Out of the frying pan...

By Emily Margosian, assistant editor, February 1, 2021

To date, millions of people in the United States have been infected with COVID-19. Yet, as the caseload creeps higher, an untold number of Americans are faced with an additional challenge associated with the virus — rampant health care fraud. Crisis often proves to be a fertile ground for fraud, according to New York dermatologist and attorney David Goldberg, MD, JD. “Whenever there is a catastrophic event — a recession, a pandemic, a natural disaster — there’s always going to be fraud.”

Even in relatively “normal” times, health care presents an attractive target for fraudsters due to the potentially large payouts and opportunities for profit. According to a 2020 Comparitech report, U.S. health care organizations spent over $160 million in ransomware recovery costs from 2016 to 2019, with over 6.65 million patient records compromised. With the introduction of stimulus funds provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and relaxed regulations intended to aid health care workers combatting the virus, scammers have smelled blood in the proverbial water.

“Fraudsters take advantage of fear and uncertainty, both of which are currently highly prevalent,” explained Melissa Garrido, PhD, health economist and research associate professor in the Department of Health Law, Policy, and Management at Boston University School of Public Health. “The combination of new benefits, economic hardship, and clinical uncertainty have created an ideal environment for potential scammers. Individuals might be more likely to divulge their identifying information over the phone to a scammer offering a bogus grant or COVID test than they would in other times, because these are relatively new processes. When there’s a new benefit or needed test, it’s more difficult to distinguish a legitimate request from an illegitimate one.”

This month, DermWorld speaks with health care and legal experts to highlight growing areas of fraud related to COVID-19, and offers tips on what dermatologists can do to protect themselves and their patients from harm.

Fake testing and products

“In the case of the current pandemic, there has already been reported fraud in two ways — to providers and to patients,” explained Dr. Goldberg. “At this point, there are dermatologists and physicians throughout the country who are providing COVID antigen and antibody testing to their patients, because frankly it’s one more way to make some income when things are so uncertain.”

However, physicians should be alert to the authenticity of the COVID tests they offer patients, according to Dr. Goldberg. “The problem is that there’s been a bunch of fraudulent activity in this area. In an Oregon case, this guy was offering COVID antigen tests at 50 cents each. Obviously, any COVID test that only costs 50 cents is not going to be real. It was seized by U.S. Customs and Border Protection before it got to anybody, and certainly never had FDA clearance or pre-market approval, but it was being offered to patients and to doctors.”

In April 2020 the Federal Bureau of Investigation (FBI) issued a public warning about emerging health care fraud schemes related to COVID-19. “Criminals are actively manipulating the COVID-19 pandemic to their advantage,” said Calvin A. Shivers, assistant director of the FBI’s Criminal Investigative Division. “We ask all Americans to remain vigilant to avoid falling victim to these schemes.”

The report cautioned the public to be aware of:

• COVID testing schemes

• COVID treatment schemes

• Scammers posing as COVID-19 contact tracers

• The solicitation of personal, financial, and health care information

Alongside the FBI, the U.S. Attorney General, the Food and Drug Administration (FDA), and Federal Trade Commission (FTC) have issued similar warnings to the public. Additionally, the Better Business Bureau established a webpage to educate the public on common consumer-facing COVID scams.

“When you’re frightened, you make poor decisions. When patients get calls that purport to be pharmacists or physicians, they might jump right on board and start handing over everything from their Social Security number, to their credit cards.”

Unfortunately, those most vulnerable to the effects of the virus are more likely to fall victim to a COVID-related scam, said Dr. Goldberg. “The elderly are already more susceptible to fraud in general, and are so anxious about being infected with COVID. When you’re frightened, you make poor decisions. When they get calls that purport to be pharmacists or physicians, they might jump right on board and start handing over everything from their Social Security number, to their credit cards. We had a patient in the office just last week who talked about this, so again, this affects dermatologists, it affects physicians in general, and it affects the public.”

Physicians can advise patients on how to protect their health and personal information by practicing the following steps:

• Be suspicious of unexpected calls or visitors offering COVID-19/antibody tests. If your personal information is compromised, it may be used in other fraud schemes.

• Do not respond to or open hyperlinks in text messages about COVID-19 from unknown sources.

• Ignore offers or advertisements for COVID-19/antibody testing or treatments on social media sites. If you make an appointment for a COVID-19 test online, ensure the location is an actual testing site.

• Legitimate contact tracers will never ask for your Medicare number, financial information, or attempt to set up a COVID-19 test and collect payment information for the test.

• Consult the FDA’s website for an updated list of approved antibody tests and testing companies.

• Regularly check medical bills and insurance explanation of benefits (EOBs) for any suspicious claims and promptly report any errors to your health insurance provider.

• Heed HHS-issued warnings about unsolicited requests for Medicare/Medicaid numbers. Medicare will not call beneficiaries to offer COVID-related products, services, or benefit review.

Price gouging

In the early spring of last year, many struggled to acquire basic household goods ranging from canned goods to toilet paper. However, front line health care workers grappled with the additional challenge of a personal protective equipment (PPE) shortage exacerbated by opportunists selling hoarded supplies at huge mark-ups.

In May 2020, federal authorities arrested a New York pharmacist who purchased $200,000 worth of N95 masks to sell at severely inflated prices throughout the spring as the virus tore through the city. “He was selling them for as much as $25 each and was known in the newspapers as the ‘mask man,’” Dr. Goldberg recalled. “Federal agents searched his home, searched his car, and found 6,660 masks. You just can’t do that. He violated what is called the Defense Production Act, which doesn’t allow you to make a hoarding profit.”

