Key Compliance Training for Lab Sales & Marketing Personnel

By Peter Francis, Clinical Laboratory Sales Training, LLC Laboratory sales and marketing activities can be a breeding ground for inadvertent fraud and abuse violations. So, when a lab assigns someone to market its testing services, it should undertake one important educational duty within the first few days of the onboarding process: a review of laboratory sales com­pliance rules, regulations and policies. Even if the representative from another lab has received previous compliance training, it remains important for the new employer to provide this mandatory training, either through in-house or third-party resources. Additionally, the lab should maintain written and dated documentation that verifies each rep’s compliance education. Here’s a strategy for implementing effective compliance training for sales and marketing personnel.

Intense Government Focus on Health Care Fraud

The reason why compliance training is so important is that the government focuses a spotlight on health care fraud and abuse. Each year, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) increases its enforcement budget. In 2022, that sits at slightly more than $100 million, out of which the Department of Justice (DOJ) will receive $83 million. The recent return on investment on enforcement activity has been over $4.00 for every dollar spent. There are some key laws that people must un­derstand before engaging in conversations with health care professionals and their re­spective staff: the False Claims Act (FCA), the Anti-Kickback Statute (AKS), the Stark Law, the Civil Monetary Penalties Law (CMPL), and applicable state laws. These laws have a broad scope, affecting in-office phlebotomy, client supplies, leasing space in a doctor’s office, non-monetary compensation, pricing, test documentation and custom profiles. This article will focus on the key points that marketing personnel must understand.

The FCA

The FCA is the government’s most powerful—and often used—enforcement tool. Risk of FCA liability comes into play when a provider does the following (this list is meant to be illustrative, not exhaustive):

• Bills for services that weren’t provided;
• Submits a claim for reimbursement that contains false information;
• Seeks reimbursement for medically unnecessary tests or services;
• Changes a claim to receive higher reimbursement; or
• Routinely doesn’t bill co-payment, deductible or balance obligations.

While this may seem to affect the billing department more than the sales function, understand the federal government has seen numerous cases in which marketers sought to persuade providers to change ordering patterns and request unnecessary lab services. Such conduct can implicate the FCA.

The AKS

The AKS is of paramount importance to lab employees, especially to the extent it can result in both civil and criminal penalties. This statute specifically states that a person may not knowingly or willfully offer, pay, solicit, or receive remuneration to induce, or to recommend or arrange for referrals of Medicare or Medicaid patients or items of services provided to such patients. The AKS follows a wide-ranging approach, one that applies to individuals and entities on both sides of a prohibited transaction. AKS violations can arise any time a lab offers something of value to a referral source, including not just money payments but items like free or discounted gloves, point-of-care urine cups, tickets to entertainment and other gifts.

The Stark Laws

There are three Stark Laws, each of which provides for what’s known as “strict liability.” Translation: You can be liable simply by committing actions banned by the Stark Laws, regardless of whether you intended to or what your state of mind was in engaging in the conduct. People may refer to Stark as the “Stark self-referral ban” because it states that a physician may not refer a Medicare/Medicaid beneficiary to a clinical lab with which the physician (or an immediate family member) has a financial relationship. A financial relationship means either an ownership interest or a compensation arrangement. There are several important points about Stark that sales representatives must understand. Under the Stark II law, anyone from a Designated Health Service (e.g., laboratory, physical therapy, home health service, radiology, etc.) may offer up to a specified amount of compensation to physicians for a calendar year. For 2022, labs may provide non-monetary benefits up to $452 per physician. This includes meals, note pads, pens, mugs and other low-value items offered to physicians who order laboratory tests for government beneficiaries. Bottom Line: Laboratories should keep track of the amount spent on each physician during the year to verify that they’re remaining under the specific limits for the year. Marketing, sales and other lab personnel also must recognize that under Stark, non-monetary compensation cannot be:

• Determined by the volume or value of referrals generated by a referring physician;
• Solicited by physicians or employees; or
• Conditioned on the referral of business.
• The representative also can’t circumvent the law by paying out of pocket.

Representatives need to understand a few other key points with regard to the second bullet above. Under Stark, a lab employee may offer the client non-monetary compensation. This pertains to a current customer that refers government-reimbursed testing to the rep’s lab. A representative can also offer non-monetary benefits to a prospective client that doesn’t refer government reimbursement to the proposing lab. In this case, however, it is acceptable for the doctor (or the doctor’s employees) to request the rep to host a luncheon or provide low-value items. The Stark Law doesn’t apply in this situation.

The CMPL

The Civil Monetary Penalties Law (CMPL) authorizes the Secretary of Health and Human Services to impose CMPs and program exclusion for various fraud and abuse violations involving the Medicare and Medicaid programs. Fines range from $2,000 to $100,000 for each violation. Besides the violations under the AKS, FCA and Stark Laws, there are eight additional offenses for which the government can impose CMPs.

State Laws

Field marketers must be familiar with the applicable fraud and abuse laws of the state(s) in which they market. For example, some states have direct-bill laws, (i.e., no lab billing to a doctor) while others have anti-markup and truth-in-billing laws. These regulations may also apply to all or just certain types of lab testing (e.g., pathology). Some states have rules prohibiting lab employees from drawing blood/processing specimens in health care facilities. Some states prohibit labs from renting space in a doctor’s office.

Penalties

The punishment for violation can be criminal, civil and administra­tive. Criminal conviction under the AKS may result in fines from $2,000 up to $100,000 and imprisonment for up to 10 years. Under the CMPL within the AKS, financial penalties can also range up to $100,000 and the imposition of treble damages (three times actual or compensatory damages). A judge can also exclude the offender from billing any federal health care program for a specified amount of time. In addition, if a lab provides testing services to an individual or entity that the government lists on their excluded providers roster, it may be subject to CMPs. FCA violations can result in penalties of $10,781 up to $21,563 for each false claim submitted to a government health care program. In addition, a judge may impose treble damages. Exclusion from billing fed­eral insurance programs can occur for both the client and the lab. In a whistleblower case (whistleblowers are a frequent source of FCA claims), the court may also impose criminal penalties. A single case can also result in a combination of financial penalties under both the FCA and AKS, leading to fines that exceed the limits of each of the respective statutes. A point not always understood by salespeople (de­pending upon the situation): Not only the laboratory and the client may become enmeshed in the law, but also the field rep. Additionally, the federal government isn’t the only entity that can initiate lawsuits against labs and/or individuals. Private insurance companies can also bring suits under state law. 

Summary

Due to the direct contact between salespeople and their clients and prospects, field reps should always be sensitive to the laws regulating conduct between those who refer and those who receive referrals. It remains prudent for labs to create a compliance document and ensure their employees understand the rules of the road to reduce the likelihood of fraud and abuse violations. Otherwise, the lab and its clients may be exposed to severe penalties.