Why Mobile Phlebotomy Companies and Labs Should Be on Alert

While false billing of mobile phlebotomy services was a target for federal enforcers even before the COVID-19 pandemic began, the dramatic rise in telehealth utilization and at-home sample collection is bound to bring about even more intense scrutiny. In what could be the first of many cases, the U.S. Department of Justice (DOJ) recently announced that the owners of a Temecula, California, mobile phlebotomy company called PhlebXpress Inc. have pleaded guilty to conspiracy to commit over $7 million worth of Medicare fraud.¹

Medicare Specimen Collection and Travel Allowance Rules

Under Section 1833(h)(3)(A) of the Social Security Act, Medicare pays a specimen collection fee when it’s “medically necessary” for a clinical laboratory technician to draw a specimen for a clinical diagnostic laboratory test. The Act also provides for payment of a travel allowance when a technician travels to a nursing facility or homebound patients in circumstances where a specimen collection fee is payable.² The travel allowance is prorated based on the miles the phlebotomist travels and the number of eligible patients from whom a specimen is collected. The idea is to reimburse labs for the personnel and travel expenses of specimen collection.

Medicare Travel Allowance Rules in a Nutshell

Medicare will only pay a travel allowance if the lab technician collects a specimen that qualifies for payment of a specimen collection fee. In other words, the specimen collection must:³

• Require a trained technician;
• Be for a Medicare beneficiary who’s either homebound or an inpatient at a facility other than a hospital; and
• Be for a lab test that’s covered by Medicare.

You’re not allowed to submit claims for a travel allowance where the technician acts merely as a messenger to pick up the specimen. In addition, the allowance applies only to “eligible miles” traveled. To calculate “eligible miles,” you begin at the lab or starting point of the technician’s travel for qualifying specimen collection and end at the lab or ending point of the technician’s travel. You may not count miles traveled for any purposes that are not related to qualifying specimen collection, e.g., personal errands or collections from patients who aren’t Medicare beneficiaries.

The payable travel allowance amount varies depending on distance traveled and numbers of locations:

• A flat rate is paid if the trained technician travels 20 eligible miles or less to and from one location to collect specimens from one or more Medicare beneficiaries;
• A per-mile rate is paid when a trained technician travels either: (i) more than 20 eligible miles to and from one location for specimen collection from one or more Medicare beneficiaries; or (ii) to more than one location for specimen collection from more than one Medicare beneficiary.

However, the U.S. Department of Health and Human Services Office of Inspector General (OIG) has expressed concerns about the potential for abuse when labs overstate travel mileage to get higher Medicare reimbursements. A notable example occurred in October 2018 when the OIG published an audit report finding that Texas-based independent lab Professional Clinical Laboratory, Inc. (ProLab) failed to comply with Medicare requirements for billing phlebotomy travel allowances. Based on a review of 127,168 claims totaling $3,159,036, the agency estimated that at least $319,277 of the travel allowances paid to ProLab didn’t meet Medicare requirements. The specific problems the report cites are typical for a travel allowance overpayment case, including:

• Prorating travel allowance mileage based on the number of specimens, rather than number of patients;
• Lack of travel logs or other documentation to support the prorated miles supposedly traveled;
• Failure to adjust the travel allowance amount to yearly changes to the Clinical Laboratory Fee Schedule (CLFS) payment rate;
• Lack of documentation to show that the phlebotomist collected a specimen from the patient during the trip; and
• Lack of documentation showing how many patients a specimen was collected from during the trip.

The OIG called on ProLab to repay the overpayments and consider whether it fully complied with the 60-day repayment rule.⁴

The PhlebXpress Case

Mobile phlebotomy was back in the news on January 20, 2023 when the DOJ announced word of the latest case. The defendants, Gabriella Santibanez, 58, and her sister Lisa Hazard, 54, are accused of having engaged in fraudulent billing practices for phlebotomy and other medical collection services at patients’ homes and long-term facilities over a five-year period beginning December 1, 2015. According to the DOJ press release, PhlebXpress, with the sisters’ knowledge, submitted over $7.5 million in false claims by billing Medicare for non-reimbursable services and overstating the mileage that company phlebotomists traveled to the tune of an average of over 140 miles for each patient seen.

The situation went from bad to worse in November 2020 after Medicare imposed a payment suspension against PhlebXpress in response to “credible allegations of fraud.” Rather than playing ball with the investigation, Santibanez and Hazard sought to circumvent the payment suspension by falsely representing that services actually provided by PhlebXpress were performed by another company called Phlebotomy Solutions. In addition to billing Medicare for these non-reimbursable services, PhlebXpress continued to overstate phlebotomist travel mileage, in one case billing for 124.6 miles when the phlebotomist only traveled 1.4 miles.

The case was serious enough to warrant bringing in investigators from the Federal Bureau of Investigation (FBI). With sentencing set for May 1, 2023, Santibanez and Hazard each face a maximum penalty of 10 years in prison and a $250,000 fine.¹

Takeaway & Impact on Lab Compliance

From a compliance perspective, the recent growth in telehealth gives the ProLab and PhlebXpress cases added significance. Unlike many other healthcare providers, medical labs can’t ply their trade purely via telehealth. Human contact is necessary at some point. Testing must be performed on actual, physical samples. Collection and delivery of samples becomes trickier when tests are ordered via telehealth. Patients who can’t or won’t leave home for a medical consultation also want to be able to provide the samples necessary to perform the tests their telehealth provider orders for them without going out to a clinic or collection center. All of this has created the need for a new kind of service: in-home phlebotomy services.

Lockdowns and the vast expansion of telehealth has driven explosive growth in the global mobile phlebotomy services market, which financial consultant Emergen Research valued at $497.3 million in 2020. Emergen also predicts revenue compound annual growth rates of 4.4 percent through 2028, driven by growing demand for routine blood testing. Major players in the in-home phlebotomy market include NeoGenomics Laboratories, Getlabs, Viracor-IBT Laboratories, Angel’s on Wheels Mobile Phlebotomy LLC, Sonora Quest Laboratories, TravaLab LLC, Ultimate Wellness Providers Co., Mobile Phlebotomy Services, Inc., Pinnacle Mobile Phlebotomy, LLC, VeniExpress, Inc., and Progressive Phlebotomy Services, LLC.⁵

These trends will likely result in significant increases in Medicare travel allowance payments. And as history has shown us time and time again, higher reimbursements lead to more intense regulatory scrutiny. The main targets are likely to include:

• At-home phlebotomy companies;
• Independent test labs;
• Mobile toxicology labs;
• Mobile phlebotomy units;
• On-site blood draw and blood testing centers;
• Mobile radiology groups;
• Mobile testing and imaging services; and
• Mobile diagnostic services for acute, long-term, or terminal patients.

Bottom Line: Labs and their compliance managers should be aware of what’s happening and pay careful attention to ensure the proper billing and documentation of travel allowances and specimen collection fees.

References:

1. https://www.justice.gov/usao-edca/pr/owners-mobile-phlebotomy-company-plead-guilty-7-million-medicare-fraud-0
2. https://www.ssa.gov/OP_Home/ssact/title18/1833.htm
3. https://www.g2intelligence.com/how-to-comply-with-new-specimen-collection-fee-and-travel-allowance-rules/
4. https://oig.hhs.gov/oas/reports/region6/61602002.pdf
5. https://www.emergenresearch.com/industry-report/mobile-phlebotomy-services-market