Laboratory Payments to Physicians

Special Fraud Alert Relating to Laboratory Payments to Physicians

The Office of the Inspector General for the Department of Health and Human Services (HHS-OIG) issued its first Special Fraud Alert relating to Laboratory Payments to Physicians. The Alert addressed two specific high risk arrangements which implicate the Federal Anti-Kickback Statute and, by extension, the False Claims Act: (1) blood specimen collection, processing and packaging arrangements and (2) registry arrangements.

Blood Specimen Collection, Processing, and Packaging Arrangements

OIG stated that it has become aware of “arrangements under which clinical laboratories are providing remuneration to physicians to collect, process, and package patients’ specimens” which typically involve payments from laboratories to physicians for certain specified duties which may include collecting the blood specimens, centrifuging the specimens, maintaining the specimens at a particular temperature, and packaging the specimens to avoid damage during transport. Often these arrangements involve a per-specimen or per-patient fee structure and include highly specialized tests.

OIG then set forth some of the characteristics of these arrangements that may be “evidence of unlawful purpose” as follows:

• Payment exceeds fair market value for services actually rendered by the party receiving such payment.
• Payment is for services for which payment is also made by a third party, such as Medicare.
• Payment is made directly to the ordering physician rather than to the ordering physician’s group practice, which may bear the cost of collecting and processing the specimen.
• Payment is made on a per-specimen basis for more than one specimen collected during a single patient encounter or on a per-test, per-patient, or other basis that takes into account the volume or value of referrals.
• Payment is offered on the condition that the physician order either a specified volume or more tests performed using different methodologies that are intended to provide the same reimbursable clinical information), or tests that otherwise are not reasonable and necessary or type of tests or test panel, especially if the panel includes duplicative tests (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information).
• Payment is made to the physician or the physician’s group practice, despite the fact that the specimen processing is actually being performed by a phlebotomist placed in the physician’s office by the laboratory or a third party.

OIG clarified, however, that physicians may still use CPT Code 36145 (blood draw/venipuncture collection fee) and CPT Code 99000 (preparing a specimen to send to a laboratory) in connection with the collection, processing, and transport of blood specimens.

Patient Registry Payments

In addition to blood specimen collection arrangements and attendant fees, the Special Fraud Alert underscored that OIG has become aware of “arrangements under which clinical laboratories are coordinating or maintaining databases, either directly or indirectly or through an agent, purportedly to collect data on the demographics, presentation, diagnosis, treatment, outcomes, or other attributes of patients who have undergone, or who may undergo, certain tests performed by the offering laboratories,” generally, specialized expensive tests. Labs that participate in these types of registry arrangements boast that they are intended to advance clinical research to promote treatment, to provide physicians with valuable knowledge for patients with similar disease profiles, and to provide other benefits to physicians generally.

According to OIG, characteristics of such registry arrangements that may implicate the Federal Anti-Kickback Statute are as follows:

• The laboratory requires, encourages, or recommends that physicians who enter into Registry Arrangements perform the tests with a stated frequency (e.g., four times per year) to be eligible to receive, or to not receive a reduction in, compensation.
• The laboratory collects comparative data for the Registry from, and bills for, multiple tests that may be duplicative (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information) or that otherwise are not reasonable and necessary.
• Compensation paid to physicians pursuant to Registry Arrangements is on a per-patient or other basis that takes into account the value or volume of referrals.
• Compensation paid to physicians pursuant to Registry Arrangements is not fair market value for the physicians’ efforts in collecting and reporting patient data.
• Compensation paid to physicians pursuant to Registry Arrangements is not supported by documentation, submitted by the physicians in a timely manner, memorializing the physicians’ efforts.
• The laboratory offers Registry Arrangements only for tests (or disease states associated with tests) for which it has obtained patents or that it exclusively performs.
• When a test is performed by multiple laboratories, the laboratory collects data only from the tests it performs.
• The tests associated with the Registry Arrangement are presented on the offering laboratory’s requisition in a manner that makes it more difficult for the ordering physician to make an independent medical necessity decision with regard to each test for which the laboratory will bill (e.g., disease-related panels).

Federal Health Care vs. Non-Federal Health Care Business

Another significant takeaway from the Alert is that OIG concerns are not abated when these arrangements apply only to specimens collected from non-Federal health care program beneficiaries since arrangements that “carve out” Federal health care program business may still violate the Anti-Kickback statute. Indeed, if the remuneration from non-federal health care business is designed to influence future referrals related to Federal health care program business, that arrangement may well implicate the Anti-Kickback Statute. According to OIG, “[b]ecause physicians typically wish to minimize the number of laboratories to which they refer for reasons of convenience and administrative efficiency, [arrangements] that carve out Federal health care business may nevertheless be intended to influence physicians’ referrals of Federal health care program business to the offering laboratories.”

The Special Fraud Alert is available here

Author: Andrew Feldman

Mr. Feldman represents professionals, corporations, health care providers, and health care marketers in government investigations and prosecutions throughout the United States. Mr. Feldman works tirelessly for his clients from the time an investigation begins until the time a jury renders a verdict.

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