Federal Enforcers Crack Down on Fraudulent Billing of Genetic Tests
Labs that bill federal health care programs for these tests need to pay especially close attention to ensure compliance.
Genetic tests are becoming a favorite target for federal fraud enforcers. So, if your lab bills Medicare, Medicaid, and other federal health care programs for these tests, you need to pay especially close attention to ensure your billing practices are compliant.
Medicare Part B Coverage of Genetic TestsMedicare Part B covers genetic tests used for medically necessary diagnostic, but not predictive and preventive purposes. The Clinical Laboratory Fee Schedule (CLFS) includes four categories of covered tests:
- Molecular pathology tests to detect variants in genetic material to help doctors determine how patients will respond to treatment;
- Multianalyte assays with algorithmic analyses (MAAAs) that combine multiple test results with patient information to yield a score, such as the chances that cancer will recur or that a patient will respond to treatment;
- Genomic sequencing procedures (GSPs) that identify structural changes in genetic material used to diagnose or manage inherited diseases, such as hereditary breast cancer; and
- Proprietary laboratory analyses (PLAs) established by the American Medical Association as alphanumeric procedure codes providing corresponding descriptors for labs or manufacturers that want to more specifically identify their tests.
Concerns Over Fraudulent BillingGenetic tests have long been an area of fraud concern given their high price points. Thus, five of the top 25 tests listed in the OIG’s new report on Medicare Part B lab spending in 2020 were genetic tests ranging in reimbursement rates from $508.28—for gene analysis for colorectal cancer (81528)—to $3,873—for a test for detecting genes associated with breast cancer (81519). In July 2020, the CMS Healthcare Fraud Prevention Partnership (HFPP), a voluntary public-private partnership that uses data and information sharing to detect and prevent health care fraud, published a report raising concerns over billing of genetic tests. The report cites three types of fraudulent billing practices associated with genetic testing:
- Billing for services not provided, which typically involve falsifying a bill or patient’s medical records, such as a “gang visit,” in which an improbable number of genetic tests is performed on a single day in a single location;
- Unbundling of claims, which occurs when a lab bills each genetic test separately, rather than using an appropriate panel of bundled tests, to maximize reimbursement; and
- Blanket ordering, which occurs when an ordering provider indiscriminately orders a number of tests for a beneficiary without considering the beneficiary’s specific needs.
The New OIG Report Sounds Alarm on Genetic TestingOn December 21, 2021, a week before issuing its new top 25 lab test price report for 2020, the OIG issued a data briefing summarizing the results of its audit of Medicare genetic test payments to labs made between calendar years 2016 to 2019. The key finding: Medicare payments quadrupled during the audit period from $351 million to $1.41 billion. OIG also reported that during those three years:
- The number of genetic-testing procedure codes covered by Medicare increased by 161 percent;
- The number of genetic tests Medicare paid for increased by 230 percent;
- The average amount Medicare paid per beneficiary who received at least one genetic test increased by 75 percent;
- The average number of genetic tests paid per beneficiary increased by 43 percent;
- The number of laboratories that received more than $1 million in Medicare payments per year for genetic tests nearly tripled; and
- The number of providers ordering genetic tests for beneficiaries more than doubled
The Crackdown on CGx Billing FraudMeanwhile, enforcement actions for false billing and ordering of genetic tests have also grown in frequency. One of the primary targets is cancer genetic testing (CGx). The Department of Justice (DOJ) scored two notable convictions for CGx fraud in the closing months of 2021. On Nov. 17, a former lab sales rep became the fifth defendant to plead guilty to taking part in a scheme to offer and pay bribes for orders of over $340,000 worth of CGx tests. The DOJ claimed that the 57-year-old sales rep from Pennsylvania made a living soliciting and collecting DNA samples from Medicare patients at health fairs. He then sent the samples to a lab in New Jersey for CDx testing in exchange for a commission. Having received his own bribe, the rep paid a kickback to a Pennsylvania physician for permission to use the physician’s name and medical credentials to order the tests for Medicare patients. On Dec. 21, the owner of a Kentucky marketing firm was convicted for her role in a similar kickback scheme accounting for nearly $235,000 in false billings of medically unnecessary CGx tests. As in the Pennsylvania scam, marketers collected samples at health fairs and paid physicians bribes for signed orders for CGx tests for patients the doctor never actually saw. In each case, the defendant faces a sentence of up to five years in prison and $250,000 in penalties or twice the gross gain or loss derived from offense, whichever is higher, for violating the federal Anti-Kickback Statute.
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