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mHealth Companies Fined for Medicare Fraud on Wearable Monitors

The makers and marketers of an mHealth wearable for cardiac monitoring have been fined $13.45 million for compelling doctors to seek Medicare reimbursement for more expensive RPM services.

Source: ThinkStock

By Eric Wicklund

- Federal officials say the developers of an mHealth wearable forced doctors to bill Medicare for remote patient monitoring services that were more expensive than necessary.

The U.S. Department of Justice has levied a $13.45 million fine against the makers and marketers of the Pocket ECG for creating a registration process that forced doctors to seek the highest possible reimbursement from the Centers for Medicare and Medicaid Services for telemedicine services.

Investigators said doctors were steered toward the more costly service even if they didn’t need or use it.

“Sophisticated medical technology can be used to help doctors dramatically improve the lives of their patients, but it can also be misused to fraudulently increase medical bills,” Acting U.S. Attorney William E. Fitzpatrick for the District of New Jersey said in a press release issued on June 26. “Today’s settlement demonstrates that the federal government is committed to preserving the integrity of the Medicare system and ensuring that Medicare funds are spent only for patient care.”

“Billing for unneeded services, as the government alleged, takes unfair advantage of Medicare patients and steals from taxpayers,” added Special Agent in Charge Scott J. Lampert for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “OIG, along with our law enforcement partners, will aggressively investigate these crimes.”

The Pocket ECG was developed by Warsaw, Poland-based MEDICALgorithmics and marketed by McKinney, Texas-based Spectocor and its parent company, AMI Monitoring, from 2011-16. In 2013, a former Spectocor/AMI co-owner formed another independent diagnostic testing facility, Medi-Lynx Cardiac Monitoring, and also marketed the Pocket ECG. MEDICALgorithmics acquired a controlling interest in Medi-Lynx in 2016.

The Pocket ECG was marketed as being able to provide remote cardiac monitoring through three channels – telemetry, event and Holter. But investigators found that physicians wanting to use the wearables were only able to enroll their patients through CMS for telemetry services, which offered the highest available reimbursement provided through the patient’s insurer.

Acting on a tip from a whistleblower, federal officials charged AMI and Spectocor, owner Joseph Bogdan, Medi-Lynx and MEDICALgorithmics with violating the False Claims Act. AMI and Spectocor have agreed to pay $9.56 million plus interest, Bogdan has agreed to pay $1 million plus interest, and Medi-Lynx and MEDICALgorithmics will pay $2.89 million.

The whistleblower, Eben Steele, a former sales manager for AMI/Spectocor, will receive about $2.4 million from the two settlements.

While telehealth advocates have long argued that mHealth devices and telemedicine platforms can help reduce waste and improve efficiency and outcomes, the case points to the challenges faced by CMS in determining how physicians are reimbursed and whether they’re billing properly for services rendered outside the office or hospital.

“Independent diagnostic testing facilities that improperly steer physicians to order higher levels of service will be held accountable,” Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division said in the release. “We will vigilantly ensure the appropriate use of our country’s limited Medicare funds.”


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