Demand for telemedicine services skyrocketed during the pandemic. Before the pandemic, the Medicare Payment Advisory Commission estimated 134,000 beneficiaries used telemedicine services. 6 months into the pandemic, that figure topped 10.3 million. 

This explosion in demand, coupled with the easing of Medicare payment rules for telehealth services, enabled a novel species of fraud. We call it “tele-fraud.”  

Regulators recently nailed three Michigan doctors (and one nurse practitioner) for participating in a Medicare fraud scheme. 

This scheme has many moving parts, and they all hinge on telemedicine; we’ve summarized below. 

The doctors received prewritten documents from an unnamed marketing company. Telemarketers stuffed these documents with data extracted from elderly Medicare beneficiaries. The doctors received compensation for signing these documents. Signing the documents gave them access to recorded phone calls between the telemarketers and the Medicare beneficiaries, but the doctors were not obligated to listen to the calls or contact the beneficiaries. 

This detail is critical, and one of the reasons why regulators dropped the hammer. The three doctors who participated in the scheme signed the orders despite evidence the orders were not medically necessary.

The nurse practitioner admitted in his guilty plea that “he signed orders for medical braces and cancer genetic testing, attesting that he had performed the assessments and verifying that the orders were reasonably and medically necessary, when, in fact, he typically executed the orders without reviewing the records.”

Hard to come back from that one.

The telemarketing company then sold the signed documents to medical equipment manufacturers and genetic testing laboratories. These entities billed Medicare for the braces and genetic tests and listed the Michigan doctors as the referring providers.  

This added up to $7.3 million in false claims.  

The investigation that brought this scheme to light is known as “Operation Happy Clickers.” It is one of several federal crackdowns on telemedicine fraud. The three doctors settled their respective cases and paid a fine; the nurse practitioner pled guilty to a criminal charge of making a false statement. Fines ranged from $28,000 to over $300,000.

At the start of the pandemic, the federal government eased Medicare payment rules specific to telehealth services. Some expressed concerns that easing the rules would enable fraudsters. In this case, those concerns proved prophetic.  

So, investigations like Operation Happy Clickers are bringing the bad actors to justice. That’s good.  

But let’s answer the question we’re all asking ourselves: What are the chances a regular, law-abiding doctor becomes the subject of an investigation because of an honest mistake?  

Provided you mind details (and don’t sign up for any fraud schemes), the risks are low. But telemedicine presents novel risks because the technology is relatively new. Doctors (even seasoned doctors) make mistakes when caring for patients in new ways. To echo an example described in one of our sources… 

“…under COVID-19 pandemic emergency rule waivers, physicians are allowed to bill Medicare for telehealth visits with patients they hadn’t previously seen in person. So, they should take common-sense precautions. “Use your doctor brain: ‘Can I properly evaluate this patient for whatever the clinical issue is via telehealth?’ ” advised Ty Howard, a former federal prosecutor who is with Bradley Arant Boult Cummings. He defends physicians in regulatory actions. “If you have questions about that, that’s a big red flag.” 

We repeat ourselves: Details are important. Billing a patient for a video conference (when you just spoke to them over the phone) can be a problem. Regulators are unlikely to target doctors for one-off mistakes, but those who make a habit of mislabeling these consults risk penalties. The virtual nature of telemedicine makes it easier for practices to accidentally bill patients for a more robust service than was provided. 

“The feds may start examining illegal telehealth practices, such as billing for more services than were actually provided, billing for services that were not provided, or inappropriately upcoding services. “If you do a general video consult but bill for something more complex, that’s classic upcoding, and that’s where we’re most likely to see fraud claims in the future,” said Miranda Hooker, a former federal prosecutor at Troutman Pepper in Boston who defends clients accused of healthcare fraud. “Also, if you bill for a video consult when it’s actually a phone consult, that’s technically a false claim.” 

Most doctors would never intentionally overbill a patient, but those who rely upon electronic health record systems to manage tasks (like billing) may overcharge a patient in error. Some businesses operating in the health IT space claim they can “dramatically increase” a doctor’s reimbursement. This is sometimes accomplished via algorithms programmed to “upcode” certain procedures – such as telehealth services.

Telehealth violations fly under the radar because doctors and patients are rarely in the same space. Potential whistleblowers (nurses, staff, other providers) are usually absent, so if doctors are gaming the system, their actions go unreported. 

This isn’t to say doctors can’t trust these companies. But they should seek legal counsel before partnering with them. 

The moral of the story: Mind your documentation and billing practices in all things, and especially telehealth services. The virtual nature of care enables accidental billing errors and deliberate fraud.

So long as providers don’t treat telemedicine like an easy button to fortune, they should practice with peace of mind. 

What do you think? Let us know in the comments below.

Jeffrey Segal, MD, JD

Chief Executive Officer and Founder

Dr. Jeffrey Segal, Chief Executive Officer and Founder of Medical Justice, is a board-certified neurosurgeon. Dr. Segal is a Fellow of the American College of Surgeons; the American College of Legal Medicine; and the American Association of Neurological Surgeons. He is also a member of the North American Spine Society. In the process of conceiving, funding, developing, and growing Medical Justice, Dr. Segal has established himself as one of the country’s leading authorities on medical malpractice issues, counterclaims, and internet-based assaults on reputation.

Dr. Segal was a practicing neurosurgeon for approximately ten years, during which time he also played an active role as a participant on various state-sanctioned medical review panels designed to decrease the incidence of meritless medical malpractice cases.

Dr. Segal holds a M.D. from Baylor College of Medicine, where he also completed a neurosurgical residency. Dr. Segal served as a Spinal Surgery Fellow at The University of South Florida Medical School. He is a member of Phi Beta Kappa as well as the AOA Medical Honor Society. Dr. Segal received his B.A. from the University of Texas and graduated with a J.D. from Concord Law School with highest honors.

In 2000, he co-founded and served as CEO of DarPharma, Inc, a biotechnology company in Chapel Hill, NC, focused on the discovery and development of first-of-class pharmaceuticals for neuropsychiatric disorders.

Dr. Segal is also a partner at Byrd Adatto, a national business and health care law firm. Byrd Adatto was selected as a Best Law Firm in the 2021 edition of the “Best Law Firms” list by U.S. News – Best Lawyers. With over 50 combined years of experience in serving doctors, dentists, and other providers, Byrd Adatto has a national pedigree to address most legal issues that arise in the business and practice of medicine.