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Telemedicine fraud ripe during COVID-19 pandemic

In April 2019, following an investigation by the FBI and U.S. Department of Health and Human Services Office of the Inspector General, the U.S. Department of Justice (DOJ) charged 24 defendants in a $1.2 billion illegal Medicare kickback and bribery scheme.

The alleged scheme centered around the defendants providing illegal kickbacks and bribes to health care providers in exchange for prescriptions of items of durable medical equipment like braces and supports.

According to the indictment, the scheme began with fraudulent telemedicine companies. The indictment identified several individuals involved in an international telemarketing network preying on vulnerable people in the U.S., the Philippines and Latin America. (See 24 Charged in $1.2 Billion Medicare Scheme, U.S. Says, by Niraj Chokshi and Julia Jacobs, The New York Times, April 9, 2019.)

According to the Coalition Against Insurance Fraud, insurance fraud losses conservatively amount to $80 billion a year in the U.S. The National Health Care Anti-Fraud Association suggests “some government and law enforcement agencies place the loss as … more than $300 billion” annually. (See The Challenge of Health Fraud.)

Many view health insurance fraud as claiming false injuries or doctors billing for services not rendered or unnecessary services. Those might be the core frauds, but we must include technology in the mix.

The DOJ alleges the money in the April 2019 Medicare case flowed from international telemarketing centers to telemedicine companies that allegedly provided illegal kickbacks to physicians in exchange for medically unnecessary and inappropriate rendered durable medical equipment (DME) prescriptions. The call centers then sold the prescriptions to medical supply companies, who subsequently and fraudulently billed Medicare, for more than $1 billion. The physicians had had no direct contact with the patients — except for some brief telephone conversations — whom they’d never met. (See the DOJ release.)

Most schemes aren’t this complex, but telehealth opens the door for more fraud, especially with its greater use during the pandemic.

History of telemedicine

Telemedicine isn’t a 21st century phenomenon. Hugo Gernsback, an inventor and publisher, introduced a device he named the “teledactyl” in a 1925 article he wrote for his Science and Invention magazine. (See Telemedicine Predicted in 1925, by Matt Novak, Smithsonian Magazine, March 14, 2012.)

Gernsback wrote, “The Teledactyl (Tele, far; Dactyl, finger — from the Greek) is a future instrument by which it will be possible for us to ‘feel at a distance.’… The doctor of the future, by means of this instrument, will be able to feel his patient, as it were, at a distance.…The doctor sees what is going on in the patient’s room by means of a television screen. …

“As our civilization progresses we find it more and more necessary to act at a distance. … The busy doctor, fifty years hence, will not be able to visit his patients as he does now.”

In a 2015 article in “Medpage Today,” Jay Sanders, M.D., president and CEO of the American Telemedicine Group, recalled his introduction to the concept in 1967 as a resident at Massachusetts General Hospital (MGH). His professor, Ken Bird, M.D., who was moonlighting as the medical director at Logan Airport Medical Station, was exasperated that he had to waste an hour in traffic in the 3 ½-mile trip commuting between both facilities. One night, Bird said to Sanders, “What if I brought two TV cameras and put one at Logan Airport and one here in the MGH ER and I began to examine patients over TV?” Sanders wrote that at the time he thought “it was the stupidest idea I’d ever heard. … And I’ve been working on his stupid idea ever since.” (See How ‘A Stupid Idea’ Gave Birth to Telemedicine, by Jay H. Sanders, M.D., Medpage Today, Dec. 30, 2015.)

In 1997, Medicare began reimbursement for telemedicine services following passage of the Balanced Budget Act with the hope that patients in rural communities and those without reasonable physical access to medical specialists could receive adequate medical evaluation.

At the beginning of this century, we began to communicate more with video applications such as Skype. And, of course, this stay-at-home year has popularized telemedicine beyond Medicare and into the private insurance industry.

On March 13, with an emergency declaration under the U.S. Stafford Act and the National Emergencies Act, the Center for Medicare and Medicaid Services (CMS) expanded Medicare’s telehealth benefits under CMS’ “1135 waiver” and the Coronavirus Preparedness and Response Supplemental Appropriations Act. This has allowed for greater flexibility and access to telehealth technology during the COVID-19 pandemic. (See the CMS release.)

Prior to this, Medicare was only reimbursing providers for telehealth services for routine visits in certain circumstances. For example, a beneficiary had to have lived in a rural area and traveled to a local medical facility to receive telemedical services from a doctor in a remote location. CMS normally wouldn’t have allowed the patient to receive this service in their home. And a telemedicine patient had to have a prior working relationship with the physician.

Telemedicine fraud

Of course, during the COVID-19 crisis, many small businesses, including doctors, dentists, chiropractors and other health care providers, have been unable to be physically open. The combination of reduced income and the need/desire to support expenses and lifestyles provides the pressure and rationalization components of the Fraud Triangle.

Health care providers can further distort their rationalizations by dwelling or the possibly flawed conventional wisdom that flush insurance carriers are continuing to collect premiums and enhance their bottom lines. This are ripe conditions for fraudsters’ misuse of telemedicine.

