Updated on: October 22, 2021

How Fraudsters Use Telemarketing as Telehealth to  Scam Seniors

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Original story posted on: October 18, 2021

Former OIG special agent reveals how the PHE has been abused by con artists to scam unsuspecting seniors.

Telemedicine and telehealth: both terms elicit thoughts of being in front of a screen of some sort and having an interaction with a healthcare professional.

Prior to the Public Health Emergency (PHE) caused by the outbreak of COVID-19, the Centers for Medicare & Medicaid Services (CMS) had very strict rules on the allowance of telemedicine for the Medicare population. Most of the regulatory allowances for the use of telemedicine for this population was founded on catch phrases like “originating site” and “metropolitan statistical area.” These phrases conjured up all kinds of thoughts for healthcare providers who wanted to provide quality continuity of care for their patients, but were limited in the way to achieve this for ill or homebound patients who could not get to the office for a visit. The modernization of these regulations afforded the healthcare community the ability to expand their reach, while continuing to provide the necessary care that was not available due to the PHE restrictions. 

As with anything that exists in the healthcare payment world, as something becomes available, not only will it benefit those who need the services, items, and procedures, but it will inevitably imbue those intent on committing fraud with opportunities as well. In discussing fraud, waste, and abuse, those engaging in it are clearly the ones who care the least about regulations, law-enforcement actions, and the like. Yet regulations, policies, and guidance are really intended to work.. 

From a fraud perspective, the ability to monetize telemedicine and telehealth is something we will be seeing in press releases for years to come. What we are seeing is not really “telemedicine” or “telehealth,” but more directly associated with “telemarketing.”

Understanding the process by which these fraudulent providers are working in this era can foster a better knowledge base to begin calling these schemes by their appropriate names. 

If you can recall watching movies from the late 1980s, such as Wall Street, where the stockbrokers sat in cubicles that were really nothing more than “phone farms” (people making voluminous numbers of telephone calls, soliciting people to buy into a stock that was worthless), that is a similar landscape to today. Instead of peddling the wares of stocks that are not worth anything, the telemarketers are soliciting the Medicare population to agree to accept, among other things, genetic tests, durable medical equipment (orthotics for shoes, knees, ankles, and backs, and other types of braces), topical and other types of prescription medications, and anything else that can be sent through the mail to these unwitting participants. 

Unfortunately, COVID-19 exaggerated the isolation with which the Medicare population is often faced. Sitting home alone, watching endless amounts of television, the senior population is bombarded with advertisements for these various medical items and services. Couple this with the amount of information available on the Internet and the deep (or dark) web, and they become the ingredients needed in this recipe for fraud. These telemarketing firms buy and sell patient lists, and use information obtained through social engineering to solicit Medicare beneficiaries and have them agree to accept items and services that are essentially useless to them. In some instances, there is no contact with the beneficiary, and the item or product is just sent to them; the unwitting recipient may believe that the item or product was sent to them because their primary care physician has requested it. 

Make no mistake; the telemarketing firms are in control. They obtain the call lists or patient information through a variety of methods. They work with fraudulent doctors and non-physician providers (NPPs, in Medicare parlance) to gain a signature on an order for the equipment, test, or prescription. The fraudulent doctors or NPPs are paid a per-referral or per-prescription fee for each item or product ordered or referred. The fraudulent document is then sent by the telemarketing company to a fraudulent pharmacy or supplier of the item or product, and the fraudulent item or product is dispensed to the unwitting Medicare beneficiary. Copayments are not part of the equation, as that could possibly raise an eyebrow of awareness that there is something inappropriate about the item or product. The fraudulent supplier submits the claim for reimbursement and shares in the reimbursement with the telemarketing company. The telemarketing company then pays the signing doctor or NPP for their work. In almost no circumstances does the doctor or NPP have contact with the beneficiary, and in many instances, the beneficiary is not even interviewed about their medical need for the item or product. 

While working as a U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) Special Agent, I was involved in many of these cases, mostly with mail-order diabetic testing supplies, topical pain ointments and creams, and durable medical equipment (DME). These schemes specifically target the Medicare population due to the innate expectation that a Medicare beneficiary must stay alive and healthy, and do whatever their “doctor” tells them to do. The fact is that these companies do nothing more than prey upon the vulnerabilities that exist within this population. 

One case I recall well involved a sales representative who would travel to low-income senior citizen buildings and purport to be from a not-for-profit that was involved in assisting seniors in getting free and low-cost items and services. He would tout senior transportation, fresh produce coupons, and the like, all of which were readily available and likely already being taken advantage of by the seniors to whom he was speaking. As part of his pitch, he would discuss the importance of getting a genetic test done with a cheek swab. He would talk about the fact that although most medications are safe, there are populations that have adverse reactions to them, and the genetic tests would show that. He would use scare tactics to get the residents of each building to agree to get swabbed, and pay a doctor a per-signature fee for each swab he took. This same scheme is prevalent in the telemarketing world, with people agreeing to accept a swab kit, do the swab, and send it to a fraudulent lab for testing. It both angered and upset me that relying upon scare tactics was the ploy used. 

To conclude on a high note, as we encounter future advances in technology, the Medicare population will certainly not be left out this time around. Technology developments and CMS’s interest in expanding the ability of doctors and NPPs to use technology as part of the healthcare continuum are here to stay.

It is up to CMS and the law-enforcement community to ensure that these technologies are deployed in legitimate and useful ways, and to stem the tide of fraud, which has a huge financial impact on the American economy and the healthcare system.

Programming Note: Check out Eric Rubenstein, MS, CFE RACmonitor webcast "OIG Audits and Investigations: Get Ready for a Big Post-Pandemic Push"

Eric Rubenstein, MS, CFE

Eric Rubenstein is Director of Litigation, Fraud, Waste and Abuse Support at Advize Health. Previously, he served as a federal law enforcement officer, and he possesses 25 years of experience specializing in white-collar crime investigations. Since retiring as a senior special agent for the OIG, Eric has consulted with clients, both in the commercial and government arenas, to provide subject matter expertise in the areas of fraud, waste and abuse. He is a featured presenter/trainer at local, national and global training academies and conferences. Eric owns a proven track record of providing successful training to private healthcare fraud investigators, as well as to investigators and agents within the U.S. Department of Health & Human Services (HHS).

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