Medical fraudsters are targeting Medicare recipients with schemes to persuade them to agree to genetic tests advertised as informing them if they are predisposed to specific chronic diseases or cancer

Medicare scams involving orders for unnecessary, expensive testing are not new. However, clinical laboratory managers and anatomic pathologists need to be aware—particularly those working in hospital and health system labs—that an entirely new wave of fraud involving medical laboratory testing is gaining momentum. This time, instead of specialty cardiology, toxicology, and pain management testing, the scam involves genetic tests.

The shifting focus to genetic tests by fraudsters is a recent development to which many hospital-based medical laboratory professionals may be unaware. One reason that the hospital lab managers can be extraordinarily compliant with federal and state laws is because they don’t want to threaten the license of their hospital. So, hospital lab staff often are unaware of the types and extent of fraud involving certain lines of clinical lab testing that surface in the outpatient/outreach market.

The growing number of fraudulent activities associated with genetic tests is now an issue for federal healthcare fraud investigators. Former US attorney Robert M. Thomas, Jr., a whistleblower attorney, adjunct professor at Boston University School of Law, and a civil rights advocate, wrote in STAT, “What’s going on here is the same pattern of activity that has occurred throughout the healthcare system: a great majority of law-abiding actors and a few that seek out opportunities to game the system of government reimbursement. If you can get a saliva swab and a Medicare number [to provide a specimen for a genetic test] from an unsuspecting senior and falsify a doctor’s order (or find a shady doctor to write one), there’s an easy four-figure sum to be had.”

This aligns with a recent fraud alert from the US Department of Health and Human Services Office of Inspector General (OIG) that states: “Scammers are offering Medicare beneficiaries ‘free’ screenings or cheek swabs for genetic testing to obtain their Medicare information for identity theft or fraudulent billing purposes. Fraudsters are targeting beneficiaries through telemarketing calls, booths at public events, health fairs, and door-to-door visits.

“Beneficiaries who agree to genetic testing or verify personal or Medicare information may receive a cheek swab, an in-person screening or a testing kit in the mail, even if it is not ordered by a physician or medically necessary.

“If Medicare denies the claim, the [Medicare] beneficiary could be responsible for the entire cost of the test, which could be thousands of dollars.”

In a STAT column, former US attorney Robert M. Thomas, Jr. (above), noted that “All a scammer must do is find a medical laboratory willing to split the profit from the testing once the DNA samples are in hand. With more and more labs opening, there are plenty of doors upon which to knock.” This makes it imperative that clinical laboratory managers train their staff to identify and question potentially fraudulent test orders. (Photo copyright: Twitter.)

How the Scam Works

As with similar fraud cases, the scamsters pay inducements to often-unaware patients, physicians, and others to encourage an order for a genetic test. They then bill federal health programs and private insurers at inflated prices.

Thomas describes one such scenario used to increase genetic test orders. “A typical scheme might go something like this: A scammer offers free ice cream sundaes, gift cards, or even casino chips at a retirement community or ‘Medicare expo’ for anyone who would like to hear about the exciting new technology of genetic testing and what it might reveal about ‘your family’s risk of cancer’ or some other come-on,” explained Thomas. “The scammer describes this sophisticated technology and downplays or ignores the medical necessity criteria and the need for a doctor’s order. He or she persuades some attendees to provide saliva samples and gets identifying information, such as the senior’s name, date of birth, and Medicare number.

“The scammer then approaches a testing lab, saying, ‘I can find you a lot more business and get you a lot more patients if you share the proceeds with me.’ This, of course, violates the federal anti-bribery law known as the Anti-Kickback Act. But the lure of high-volume profits can be strong enough for some to ignore that roadblock,” he noted.

What Medical Laboratories Need to Know about Fraud and Genetic Tests

Regardless of how the fraudster proceeds—whether asking the lab company outright to split profits or by simply sending a high volume of the same genetic test to the lab without explanation—clinical laboratory managers should be alert to such activities.

Thomas writes: “An ethical lab would detect that something is amiss with such a request [involving a genetic test]. An alert lab might question how an individual, who is not a doctor, has gotten so many saliva samples and [so much] personal information from so many ‘patients.’ Other [genetic testing] lab companies may simply play the game without asking enough questions, or worse, knowing that the tests are not medically necessary, as required by the rules. The promise of easy money can be just too alluring.”

Physicians and medical laboratories that participate in these scams are in violation of the federal anti-bribery laws. In “Federal Investigations into Alleged Kickback Schemes between Hospitals and Physicians Increase in Number and Scope,” Dark Daily reported on new OIG investigations into hospitals alleged to have violated anti-kickback legislation.

Current Cases Involving Genetic Testing Scams

Fraudulent medical test ordering schemes are an ongoing problem that Dark Daily has repeatedly covered. Though the genetic testing aspect is relatively new, there are several recent and current cases that outline the consequences of participating in the new scam.

For example, in February GenomeDx Biosciences Corp. (GenomeDx) agreed to pay $1.99 million to settle a federal case regarding unnecessary genetic testing. In this case, post-operative prostate cancer patients were given a genetic test called Decipher even though they “did not have risk factors necessitating the test,” a Department of Justice (DOJ) press release states. The DOJ claimed GenomeDx fraudulently billed Medicare for the tests, violating the False Claims Act.

A similar federal case involved a doctor who was charged with ordering genetic tests for patients he never saw or treated. Though the doctor was licensed to practice medicine in Florida, the “patients” in question resided in Oklahoma, Arizona, Tennessee, and Mississippi. One patient testified to having responded to a Facebook ad that offered a $100 gift card “for people interested in genetic testing,” a press release from the US Attorney’s Office District of New Jersey stated.

One important recommendation is that medical laboratory professionals learn how to spot and question potentially fraudulent testing requests. This shift to genetic testing is just the latest threat. Even clinical labs that are well prepared could be caught unaware, particularly if the fraudster sends genetic test orders to multiple labs to process what are probably medically-unnecessary tests.

—Dava Stewart

Related Information:

Genetic testing: The Next Big Arena for Fraud?

Fraud Alert: Genetic Testing Scam

Genetic Testing Company Agrees to Pay $1.99 Million to Resolve Allegations of False Claims to Medicare for Medically Unnecessary Tests

Florida-Based Doctor Charged with Fraudulently Ordering Genetic Tests

Federal Investigations into Alleged Kickback Schemes between Hospitals and Physicians Increase in Number and Scope