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WSJ bringing heat to Lab fees paid to practitioners

                                                            September 10, 2014
Monday's WSJ highlighted on the front page potential Anti-kickback exposure from receipt of remuneration from labs to doctors.  As if the June 2014 Special Fraud Alert: Laboratory Payments to Referring Physicians did not create enough of a stir, the WSJ recounts the rise of a Health Diagnostic Laboratory Inc., as "transform[ing] itself from a startup incorporated in late 2008 into a major lab with $383 million in 2013 revenues, 41% of that from Medicare."  The article discusses Health Diagnostic's approach, compensating physicians per blood sample as a reason for its immediate rise and success.  

Along with the attention to the lab's growth, the article offers a simple analysis of the Anti-kickback statute and the Special Fraud Alert, without getting in to too much detail.  For our purposes, I thought I would delve a little further in to the Fraud Alert to highlight what all of the fuss is about.  

The Fraud Alert highlights that any remuneration at all, whether fair market value or not, is illegal if even one purpose may be to induce referrals.  The Alert details characteristics of certain arrangements that may serve as tell tale signs of an inappropriate arrangement:
  • Payment exceeds fair market value for services actually rendered by the party receiving the 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 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), or tests that otherwise are not reasonable and necessary or reimbursable.
  • 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.
As is also highlighted in the WSJ article, labs often hide behind the Antii-kickback statute safe harbor -  


"At issue is a "safe harbor" exception to the federal anti-kickback statute. A vendor selling something to doctors may compensate them for certain related services. For instance, a lab could reimburse a doctor the partial cost of employing a blood-drawing technician who sends samples to the lab.

Under the exception, payments must not offer a financial incentive for doctors to send more business the vendor's way. They must not exceed a "fair market value" for the service and must be a fixed amount set beforehand."

However, the recent Fraud Alert seems to have taken some steam out of the safe harbor protection, highlighting that in increased instances reimbursement for the doctor's trouble is often available for reimbursement by third party payors, and as such, payment from any lab for such expense is easily interpreted as an inducement. 

Why highlight and encourage you to check out the WSJ article and Fraud Alert yourself?  Well, because you may not be aware of the prohibition against incentive payments, or you may need a reminder that a cautionary tale is worth heeding oftentimes.  In this instance, I can promise the juice would not be worth the squeeze.  

Concerned about an arrangement?  Let us know so we can help.  


WSJ Article (access may be blocked for non-subscribers)

Fraud Alert -  http://oig.hhs.gov/fraud/docs/alertsandbulletins/2014/OIG_SFA_Laboratory_Payments_06252014.pdf

 


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