OIG Says No to Lab Providing Free Labeling Services to Dialysis Facility

Reiterating its longstanding aversion to labs providing free items or services to referral sources, the Department of Health & Human Services Office of Inspector General (OIG) issued an Advisory Opinion Dec. 5, 2016, indicating an arrangement between a lab and dialysis facilities could violate the Anti-Kickback statute. Under the proposed arrangement, the lab would provide certain dialysis facilities with free labeling of test tubes and specimen collection containers that would be used used to collect specimens for testing at the lab.

The OIG addressed a similar set of facts in a prior Advisory Opinion back in 2008 with the same result. At that time, dialysis facilities were paid composite rates. Now, dialysis facilities are paid via the End-Stage Renal Disease Prospective Payment System (since 2011)—a bundled payment that replaced the composite rate system. Neither payment system would provide separate payment for administrative tasks related to lab testing—such as labeling of test tubes and specimen containers.

Once again the OIG expressed its “longstanding and clear” position on labs providing free or discounted items or services to potential referral sources: “such arrangements are suspect and may violate the anti-kickback statute.”

It didn’t help in either the 2008 or current advisory opinion that the requesting lab said it would select which dialysis facilities got the free labeling services and that such selection could depend “upon whether offering such services would be necessary to obtain or retain the business of a particular dialysis facility.”

Why would the lab even need to ask if the OIG would be happy about this? The lab points out in this most recent Advisory Opinion (as was claimed in the 2008 request as well) that some of its competitors are already doing this. The OIG responded noting that not only was this proposed arrangement likely to invoke sanctions but “comparable competitor arrangements” could likewise “run afoul of the anti-kickback statute.”