OIG Says Lab Processing and Registry Arrangement May Violate Anti-Kickback Law

The Department of Health and Human Services Office of Inspector General (OIG) June 25 warned clinical laboratories and physicians that providing remuneration to physicians to collect, process, and package patients’ specimens and/or establishing databases to collect patient testing data could violate federal anti-kickback law. In a special fraud alert on laboratory payments to referring physicians, the OIG said it is “concerned about the risks that Specimen Processing Arrangements and Registry Arrangements pose under the anti-kickback statute.” The fraud alert “reiterates our longstanding concerns about payments from laboratories to physicians in excess of the fair market value of the physicians’ services and payments that reflect the volume or value of referrals of Federal health care program business.” The OIG said the two arrangements “present a substantial risk of fraud and abuse under the anti-kickback statute.” Physicians Also at Risk Because the anti-kickback statute ascribes criminal liability to parties on both sides of an impermissible kickback arrangement, physicians who enter into either arrangement also might be at risk under the statute, the alert said. The OIG said specimen processing arrangements typically involve payments from laboratories to physicians for certain specified duties, which may include collecting the blood specimens, centrifuging the specimens, maintaining the specimens at a particular temperature, and packaging the specimens so that they aren’t damaged in transport. Payments under specimen processing arrangements typically are made on a per-specimen or per-patient-encounter basis and often are associated with expensive or specialized tests, the alert stated. The alert said these arrangements may violate anti-kickback law in several instances, including when:

• Payment is made directly to the ordering physician, rather than to the ordering physician’s group practice, which may bear the cost of collecting and processing the specimen;
• Payment is made on a per-specimen basis for more than one specimen collected during a single patient encounter or on a per-test, per-patient, or other basis that takes into account the volume or value of referrals; or
• Payment is made to the physician or the physician’s group practice, despite the fact that the specimen processing is actually being performed by a phlebotomist placed in the physician’s office by the laboratory or a third party.

“OIG’s concerns regarding Specimen Processing Arrangements are not abated when those arrangements apply only to specimens collected from non-Federal health care program patients,” the alert said. “Arrangements that ‘carve out’ Federal health care program beneficiaries or business from otherwise questionable arrangements implicate the anti-kickback statute and may violate it by disguising remuneration for Federal health care program business through the payment of amounts purportedly related to non-Federal health care program business.” Inducing More Tests OIG said it also has become aware of arrangements under which clinical laboratories are “establishing, coordinating, or maintaining databases, either directly or through an agent, purportedly to collect data on the demographics, presentation, diagnosis, treatment, outcomes, or other attributes of patients who have undergone, or who may undergo, certain tests performed by the offering laboratories.” “Typically these are specialized and expensive tests paid for by Federal health care programs,” the alert said. Laboratories that participate in registry arrangements often assert that they are intended to advance clinical research to promote treatment, to provide physicians with valuable clinical knowledge for patients with similar disease profiles, and to provide other benefits to physicians or the health care industry, the OIG said. But the alert said such 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 clinically superior, laboratories. Such arrangements may violate the anti-kickback statute in several instances, including when:

• The laboratory collects comparative data for the registry from, and bills for, multiple tests that may be duplicative (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information) or that otherwise aren’t reasonable and necessary; or
• The laboratory offers registry arrangements only for tests (or disease states associated with tests) for which it has obtained patents or that it performs exclusively.

Takeaway: The OIG has concluded that specimen processing arrangements and registry arrangements between labs and physicians could violate the federal anti-kickback law.