Telehealth and Telemedicine Fraud Explained

Telehealth fraud is billing Medicare or Medicaid for virtual visits that never happened, were not medically necessary, or existed only to generate prescriptions and orders the patient never needed.

Telehealth use exploded after 2020, and so did the fraud. It is prosecuted under the False Claims Act, and a whistleblower who reports it can recover 15% to 30% of what the government collects. If you have inside knowledge of telehealth fraud, call (888) 713-6653 for a free, confidential review of your claim.

Telehealth lets a doctor treat a patient without an in-person visit, by live video, phone, or remote monitoring. Medicare, Tricare, and Medicaid all cover qualifying telehealth, and after the COVID-19 public health emergency in 2020 that coverage expanded dramatically.

The numbers show why fraud followed. In the first year of the pandemic, Medicare beneficiaries used 88 times more telehealth than the year before, and the HHS Office of Inspector General later flagged 1,714 providers whose telehealth billing posed a high risk to Medicare, accounting for $127.7 million in services. ^[1]

The rules keep shifting as Congress extends or narrows the pandemic-era flexibilities, but the core principle has not changed: knowingly billing a government program for telehealth that was never provided, was not medically necessary, or did not qualify is fraud under the False Claims Act.

As Federal and State governments refine reimbursement for online medical care policies some unscrupulous medical and pharmaceutical providers are taking advantage of the system.

Telecare Violations: Turn Them In

Medical professionals know that making false Medicare or Medicaid claims for in-person is considered fraud. The same applied for telemedicine and telehealth.

Medicare Fraud is covered under the False Claim Act.

Federal and State Governments use the False Claims Act to empower those who have knowledge of wrongdoing and report them.

You can also report Medicare Fraud anonymously.

Telemedicine uses the same Medicare claim guidelines that apply to in-person care with additional rules for covered services.

Before reporting or bringing a case for telemedicine fraud it is important to understand the difference between telemedicine and telehealth.

Telehealth and telemedicine are considered two different types of online healthcare.

Both utilize electronic means to deliver medical services, treatments or prescriptions. This allows them to be defined as eHealth or telecare service.

The electronic means for clinical services include:

• Doctor/Patient Videoconferencing
• Internet Communication
• Store-and-forward Technologies
• Streaming Media
• Wireless Communications
• Telemonitoring Service
• Email, Fax, Text Communication
• Prescription of Drugs

According to the Office of the National Coordinator for Health information Technology (ONC) - “telehealth as the use of electronic information and telecommunications technologies to support and promote long-distance clinical health care, patient and professional health-related education, public health and health administration.” ^[2]

This general description is helpful, but specifically defining the difference between telemedicine and telehealth services is important for understanding what is covered by Medicare Part B, Medicaid or Tricare.

Telemedicine and Telehealth are new technologies. Newer advancements in medical treatments make life easier for patients but create a potential for abuse.

However, these innovations in healthcare are more difficult to regulate. As Medicare and other healthcare programs cover these innovative services new fraud schemes follow along.

The Department of Justice, the US Attorney General's Office and State Attorneys need help identifying complex and new illegal schemes.

Medical professionals should consult with a qualified Qui Tam Attorney to help bring cases if they believe a pattern of fraudulent action is in fact occurring.

In October 2018 four people and seven companies were indicted in a $1 Billion dollar telemedicine fraud scheme. The scheme involved the defendants setting-up a complex telemedicine process.

HealthRight, LLC, using other complicit pharmacies, fraudulently requested insurance coverage and prescriptions from people all over the country according to the indictment.

Doctors and clinics were approving drugs without even knowing the defendants where massively marking-up the prices and billing private insurance carriers.

While the private insurance carriers are not covered directly by the FCA, in many cases there is overlap with Medicare and Medicaid. This would allow for broader application of the False Claims Act.

That 2018 case was an early version of what became a flood of telehealth fraud. The schemes have only grown larger and more organized since.

These government programs are typically slower to react and enforce change.

The government will rely on the public and medical professional to help.

Telehealth Fraud Red Flags

Insiders usually spot the same warning signs:

• Visits billed with little or no actual patient interaction, or "visits" that last seconds
• Doctors signing large batches of orders for braces, tests, or drugs they never reviewed
• Payments or "marketing fees" moving between the telehealth platform, prescribers, and equipment or lab companies
• Patients recruited by call centers or ads rather than referred by their own physician
• Orders for the same product going to large numbers of unrelated patients

When COVID-19 hit in 2020, Medicare lifted most of its telehealth restrictions. CMS waived the geographic and originating-site rules, allowed audio-only visits, and paid for telehealth at the same rate as in-person care. The federal Public Health Emergency ended in May 2023, but Congress extended many of those flexibilities, and the rules have kept shifting since.

That explosion of covered telehealth created the modern fraud pattern prosecutors now call "telefraud." It runs like an assembly line:

• DME (brace) schemes: telemarketing call centers recruit Medicare patients, a sham telehealth "visit" generates a doctor's order for back, knee, or wrist braces the patient never needed, and a supplier bills Medicare. The DOJ's 2019 "Operation Brace Yourself" charged roughly $1.2 billion in this exact scheme.
• Genetic and cancer-screening tests: the same call-center-plus-telehealth model generates orders for expensive cancer (CGx) or cardiovascular genetic tests. "Operation Double Helix" charged about $2.1 billion in genetic-testing fraud.
• Prescription and kickback mills: high-volume telehealth platforms pay doctors per consult to rubber-stamp orders for expensive drugs or supplies, with kickbacks moving between the platform, the prescribers, and the suppliers.

The common thread is volume and kickbacks: thousands of orders signed in seconds, tied to payments that violate the Anti-Kickback Statute and turn every resulting claim into a false claim against Medicare. Telefraud is now one of the largest dollar categories in the DOJ's annual national health care fraud takedowns, and almost every case started with an insider who saw the orders were not real.

This is current, not history. In its 2024 National Health Care Fraud Enforcement Action, the Department of Justice charged 36 defendants in more than $1.1 billion of telemedicine and lab-testing schemes, part of a $2.75 billion sweep. One Florida operation that sold templated doctor's orders for braces and pain creams was tied to $1.9 billion in fraudulent claims. ^[8]