Telehealth, EHR Use Increases False Claims Act Violations, Fraud


As more providers leverage telehealth services and EHR systems, the federal government has seen increased False Claims Act violations and healthcare fraud.

Healthcare digitization, including increased use of telehealth and EHR has led to a higher volume of healthcare fraud and False Claims Act (FCA) cases, according to lawyers from Hogan Lovells.

The False Claims Act states that it is illegal for companies to knowingly submit fraudulent Medicare or Medicaid claims.

As both EHR implementation and telehealth use have expanded in the past few years, the Department of Justice (DOJ) has observed high levels of healthcare fraud, prompting the federal agency to increase its FCA enforcement.

The COVID-19 public health emergency led to a telehealth boom, but the DOJ has been investigating healthcare fraud involving the care modality since before the pandemic. Most of the DOJ cases involved false claims for durable medical equipment (DME) and compound medicine.

In 2019, the DOJ investigated an alleged fraud and kickback scheme in which DME companies paid illegal kickbacks to telehealth companies. The medical professionals working for the telehealth companies then referred Medicare beneficiaries to the DME companies for unnecessary back, shoulder, wrist, and knee braces.

The individuals involved with the telehealth companies and the DME company owners violated the False Claims Act, and the fraudulent Medicare billing led to a loss of more than $1.2 billion.

When the COVID-19 pandemic hit, Medicare introduced greater flexibility for telehealth coverage. Flexibility helped improve access to healthcare services for many individuals, but it also increased the opportunity for healthcare fraud and abuse, according to the lawyers. In response, the government upped its FCA enforcement.

In October 2020, the DOJ announced “Operation Rubber Stamp,” in which it examined an FCA case involving telehealth executives who paid medical professionals to order fraudulent DME, genetic and diagnostic testing, and pain medications. The scheme led to $1.5 billion in fraudulent Medicare and Medicaid billing.

While the defendants did not receive charges for violating the FCA, the Hogan Lovells lawyers said that such fraud schemes could potentially prompt FCA claims by the government or whistleblowers.

The DOJ has alleged FCA violations in other ongoing telehealth fraud investigations, including a case that involved physicians approving orders for medically unnecessary DME and cancer genetic testing.

EHR utilization has also led to violations of the False Claims Act, the report furthered.

EHR implementation increased when congress enacted the Health Information Technology for Economic and Clinical Health (HITECH) Act in 2009, which provided incentives for health systems that transitioned to an EHR.

Since then, the DOJ has investigated several cases that highlighted FCA risks for EHR companies and the health systems that use them.

For example, in 2020, a health information technology developer paid $118 million to resolve FCA allegations that it received kickbacks from pharmaceutical companies in exchange for implementing clinical decision support alerts in its EHR software that increased prescriptions for certain drugs.

Additionally, in January 2021, EHR vendor athenahealth violated the FCA and the Anti-Kickback Statute in a scheme that aimed to boost its EHR sales. The DOJ alleged that the EHR vendor paid kickbacks to existing customers for each new client that signed up for athenahealth services. The vendor also orchestrated deals with competing EHR vendors that were discontinuing their EHR services to get them to refer their clients to athenahealth in exchange for remuneration.

Past FCA cases concerning EHR companies have involved discounts in exchange for referrals, product capability misrepresentations, and misrepresenting eligibility for EHR incentives.

Experts expect FCA and healthcare fraud cases involving telehealth and EHR to continue in the future. The lawyers recommended that telehealth providers evaluate their compliance programs and properly document patient encounters.

EHR companies should also ensure their systems comply with requirements to avoid FCA violations. Providers should check that their EHR software is HHS-certified and has previously maintained reliable outcomes.

“Telemedicine and EHR technologies have rapidly changed patient care, introducing opportunities for potential fraud and abuse and exposing gaps in oversight,” the lawyers concluded. “Companies operating in these spaces should expect increased FCA enforcement in these areas going forward and take steps to minimize their risk.”

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