By Christopher P. Young, Editor, G2 Compliance Advisor
A long standing issue in the laboratory industry is once again under scrutiny as the result of a U.S. Department of Health and Human Services’ Office of Inspector General (OIG) Advisory Opinion (AO 15-04) posted on March 25 on its website. AO 15-04 warns that the practice of writing off charges for patients of exclusive insurance contracts by laboratories that are not contracted with that insurance, may constitute prohibited remuneration under the Anti-Kickback statute (AKS).
The requestor, identified as a multi-regional medical laboratory, states in the AO that some physicians have “expressed a desire” to work with a single laboratory for all of their patients, resulting in an ease of communication and consistency in test reports. Some patients of a practice may be covered by an insurance that does not permit their patients to go out-of-network for laboratory services and will not pay any other laboratory but their contracted provider. The requestor is proposing to enter into agreements under which the physicians would agree to refer all of their laboratory testing to that laboratory and the laboratory would agree not to charge patients covered under these exclusive contracts. The laboratory would submit claims for other patients referred by the physician, including Medicare and Medicaid. The agreements include a statement by the physician that they are receiving no benefits of any kind as a result of the laboratory providing the free service. Further, patients would have a choice to go to any laboratory they wanted, which was likely added to avoid the appearance of steering patients to the laboratory.
The OIG says the problem with this arrangement is two-fold. First, the physician would receive remuneration indirectly because of the efficiencies that using a single laboratory would provide. Second, the physician could benefit from not having to pay maintenance fees on interfaces with more than one laboratory.
Though not specifically requested, the OIG also provided an opinion about a potential violation of the “substantially in excess” provisions which carry a potential exclusion from Medicare and Medicaid. According to the AO, if the amount of free services provided is close to half of the laboratory’s non-government business, it could be seen as charging Medicare substantially in excess of its usual charges. Based on figures the requestor supplied, the OIG found it “plausible” that this threshold would be met and therefore, there was “too high a risk” the arrangement would violate the substantially in excess provision.