “bad guy” and document the steps they’re taking to ensure they’re in compliance with the law.  

MedCity News: Can you talk a little bit about some of the specifics of what’s described as “suspect behavior”?

Sherer: What’s interesting in this special fraud alert and what was somewhat new is the dual emphasis on marketing and clinical decision making. On the marketing side, OIG gets concerned when companies’ marketing efforts target Medicare beneficiaries and advertise free or low-cost products, including co-pay waivers. The big one that stands out here, though, is concerns around models in which practitioners have limited choice in the treatment that they can prescribe, or the ways that they can communicate with patients.

In particular, the Special Fraud Alert points to remote patient monitoring, which, when done correctly, is a tremendous tool from a preventive care perspective. What I think folks need to be thinking about, though, is in clinical areas where they often use particular tools like remote patient monitoring, whether the delivery model impedes the tools available to practitioners. Said differently, if a clinician working at an RPM company feels that a different clinical intervention besides RPM is appropriate, or that the patient really should be referred to a specialist of a different type, do they have the ability to make that recommendation? 

MedCity News: So in terms of how it could be viewed as a fraud scheme, what would be the suspicious part here?

Sherer: Regulators worry about scenarios in which practitioners are motivated, generally by way of payment, to prescribe medically unnecessary treatment. A model in which practitioners are paid based upon the number of prescriptions they write is a red flag, because the compensation structure incentivizes the provider to prescribe medication, whether or not that’s the best treatment option for the patient. OIG is also concerned about scenarios where there is limited clinical interaction between the practitioner and the patient. It’s important to document clinical protocols and establish proof that practitioners are making genuine clinical determinations based on ample amounts of clinical data from the patient, ideally approximating the type and volume of information that would be available to a practitioner in an in-person interaction. That includes having the full clinical toolkit available to the practitioner.

MedCity News: What do you expect to see as a result of this fraud alert?

Sherer: For a long time, many telehealth companies were structuring themselves as direct-to-consumer models, meaning that they did not participate in commercial or federal health insurance programs like Medicare and Medicaid. As the digital health industry has grown and a lot of these companies have become increasingly successful, more and more have started to participate in federal health insurance programs, the significance of which is that they are now subject to federal fraud and abuse laws , and are within the jurisdiction of the OIG. And so based on this special fraud alert, I think we can certainly count on increased the volume of investigation activity, specifically looking at telehealth companies.

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