Massachusetts Targets Self-Referral of Laboratory Services

The commonwealth of Massachusetts is targeting clinical laboratory self-referrals with the passage of a new law that includes a broad prohibition of such referrals. The prohibition is included in the fiscal 2015 budget for the state. According to Karen Lovitch and Samantha Kingsbury, attorneys with Mintz Levin (Washington, D.C.), the legislation originally proposed by the attorney general’s office was intended to combat self-referral arrangements between clinical laboratories and sober houses under common ownership, but it extends beyond such relationships to prohibit referrals between clinical laboratories and any person or company with a direct or indirect ownership interest in the laboratory. The legislation amends several sections of the statutory provisions governing licensed clinical laboratories and also adds new sections. For example, it amends the section regarding prohibited activities to include a new provision that explicitly prohibits a clinical laboratory from knowingly soliciting, accepting, or testing any specimen that is received from, ordered, requested, or referred by (1) a person or company in which the clinical laboratory or its directors, owners, partners, employees, or family members thereof have any direct or indirect ownership interest or (2) any person or company or its directors, owners, partners, employees, or family members thereof having any direct or indirect ownership in the clinical laboratory. Both of these provisions include exceptions for clinical labs owned by a licensed physician or physician group used exclusively in connection with the diagnosis and treatment of the group’s patients where all testing is performed by or under the direct supervision of the physician or group. “The broad exception allowing physicians and physician groups to order from their own in-office laboratories without imposing any limitations is sure to disappoint advocates for strengthening the Stark Law,” wrote Lovitch and Kingsbury in a client alert, noting that the Alliance for Integrity in Medicare has long advocated for a federal statutory or regulatory change that would prevent physicians from self-referring certain services, such as anatomic pathology, that are not typically provided during the office visit when the service is ordered. “Because the Commonwealth focused its efforts on self-referral between commonly owned sober homes and clinical laboratories, it likely did not consider the merits of a more stringent in-office laboratory exception,” they said. Takeaway: A new Massachusetts law targets self-referrals of clinical laboratory services but still allows exceptions for services provided by in-office laboratories.