For more information about this blog post, please contact Ryan L. O’Neill or Labinot Alexander Berlajolli.

OIG Issues Special Fraud Alert Regarding Telehealth Arrangements

The United States Department of Health & Human Services ("HHS"), Office of the Inspector General ("OIG"), issued a Special Fraud Alert urging practitioners to exercise caution when entering into arrangements with telemedicine companies. The Special Fraud Alert is the result of "dozens of investigations" conducted by the OIG into fraud schemes involving companies that purport to provide telehealth, telemedicine, or telemarketing services. Practitioners working for telehealth companies involved in such schemes may find themselves facing civil and criminal charges for violating numerous federal laws, including the Anti-Kickback Statute and False Claims Act, as well as state laws and regulations.

The OIG report has created a list of behaviors that should alert practitioners to potential fraud:

1. The telemedicine company or an associated telemarketing service identifies the patients for whom the practitioner orders or prescribes medical items.
2. The practitioner does not have enough contact or information about the patient to assess whether these items are medically necessary.
3. The telemedicine company pays the practitioner based on the volume of items prescribed to patients.
4. The telemedicine company provides services only to patients who are beneficiaries of federal healthcare programs.
5. The telemedicine company says they provide items and services to only nonfederal patients; however, they bill federal healthcare programs.
6. The telemedicine company only provides one type of healthcare product or service. This behavior can restrict practitioners' treatment options.

The full text of the OIG Special Fraud Alert may be accessed here.

Clinical Laboratories Secure Industry-Wide Win as DC Circuit Strikes Down Contentious 2016 HHS Final Rule on Lab Payments

A two-judge panel for the DC Circuit Court ruled on July 15, 2022 that a contentious 2016 HHS Final Rule (81 Fed. Reg. 41,036) to the Protecting Access to Medicare Act of 2014 (Pub. L. No. 113-93, 128 Stat. 1040; "PAMA") was arbitrary and capricious, striking down the rule which had led to an industry-wide reduction in Medicare payments to clinical laboratories. The 2016 rule narrowed the definition of the term "applicable laboratory" under PAMA to exclude hospital laboratories that provide outreach services.

According to the American Clinical Laboratory Association ("ACLA"), the exclusion unlawfully caused data from virtually all hospital labs, which receive private sector payments that are often up to four times larger than private sector payments to independent labs, to be disregarded, leading to massive reductions in Medicare reimbursements.

The Court concurred with the ACLA, finding that "[t]he agency, without adequate explanation, exempted a sizable portion of the laboratories covered by the statute from data reporting requirements." Although HHS argued that the 2016 rule was rendered moot by a subsequent 2018 final rule, the Court found that "[t]he record evidence in this case reflects that the agency has only 'temporarily altered its questionable behavior.'" The effect of this ruling thus invalidates the 2016 rule, preventing HHS from reinstating it in the future.

The full text of the ruling may be found here.