Telemedicine Prescribing for Pharmacy Payments: Extra Ingredients to Raise the Bill

The Mississippi telemedicine guilty pleas announced on November 21, 2019 involved two physicians who conspired to commit health care fraud through compounded-drug prescribing. A pharmacy promised one doctor a share of the reimbursements for his prescriptions. That doctor hired another to provide telemedicine services and prescribe the pharmacy’s medications. The Justice Department’s guilty-plea announcement describes video consultations without thorough examinations, prescriptions for people never examined, and ingredients added solely to increase reimbursement. The money depended on the prescription. The examination could fall out of the process.

The Pharmacy Contract and the Second Doctor’s Pay

The Justice Department’s guilty-plea announcement describes a pharmacy contract that tied the first physician’s compensation to what the pharmacy collected. In May 2014, he agreed to prescribe expensive compounded medications in exchange for 35% of the pharmacy’s reimbursements for those prescriptions. The pharmacy was in Jackson County, Mississippi, and billed health care benefit programs, including TRICARE.

In the same criminal plea announcement, the Justice Department described a separate hiring arrangement. In September 2014, the first physician hired the second and agreed to pay him $900,000 annually to perform telemedicine services and prescribe the compounded medications dispensed by the pharmacy.

The promised annual pay was for prescribing work that generated pharmacy claims. From May through October 2014, health care benefit programs, including TRICARE, reimbursed the pharmacy more than $5 million for claims connected to the two doctors’ compounded-drug prescriptions.

Telehealth businesses can separate the company supplying the technology, the professional delivering care and the business submitting a claim. Here, the pharmacy submitted the medication claims, while physicians supplied the prescriptions. Reading only the encounter record would miss the pharmacy’s financial arrangement with the doctor. Reading only the pharmacy claim would miss what happened during the consultation.

For an insider who knows the contracts or payments, that division matters. The contract identifies what compensation depends on. In a similar business, reimbursement records and clinician payment records can connect the pharmacy’s collections to the prescriber’s compensation.

What Are Some Examples of Prescription Fraud?

This case shows prescription fraud through inadequate examinations, prescriptions for people never examined, and ingredients selected to increase reimbursement. The criminal plea announcement places those practices inside a business that recruited people whose insurance covered the expensive compounded medications.

The first physician employed others to find insured people in places such as Jones County, Mississippi. He then met them through telemedicine video chats. According to the Justice Department’s account, he did not perform thorough examinations during those meetings and did not determine whether the compounded medications he prescribed were medically necessary.

The insurance coverage had been identified. The medical need had not been determined. That is the gap at the center of the case: a process that could establish whether a medication would be paid for without establishing whether the person needed it. The announcement also says that, on occasion, both physicians called in compounded medications for people they had never previously examined.

A remote-care encounter involves clinical information, an assessment, documentation and any resulting prescription. A connection log can help establish contact. The clinical record and resulting order address what the practitioner actually evaluated and prescribed. In this case, the government’s account identifies the missing work directly: a thorough examination and a determination of medical necessity.

Extra Ingredients Increased the Pharmacy’s Reimbursement

The first physician knew that some added ingredients were ineffective and were included solely to increase reimbursement, according to the criminal plea announcement. The prescription’s contents served the payment calculation. The pharmacy’s contract then gave the prescriber a share of what it received.

An ingredient could do nothing for the patient and still earn more for the pharmacy and its prescriber. Health care benefit programs paid the bill. The patient’s treatment was supposed to justify that spending, but the doctor had not determined whether the medication was needed.

The Justice Department’s later account of the criminal case, issued June 16, 2020, describes the prescribing conduct over a longer period. It says the first physician and his co-conspirators prescribed unnecessary compounded medications from May 2014 through January 2015.

When the Prescription Is the Product

A telemedicine arrangement can generate revenue through the medication ordered after the encounter. That is why the prescription, pharmacy claim and prescriber’s compensation belong in the same account of this case. The video session brought the physician and insured person together. The pharmacy’s reimbursement supplied the basis for the promised percentage payment.

The 2024 Rutgers University Law Review article Plausible Cause: Connecting the FCA and AKS in the Context of Health Care Fraud illustrates this financial relationship with a hypothetical: a drug company bills Medicare for a prescription and passes part of the payment to the prescribing doctor. The example makes the return of money to the prescriber visible.

Alongside the payment relationship is the question of what patient contact supported the prescription. A separate whistleblower complaint alleged that doctors signed brace orders without examinations, sometimes using recorded calls to produce prescriptions.

A Civil Case Over the Same Prescribing Gap

A separate False Claims Act settlement concerned a physician who allegedly approved compounded-drug prescriptions for TRICARE beneficiaries without speaking to or examining them. In its September 26, 2019 announcement, the Justice Department said the former Connecticut physician agreed to pay $300,000 to resolve the allegations.

The Justice Department identified CallMD, a Nevada telemedicine company, as the business for which the physician worked. The government alleged that his prescriptions were invalid because he had neither spoken with nor examined the patients and had no established physician-patient relationship with them. Those prescriptions allegedly caused pharmacies to submit false claims for compounded medications to TRICARE.

The civil allegation connects the prescriber’s work to another business’s bill. A pharmacy submitted the claim, but the clinical basis for the prescription depended on what the physician had done. That is why someone inside prescribing operations may understand a false pharmacy claim even when they never submit insurance bills themselves.

What the Payment and Prescribing Records Show Together

For someone inside a similar business, the useful evidence connects compensation to the clinical work and the resulting pharmacy claim. A clinician may know what information was available before signing. Someone handling pharmacy claims may know which prescriptions generated reimbursements. Someone responsible for compensation may know how the prescriber’s payment was calculated.

Our work is to connect those views. We examine whether the encounters support the prescriptions, how the ingredients relate to the stated treatment, and how the payment terms reward the prescribing decisions. The contract, encounter record, prescription, pharmacy reimbursement and physician payment each describe a different part of the same transaction.

You Know What Drove the Prescriptions

If you know how pharmacy receipts shaped prescribing or why ingredients were added, speak to one of our Whistleblower Experts. We build the case with you and bring in healthcare fraud whistleblower lawyers who understand telemedicine compensation and pharmacy claims. We stay beside you throughout the case, turning your knowledge of the business into the strongest case we can build together. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.