To gain insight into services before assessing the fraud, we must define concepts.

Telehealth versus telemedicine

Telehealth is the broad term. Telemedicine is the specific application of the concept.

Telehealth applies the use of:

  • Email
  • Mobile devices
  • Store-and-forward (asynchronous) videoconferencing, i.e. transmission of recorded health histories to health care providers
  • Remote patient monitoring, i.e. use of applied electronic devices, such as cardiac monitors, to record medical data for review by a provider at a different time

Telemedicine is real-time, two-way interactive communication sessions between patients and physicians via such apps as FaceTime or Zoom with appropriate HIPAA compliance. Telehealth encompasses all other non-face-to-face electronic communications. (See Telemedicine, at Medicaid.Gov,.)

Telemedicine services therefore can include not only data reviews of data but more interactive patient consultations, clinical services such as prescription provisions and renewals, and some semblance of a physical examination, albeit without true objective assessments for the most part. (See Why the Telemedicine Physical is Better Than You Think, by Aditi Joshi, MD and Judd Hollander, MD, Telemed Magazine, March 9, 2017.) The primary advantage of these services is availability of physicians’ services for those who live in rural or remote areas.

Telehealth has recently begun to receive Medicaid reimbursement, which has opened the door to additional types of false claims as have been identified in the Medicare program, as well (see below). Telemedicine fraud is easier to spot because of its narrower definition.

Medicare has identified such telemedicine crimes as fraudulent claims using false diagnoses, phantom patients, fake telemedicine appointments and insurance reimbursement for non-essential drugs and fictitious treatments. (See Understanding Telehealth and Telemedicine Fraud: The New Frontline in Medicare False Claims, and What You Need to Know About Telehealth Fraud, by Thom Pryor, Legal April 30, 2019.)

However, as with all types of fraud, intent is the key to determining the wrongdoing. Medical care facilities, nursing homes, pharmaceutical/medical supply companies, medical clinics, individual providers, and even physical therapists and chiropractors can take advantage of expanded broad coverage for telehealth services.

Physical therapists and chiropractors, obviously, can’t apply treatments via telemedicine. However, as with other providers they can discuss symptoms, evaluate physical and functional assessments, offer at-home remedies and exercises, and make DME recommendations. As we see in the opening case, telemedicine will facilitate increased DME fraud to purportedly alleviate symptoms and enhance function in the absence of physical treatments.

We must still be aware of all the usual fraudulent activities. Telemedicine health care providers bill via “evaluation and management” services, which encompass patient evaluations, obtaining patient histories, performing physical examinations, medical decision making, and Medicare and Medicaid coding of these services that are specific to the complexity of service and time spent. Fraudulent health providers, whether in-person or via telemedicine, notoriously provide improper coding to the U.S. federal government to steal taxpayer money. Scrutinize all telemedical visits, especially chiropractic and physical therapy visits, because they seldom require complex medical decision making.

Personal injury fraud, such as staging car accidents and exaggerating injuries, are likely to increase in telemedicine because of increased pressures of poor economic conditions. (Full discussion of this type of fraud is beyond the scope of this article.)

Telemedicine evaluations for fraud

So how do we evaluate for fraudulent activity in the telehealth environment?

Patients must initiate service to qualify for legitimate telemedicine billing. (See Medicare Telemedicine Health Care Provider Fact Sheet, Centers for Medicare and Medicaid Services.)

As always, office notes must substantiate the level of service billed. A patient’s history must deem medically necessary any prescribed home regimen or recommended item of DME despite limited examination and review of prior records.

“Phantom visits” — billing for nonexistent physician visits — can proliferate because patients don’t physically sign in. Be aware of billing for services not rendered even if a telemedicine visit did occur.

Patients should review their telemedicine explanations of benefits to confirm the correct service date of service and that the billed service is consistent with the visit.

Referral for diagnostic studies must be medically necessary and supported by documentation. Widespread referrals, especially to the same facility, can be grounds for abuse and fraud, and can raise suspicion for illegal kickbacks.

Look for substantial differences in DME among similar items, such as back braces, knee supports and cervical collars. Provided DME must be compatible with coded and billed items. For example, a health care provider once billed Medicare for a recommended complex lower-back support but provided the patient a basic elastic support.

Patients should check with their insurance carriers and state health agencies because of variations of telemedical practice.


Telemedicine isn’t a new concept. It’s become an integral element of health care delivery. However, it’s prone to fraud opportunities because of the absence of direct patient contact. U.S. federal loosening of regulations during the pandemic has opened the door for more telemedicine visits and potential for fraud.

We must monitor protocols of health service providers, including:

  • Appropriate contact.
  • Record keeping that accurately documents purported rendered service.
  • Medical necessity for rendered services and recommendation, including DME.
  • Accuracy of time and complexity coding.
  • Coordination of visits and services with explanations of benefits and patients.

Robert A. Richman, CFE, is a chiropractor in a private practice at the Chiropractic Center at Main Mall, PC, in the greater New York City area. He has performed thousands of independent medical examinations and file reviews for multiple insurance carriers along with assisting SIUs with investigations. Contact him at