While there is a federal law in place against price gouging, the President can invoke the Defense Production Act (DPA) to prevent hoarding of essential supplies and increase the domestic production of essential health products. Likewise, most states have laws that prohibit price gouging during declared emergencies. However, despite these protections, price gouging has remained an issue with both online and brick and mortar sellers. As of March 2020, online retailer Amazon had removed nearly 4,000 seller accounts for COVID-related price gouging. In the same month, New York’s Department of Consumer and Worker Protection Commissioner filed a case against a local drug store chain for selling face masks at a $200 mark-up.

“As demand for PPE has been greater than the supply, the environment created has been ripe for exploitation,” said Shivers at a June 2020 hearing before the Senate Judiciary. During his testimony, Shivers stated that millions of units of PPE had been recovered from price-gouging and hoarding operations, and that the FBI is working to determine next steps for how to redistribute or sell the PPE.

Suspicious medical billing

“Fraudulent billing practices cause tens of billions of dollars in financial losses each year for both federal health care programs and private insurance plans,” explained Rob Portman, JD, MPP, a health care attorney with Powers Pyles Sutter & Verville in Washington, D.C., and general counsel for the AAD/A, in his May 2019 DermWorld Legally Speaking column. According to the National Health Care Anti-Fraud Association (NHCAA), health care fraud in the United States approaches $300 billion annually, of which the U.S. Department of Justice (DOJ) recovered only $2.6 billion in 2019.

Unfortunately, in a decidedly atypical year, the increase in patients and claims related to treatment for COVID-19 has provided unscrupulous actors with potential cover for new levels of fraud, waste, and abuse in medical billing practices. In 2020, the Trump administration relaxed a number of established regulatory requirements in an effort to assist the health care system in combating COVID-19. These include (but are not limited to), expansions to Medicare telehealth coverage, allowing providers to offer and be reimbursed for a wider range of services provided via telemedicine, and the relaxing of prior authorization requirements.

So far, some businesses seem to have jumped at the opportunity. In April 2020, the DOJ charged a Georgia woman for her participation in a $60 million telemedicine scheme, one of the state’s largest fraud operations. Data analytics and risk assessment firm Verisk likewise reported a 14% increase in claims linked to providers with suspicious billing practices in a May 2020 report.

According to Dr. Garrido, fraudulent billing can have damaging long-term effects to both the health care system and patient care. “Payer-facing fraud can increase overall spending in the health care system; some of these costs might be passed along to individual patients through increased insurance premiums. There’s also an increased chance of patient harm — if a fraudulent provider bills for services not rendered and does not address the patient’s health condition, the patient’s health may deteriorate,” she explained.

As regulatory requirements have relaxed in response to the pandemic, it’s difficult to predict whether or not the changes will be permanent — or lead to tighter regulations in response to the influx of fraud. “I would suggest that policymakers look carefully at both benefits and unintended consequences of relaxed regulatory requirements before making any changes post-COVID,” said Dr. Garrido. “The overwhelming majority of health care providers have high integrity, and many are risking their own health to care for others with COVID-19, but history suggests that bad actors take advantage of leniency, and agency leaders have just offered great leniency,” said Dr. Garrido and Michael Adelberg, in a joint article in Health Affairs (10.1377/hblog20200504.459546).

Fraudulent billing typically falls into several categories, including billing for services that were never rendered, billing for higher-cost services than were actually performed (“upcoding”), or misrepresenting non-covered services for the purposes of receiving payment. According to Portman, while physicians are not explicitly required by federal law to report suspected Medicare or Medicaid fraud committed by other physicians, they are encouraged to report suspected fraudulent conduct to the U.S. Department of Health and Human Services Office of Inspector General (see "How to report COVID fraud" above).

However, under the AAD Code of Ethics, dermatologists who reasonably believe a physician or other health care provider has been involved in any unethical or illegal activity are encouraged to try to stop the activity or identify the provider to a duly constituted peer review authority or appropriate regulatory agency. Learn more about the AAD Code of Ethics and take the pledge.

Unemployment fraud

With millions of Americans out of work, the government has offered an unprecedented expansion of unemployment benefits to offset the economic disruption caused by the pandemic. Unfortunately, this has resulted in an explosion of fraudulent unemployment claims across the country, with employers receiving notifications of claims filed in the name of individuals who remain employed, have left the organization, or retired years ago. According to the Society for Human Resource Management (SHRM), nearly every state has been affected, although some more than others. Some prominent cases include:

• More than 130,000 false claims filed in Georgia in July

• More than 120,000 counts of Illinois unemployment insurance fraud in August

• 47,000 fraudulent claims uncovered in Maryland in June

• Reports in Pennsylvania of more than 10,000 prison inmates filing for benefits across the state

Due to the surge in fraudulent unemployment claims, it is important for HR to diligently monitor and confirm the legitimacy of the claims, SHRM advises.

In the event that a fraudulent claim is filed, both the affected employee and employer should take the following actions:

Report the fraud: Notify both the state unemployment benefits agency and local police department of the fraud. You can also notify the U.S. Department of Labor and use its resources on how to report unemployment fraud in each state.

Address identity theft: A fraudulent unemployment claim is a sign that the affected employee’s personal information has been compromised. To ensure their personal information is not used to commit additional fraud, employees should file a report with the FTC, review their credit report, and request a fraud alert or credit freeze. Read guidelines on how to implement a credit freeze. Victims of unemployment fraud may also consider taking advantage of credit monitoring services. A free annual credit report is available from each bureau.

Review cybersecurity: Employers should consult with their IT department or provider to confirm that digital records containing employee information have not been compromised. The affected individual should follow good computer hygiene and cybersecurity practices to avoid sharing personal information with unknown third parties in the future.

Additional DermWorld Resources