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OIG Issues Special Fraud Alert on Clinical Laboratory Payments to Physicians

clinical laboratory paymentsThe Office of the Inspector General for the United States Department of Health and Human Services (the “OIG”) recently issued a Special Fraud Alert regarding laboratory payments to referring physicians (the “Alert”). The Alert relates to two types of compensation arrangements - Specimen Processing Arrangements and Registry Arrangements - between clinical laboratories and physicians who order clinical laboratory tests that the OIG believes present a substantial risk of fraud and abuse under the federal anti-kickback statute.

What Arrangements Are At Issue?

Specimen Processing Arrangements involve payments from laboratories to physicians for activities such as the collection, processing, and packaging of patient blood-specimens. Payments are typically made on a per-patient encounter or a per-specimen basis.

The Alert identifies certain characteristics of a Specimen Processing Arrangement that may show an intent by a laboratory to pay for patient referrals in violation of the anti-kickback statute:

  • Payment that exceeds fair market value for services actually rendered;

  • Payment that is made directly to the ordering physician rather than the physician’s group practice, which typically bears the processing costs;

  • Payment made on a per-specimen basis when more than one specimen is collected during a single patient encounter or a per-test, per-patient basis that takes into account the volume or value of referrals;

  • Payment that is offered on the condition that the physician order either a specified volume or type of test or test panel, especially if the panel includes duplicative tests or tests not otherwise reasonable and necessary; and

  • Payment that is made to the physician or group practice when the services are actually performed by a phlebotomist placed in the physician’s office by a third-party.

Registry Arrangements involve arrangements under which a laboratory pays the ordering physician for certain tasks, such as submitting patient data, reviewing data reports, and answering patient questions with regard to databases established and maintained by the laboratory. The Alert identifies certain characteristics of a Registry Arrangement that may show an intent by a laboratory to pay for patient referrals in violation of the anti-kickback statute:

  • A requirement that the physician perform tests with a stated frequency in order to receive the compensation;

  • The laboratory collects comparative data, and bills for, multiple tests that may be duplicative or are not reasonable and necessary;

  • Payment to the physician is made on a per-patient basis that takes into account the volume or value of patient referrals;

  • Payment to the physician is not fair market value for the physician’s efforts in collecting and reporting patient data;

  • Payment to the physician is not supported by documentation;

  • Payment to the physician is limited to tests for which the laboratory has obtained patents or that it exclusively performs, or collecting data only for the tests it performs (when the same test is performed by multiple laboratories);

  • Tests are presented on the laboratory’s requisition form in a manner that makes it more difficult for the ordering physician to make an independent medical necessity decision for each test for which the laboratory will bill (e.g. disease related panels); and

  • Laboratories limit data collection from (and thus pay) only a subset of physicians who are selected based on their prior or anticipated referral volume rather than relevant attributes (like physician specialty).

What Should Physicians Do?

Physicians need to be aware that the OIG will be looking at compensation arrangements between clinical laboratories and ordering physicians carefully. Therefore, physicians should be cautious about entering into any arrangement in which a clinical laboratory is making payments to the physician. As the Alert points out, pursuant to either arrangement, both laboratories and physicians may be at risk under the anti-kickback statute. While the OIG does not offer an exhaustive list of characteristics that may evidence unlawful intent, parties entering into such arrangements - laboratories and physicians alike – should review the examples provided in the Alert.

If you have any questions regarding the Alert and how it may affect you, please contact Jennifer B. Van Regenmorter.

Categories: Compliance, Fraud & Abuse, Physicians

 has particular expertise in health law and she represents providers with emphasis in the areas of physicians, hospice, home care and long term care, including one of the country’s largest long-term care organizations. She has a vast array of experience in teaming with providers in the areas of regulatory compliance and contracts. 

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