Case of the Month: $11.4 Million Natera Settlement Shows Genetic Billing & Coding Remains a False Claims Hot Button

Before the opioid crackdown, false billing of genetic tests was the hottest thing in federal fraud enforcement against clinical labs. But while drug testing related to prescription opioids has stolen the spotlight (See GCA March 2018, for more), the recent case involving one of the nation’s leading firms serves as a reminder that genetic testing remains very much on the radar of the DOJ and whistleblowers.

Sequencing-Based Prenatal Screening
Current treatment guidelines recommend offering prenatal screening to all pregnant women in the early stages of gestation to detect fetal aneuploidy, i.e., the presence of an abnormal number of chromosomes in a cell. Two types of noninvasive, sequencing-based testing are commercially available for detecting fetal cell-free DNA fragments in maternal serum:

  • Next-generation sequencing-based quantitative tests; and
  • Targeted amplification tests capable of detecting single nucleotide polymorphisms (SNP), i.e., variations in a single base pair in one DNA sequence on targeted chromosomes in a single reaction.

The Suit against Natera
One of the leading SNP prenatal tests is Panorama, an assay produced by Silicon Valley-based Natera capable of detecting not only relatively common conditions involving extra genes associated with disorders like Down’s Syndrome but microdeletions which are harder to detect and much rarer.

Natera’s billing of Panorama was at the center of a significant new fraud case. It began when a pair of ex-Natera employees who worked with providers in administering follow-up tests detected by screening with Panorama filed a qui tam whistleblower lawsuit. Among other things, they claimed that Natera used a CPT code for DNA and chromosome analysis which the Medicaid, TRICARE and the Federal Employee Health Benefits cover instead of an SNP-based testing code which they do not cover to bill for the screenings. The government decided to intervene, charging Natera with $80 million in false billings over a four-year period.

The Settlement
Natera vigorously denied the allegations. But rather than risk a trial, Natera decided to settle the suit for $11.4 million, 19.6% of which will go to the whistleblowers. The terms:

  • $5.3 million upfront;
  • $5.3 million plus interest in four quarterly installments; and
  • $756,183 to state Medicaid programs.

The settlement is also notable for what it did not include, namely an admission of guilt or a corporate integrity agreement. The absence of the latter is an indication that the government considered the alleged wrongdoing to be more mistake than malice.

Takeaway: False billing of genetic testing will remain a significant area of concern for lab compliance going forward (See the SCORECARD below). Adding to the challenge is that testing moves faster than billing and coding. Indeed, after the settlement Natera officials offered a plausible explanation of what went wrong, noting that when it first launched Panorama it had sought the advice of a “nationally recognized coding expert” for billing advice since there was no assay-specific code for the test at the time. (Now such a code does exist—CPT 81420.) And to the extent your lab bills for a newly emerging test that does not have its own CPT code, you face the same conundrum.


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