Health Law Gurus

Lab Arrangements under the Microscope: OIG Issues New Fraud Alert

Arrangements between laboratories and referring physicians/physician group practices (the “physicians”) have long been subject to scrutiny by the Department of Health and Human Services Office of Inspector General (“OIG”). On June 25, 2014, the OIG released additional guidance on certain types of these arrangements in a Special Fraud Alert titled “Laboratory Payments to Referring Physicians” (the “Alert”). This Alert focuses on potential fraud and abuse risks under the anti-kickback statute (“AKS”) in (1) blood-specimen collection, processing, and packaging arrangements and (2) registry or database payments between laboratories and referring physicians.

The AKS prohibits the payment of remuneration in exchange for services or referrals that are reimbursable by a federal health care program such as Medicare or Medicaid. The OIG notes that the Alert “reiterates [its] longstanding concerns about payments from laboratories to physicians in excess of the fair market value of the physician’s services and payments that reflect the volume or value of referrals of Federal health care program business.”    

1. Blood-Specimen Collection, Processing, and Packaging Arrangements

The OIG warns that “Specimen Processing Arrangements” (i.e., typically relationships in which a laboratory pays a physician to collect, process, and package patients’ blood specimens) are suspect under the AKS, and depending on the intent of the parties, may be in violation of the AKS. The OIG provides in the Alert a list containing various characteristics of Specimen Processing Arrangements that may pose risks of fraud and abuse under the AKS. For example, the OIG notes that payments from a laboratory to a referring physician that are in excess of fair market value, or payments from a laboratory to a physician for services that are also paid for by a third party, may increase the probability of an illegal transaction. You may access the entire list here. Note that the list only contains examples of potentially problematic characteristics, and it is not exhaustive. In light of the Alert, laboratories and physicians should reevaluate their relationships to determine if they contain elements that pose risks of fraud and abuse under the AKS.

2. Registry Payments

The OIG Alert also provides guidance on “Registry Arrangements,” which according to the OIG, are arrangements where laboratories establish, coordinate, or maintain databases of patient information. Although the OIG states that laboratories are not prohibited under the AKS from legitimate research activities, the OIG expresses concern that certain Registry Arrangements “may induce physicians to order medically unnecessary or duplicative tests, including duplicative tests performed for the purpose of obtaining comparative data, and to order those tests from laboratories that offer Registry Arrangements in lieu of other, potentially superior, laboratories.”

The OIG provides in the Alert a list containing various characteristics of Arrangements that may pose risks of fraud and abuse under the AKS. For example, the OIG notes that when a test is performed by multiple laboratories and the laboratory collects data only from the tests it performs, the arrangement may pose risks of fraud and abuse under the AKS. You can access the full list here. Note that the list provided by the OIG only contains examples of potentially problematic characteristics, and it is not exhaustive. In light of the Alert, laboratories and physicians should reevaluate their relationships to determine if they contain elements that pose risks of fraud and abuse under the AKS.

For both Specimen Processing Arrangements and Registry Arrangements, the OIG states that concerns expressed in the Alert are not alleviated if such arrangements only apply to non-federal health care program patients.

 You can access a full copy of the Alert here.

 NOTE: This is only intended to be a summary of the Alert. It is not intended to constitute legal advice. You should consult with an attorney for advice specific to individual circumstances.