Pennsylvania Prohibits Several Common Lab Practices

Pennsylvania has become the most recent state to crack down on common laboratory practices, such as placing phlebotomists in physician offices and leasing space or equipment from a physician’s office. Senate Bill 1042, enacted in December, amends Pennsylvania’s Clinical Laboratory Act and applies to all laboratories doing business in the state, regardless of where they are headquartered. The law makes clear that it is unlawful for a “person or clinical laboratory” to pay or receive a commission, bonus, kickback, or rebate or to engage in a split-fee arrangement in any form with a health care provider or health care practitioner, either directly or indirectly, for patients or their specimens referred to any clinical laboratory operating in Pennsylvania or testing a specimen collected or accepted in Pennsylvania. What’s more, the law specifically prohibits the following:

• Leasing or renting space, shelves, or equipment or other services within a health care provider’s or practitioner’s office for any reason, including operation of a collection station;
• Providing, directly or indirectly, through employees, contractors, independent staffing companies, lease agreements, or otherwise, personnel to perform functions or duties in the provider’s office for any purpose regardless of whether fair market value is offered, including for the collection or handling of specimens, unless the clinical laboratory and the health care provider’s office are wholly owned and operated by the same entity; and
• Placing in a health care provider’s or practitioner’s office paid or unpaid personnel to perform services, including but not limited to specimen collection, specimen processing, packaging or handling services, or genetic counseling, regardless of whether fair market value is offered or given.

B 1042 specifically authorizes the Pennsylvania Department of Public Health (DOH) to investigate facts submitted in an application for laboratory licensure and to conduct inspections as necessary. It also allows for DOH to exempt out-of-state laboratories from inspection as long as the laboratory holds a certificate under the Clinical Laboratory Improvement Act of 1967 and is licensed by its home state, if applicable. According to Samantha Kingsbury, Esq., and Karen Lovitch, Esq., attorneys with Mintz Levin (Washington, D.C.), there has long been confusion about laboratories regarding whether Pennsylvania requires laboratories doing business there to hold a Pennsylvania license. In May 2012, the DOH clarified its position on this issue in a letter posted on its Web site. “The legislation is likely an effort to curb potentially abusive business practices, particularly in the more competitive clinical laboratory industry sectors,” write Kingsbury and Lovitch in a blog at www.healthlawpolicymatters.com. “Other states, such as Florida and New York, also have specific prohibitions related to placement of laboratory personnel in physician offices and renting space from physicians. In addition, relevant agencies have interpreted California’s kickback prohibition as also placing limits on such practices.” Takeaway: Pennsylvania is cracking down on what it believes are abusive business practices by some clinical laboratories.