Labs Figure Prominently in New OIG Enforcement Report

One of the best ways lab managers can keep up with federal compliance and enforcement trends is by going to school on the reports to Congress that the Department of Health and Human Services (HHS) Office of Inspector General (OIG) is required to provide every six months. On June 6, the OIG published its latest Semi-Annual Report outlining the accomplishments of the federal Health Care Fraud and Abuse Control (HCFAC) Program in the six-month period from October 1, 2021, to March 31, 2022. Here’s a quick briefing on the key takeaways from the new report.

By the Numbers

The HCFAC program was created as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) under the joint direction of the attorney general and HHS secretary, acting through the OIG, to coordinate federal, state, and local law health care fraud and abuse enforcement activities. Key metrics in the enforcement realm cited by the report:

OIG Enforcement Activity (October 1, 2021, to March 31, 2022)

The OIG also identified another $162.1 million in potential savings that HHS could accrue by implementing all of the agency’s audit recommendations, according to the report.

Labs in the Crosshairs

As usual, clinical labs featured prominently in the OIG’s latest report. While several of the period’s most significant findings involved labs and lab testing, it wasn’t just the usual finger pointing this time. Not surprisingly, the focus was on the impact of COVID-19 on lab testing.

Lab Test Spending: COVID-19 testing drove a four percent increase in overall Medicare Part B spending on lab tests even though non-COVID-19 tests decreased significantly. Medicare Part B spent $1.5 billion on COVID-19 tests in 2020, while non-COVID-19 tests declined by $1.2 billion. “The decrease in utilization of non-COVID-19 tests raises concerns about potential impacts on beneficiary health,” the report notes.

Lab Test Contracting: The Assistant Secretary for Administration (ASA) complied with federal and contracting requirements in awarding and managing five sole source contracts for COVID-19 testing, including with regard to sole source justification requirements in awarding the contracts and setting reasonable payment rates for COVID-19 tests. ASA also appropriately managed the contracts by establishing and maintaining communications with contractors, verifying that lab result numbers matched the number of tests administered, and reviewing invoices to ensure that payment rates were in accordance with contract terms and conditions.

Genetic Tests: In a December 2021 report of trends in genetic testing under Medicare Part B, the OIG noted significant increases in payments for genetic tests, numbers of genetic tests performed, the number of labs that received more than $1 million for performing genetic tests, and numbers of providers ordering genetic tests for beneficiaries. While acknowledging “legitimate reasons” for these trends, the OIG also suggested that “these increases indicate areas of possible concern, such as excessive genetic testing and fraud, which may negatively affect beneficiaries.” Let’s hope that Medicare Administrative Contractors are doing enough to limit coverage and prevent fraud in genetic testing, the OIG wondered out loud.

Genetic testing was also the focus of one of the OIG’s biggest enforcement actions during the period, the sentencing of Florida-based Panda Conservation Group LLC labs co-owner Leonel Palatnik for paying kickbacks to a telemedicine company for arranging to have telemedicine providers order genetic tests from Panda’s labs as part of a $73 million Medicare fraud scheme. Palatnik was sentenced to 82 months in federal prison and ordered to pay over $61 million in restitution for his role in the scheme.