As High Risk as it Gets: Telehealth Referrals for Genetic Testing

The Department of Justice (“DOJ”) indicted a North Carolina physician assistant last month on criminal charges in a genetic testing scheme that resulted in the submission of more than $10 million in fraudulent claims to Medicare. The indictment alleges that during his time as an independent contractor for a physician staffing and telemedicine company, the defendant signed fraudulent prescriptions for hundreds of Medicare beneficiaries for medically unnecessary genetic testing—specifically cancer genomic and pharmacogenetic testing—without ever meeting, seeing, or treating these beneficiaries, aside from brief telephone conversations with some. He now faces up to 40 years in prison.

Due to the high reimbursements associated with genetic testing, the federal government has dedicated significant efforts to reducing fraud, waste and abuse (“FWA”) in this area. For example, in June 2019, the Office of the Inspector General for Health and Human Services (“OIG”) issued a Fraud Alert to the public identifying a fraudulent scheme involving genetic testing. The Alert indicated that individuals and/or entities were offering Medicare beneficiaries cheek swabs for genetic testing with the intent of obtaining their Medicare information for use in fraudulent conduct. In July 2020, the Center for Medicare & Medicaid Services (“CMS”) issued a white paper on genetic testing fraud. Thereafter, in December 2021, the OIG issued a report analyzing nationwide trends in genetic tests for which payments were issued under Medicare Part B. Accordingly, as we have written about here, the genetic testing industry is riddled with risk.

When genetic testing is combined with telehealth, another focus of DOJ enforcement, the stakes rise significantly. Pursuant to Medicare regulations, genetic tests, like most other diagnostic tests, “must be ordered by the physician who is treating the beneficiary, that is, the physician who furnishes a consultation or treats a beneficiary for a specific medical problem and who uses the results in the management of the beneficiary’s specific medical problem.” As we reported here, the OIG has recently issued a Special Fraud Alert describing seven “suspect characteristics” that suggest a heighted risk of FWA in these relationships. The seminal Alert will guide prosecutors in their evaluation of such arrangements and charging decisions. Among other investigative techniques, these prosecutors and their agents will be analyzing claims data to identify high-risk providers, performing medical reviews of claims to determine the medical necessity of services, and conducting interviews of beneficiaries about services they received.

How Frier Levitt Can Help

Frier Levitt’s White-Collar Defense & Government Investigations practice, spearheaded by former federal and state prosecutors, has decades of experience defending providers being investigated or prosecuted for genetic testing and telehealth arrangements. To help head-off scrutiny, Fried Levitt’s Regulatory Compliance group assists client to evaluate and develop compliant genetic testing and telehealth arrangements. If you practice in these industries and are interested in further understanding potential enforcement risk and/or confirming compliance of your business model to applicable law, contact Frier Levitt today.