OIG Semi-Annual Report Calls Out Drug, Genetic, and COVID-19 Testing Fraud

On June 5, the U.S. Department of Health and Human Services Office of Inspector General (OIG) published its spring Semiannual Report to Congress describing key highlights of the federal Health Care Fraud and Abuse Control Program (Program) during the six-month period from October 1, 2022, to March 31, 2023. Here’s a quick briefing of the main takeaways for lab leaders and the enforcement trends the report reveals:¹

Enforcement By the Numbers

Starting with the “At-a-Glance Highlights” metrics of Program accomplishments during the reporting period and comparing them to those of last year’s report reveals a year-over-year decline in most key metrics.

More audits, less money: The one exception is in the number of audit reports issued, which increased during the reporting period by nearly 32 percent versus the same period a year earlier. However, while audits were up, the dollar amounts they targeted were sharply down. Thus, 62 audits generated only $200.1 million in expected recoveries in the 2023 period, over 80 percent less than the $1.14 billion in expected recoveries from just 47 audits done during the prior year. Similarly, the costs called into question by 2023 period audits totaled $277.2 million, as opposed to $1.6 billion the year before.

More enforcement, less money: OIG fraud enforcement followed the same basic pattern as audits, albeit in a less dramatic way. During the 2023 period, the agency brought 345 criminal actions and 324 civil actions, as compared to 320 and 320, respectively, during the first six months of FY 2022. However, year-over-year total recoveries fell sharply from $1.44 billion to $892.3 million. Meanwhile, the OIG excluded 1,365 individuals and entities from healthcare programs this year, approximately 30 percent more than the 1,043 excluded during the same period last year.

OIG Enforcement Activity Year Over Year (2022 vs 2023)

OIG Enforcement Actions Against Labs

The report shows that, as usual, labs were a prominent target for the OIG. Specifically, the report identifies three major areas of lab fraud and abuse during the 2023 period:

1. Billing for Medically Unnecessary Drug Tests

Billing for medically unnecessary urine drug testing has become one of if not the most common themes in OIG lab enforcement. In February, the OIG issued an audit report finding that Medicare could have saved up to $215.8 million over a five-year period had the Centers for Medicare & Medicaid Services (CMS) implemented appropriate coding edits to prevent payments for definitive drug tests billed under procedure code G0483 that may not have been medically necessary. The audit report also calls on CMS to instruct Medicare Administrative Contractors to get that money back from “at-risk” providers.³

Among the OIG’s notable achievements for the period, the semiannual report cites the case of a physician medical director of a Florida drug and alcohol treatment center who was sentenced to 20 years in prison for signing standing orders for unnecessary urinalyses and blood tests as part of a “massive multiyear scheme.”

2. Genetic Testing Fraud

The OIG remains suspicious of rising genetic testing costs and the potential for fraud. In December 2022, the agency made its latest statement in a report finding that genetic tests, along with chemistry and COVID-19 tests, drove a 17 percent increase in Medicare Part B spending for lab tests during 2021. Total spending on four categories of high-priced genetic tests increased by 56 percent, from $1.2 billion in 2020 to $1.9 billion in 2021, exceeding pre-pandemic levels, according to that report. “Since OIG began monitoring Medicare Part B spending on lab tests in 2014, spending on genetic tests has more than tripled,” the agency notes.⁴

Genetic test scamming was also the focus of a major enforcement action mentioned in the semiannual report that targeted a sales representative of a Louisiana lab that performed expensive genetic tests on toenail samples provided by podiatrists in exchange for $133,000 in cash kickbacks. The representative, who was captured on video making a cash payment to one of the podiatrists, was sentenced to 25 months in prison and ordered to pay $2.95 million in restitution jointly with his co-defendants.

3. COVID-19 Add-On Testing Abuses

The OIG has been sounding the alarm on fraudulent billing of COVID-19 lab tests almost from the moment the public health emergency began. In another December 2022 report, the agency said that its auditors had detected “questionably high levels of add-on tests alongside COVID-19 tests” to get higher reimbursements. The OIG warned that the high volume of billing for add-on respiratory, genetic, and/or allergy tests raises not just Medicare program costs but also “concern about potential waste or fraud, suggesting a need for further scrutiny of billing by these labs.”⁵ (For more analysis and how to protect your lab, see “CMS to Crack Down on Unnecessary COVID-19 Add-On Tests,” Lab Compliance Advisor, January 27, 2023.)⁶

The OIG’s semiannual reports offer important insight into both short- and long-term enforcement trends. This latest report shows that, while recoveries are down, labs involved in COVID-19, genetic, and urine drug testing may want to review their compliance programs to ensure they don’t become part of the next crackdown.

References:

1. https://oig.hhs.gov/reports-and-publications/archives/semiannual/2023/spring-sar-2023.pdf
2. https://oig.hhs.gov/reports-and-publications/archives/semiannual/2022/2022-spring-sar.pdf
3. https://www.g2intelligence.com/labs-should-be-wary-of-improper-billing-of-g0483-testing/
4. https://oig.hhs.gov/oei/reports/OEI-09-22-00400.pdf
5. https://oig.hhs.gov/oei/reports/OEI-09-20-00510.pdf
6. https://www.g2intelligence.com/cms-to-crack-down-on-unnecessary-covid-19-add-on-tests/