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Coronavirus Fraud Takes Many Forms as Federal and Local Officials Continue to Pursue Widespread Cases of Clinical Laboratory Testing Scams

Since the pandemic began, federal investigators are specifically looking for patterns of fraud in Medicare claims data for COVID-19 clinical laboratory testing

Last month, the federal Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced it had been investigating trends in Medicare claims data that could indicate patterns of fraud in the billing for COVID-19 clinical laboratory tests, Modern Healthcare reported.

Stretching back to at least March, fraudulent actors offering fake SARS-CoV-2 tests have preyed on vulnerable Americans in a wide variety of ways during the public health emergency, according to published reports. Some scam operators have gone into nursing homes and long-term care facilities to collect cash from unsuspecting elders in exchange for swab collections and phony testing, the New York Times reported.

Since the declaration of the public health emergency in the US, the federal Centers for Medicare and Medicaid Services (CMS) no longer requires a lab test requisition signed by a treating physician or other provider for COVID-19 testing. “The strong demand for and limited supply of SARS-CoV-2 tests, along with the move by CMS to relax rules for certain test orders during the pandemic, makes the situation a potentially ripe one for fraud,” Modern Healthcare stated.

Plus, a lack of clarity about the medical necessity of COVID-19 tests could raise the liability risk for law-abiding clinical laboratories. All of these factors make COVID-19 testing fraud a potential bombshell for clinical laboratories conducting coronavirus testing that may get caught up in federal investigations.

Feds Step Up Enforcement

Shortly after the pandemic arrived in the US, the FBI, the Better Business Bureau (BBB), the FDA, the federal Department of Health and Human Services (HHS), and other federal and local authorities have frequently warned doctors, hospitals, and healthcare consumers about the potential for fraud by unscrupulous companies purporting to offer legitimate clinical laboratory testing for COVID-19. A June 26 FBI press release stated, “Scammers are marketing fraudulent and/or unapproved COVID-19 antibody tests, potentially providing false results.”

Some of the fraudsters behind these scams have operated online and through social media and email. While others have conducted these scams in person or over the phone, noted the press release.

And yet, despite the warnings, the scams and news articles about them have continued to spread throughout the COVID-19 pandemic.

Various Forms of Fraud and Their Consequences

In many of these scams, fraudsters seek to collect consumers’ personal information, including names, dates of birth, and Social Security numbers, as well as other forms of personal health information, such as Medicare or private health insurance data, the FBI reported. Scammers can use that information in medical insurance fraud schemes or to commit identity theft, the agency added.

Additionally, any fake or inaccurate COVID-19 tests or assays that the FDA has not allowed for use could provide doctors with false results, potentially creating a dangerous situation for patients.

The New York Times (NYT) recently reported that the FBI had issued a warning “about scammers who advertise fraudulent COVID-19 antibody tests as a way to obtain personal information that can be used for identity theft or medical insurance fraud.”

Three days after the FBI issued its warning about the COVID-19 antibody testing scam, the BBB added an alert to its website: “BBB Scam Alert: Want a COVID-19 test? There’s a scam for that.” BBB also provided advice to consumers about how to avoid testing scams.

On June 17, the FDA reported that it issued warning letters to three companies for marketing adulterated and misbranded COVID-19 antibody tests, stated an FDA news release. The agency sent warning letters to:

Jeff Shuren, MD, JD, Director of the FDA’s Center for Devices and Radiological Health
In the FDA’s announcement, Jeff Shuren, MD, JD (above), Director of the FDA’s Center for Devices and Radiological Health, said “When tests are marketed inappropriately, with inaccurate or misleading claims—such as the ability to perform the test completely at home, or that the test is authorized, cleared, or approved when it is not—they put the health of Americans at risk. Such conduct will not be tolerated by the FDA, and we will continue to monitor tests marketed in the US, taking appropriate action as warranted.” (Photo copyright: The Food and Drug Administration.)

Scams Reported Just in April

On April 17, the New York Times reported that a special agent with the HHS OIG noted that impostors seeking Medicare or Medicaid information posed as doctors or laboratory technicians to offer fake tests in nursing homes and assisted living facilities.

Earlier in April, The Texas Tribune reported that the owner of a freestanding emergency room in Laredo, Texas, spent $500,000 to buy 20,000 rapid COVID-19 tests for patients suspected of having COVID-19. Health officials in Laredo planned to establish a drive-through testing site and then administer tests that came from a manufacturer in China to detect active infections. After trying to validate the tests, city health officials found they were unreliable and unusable.

An April 9 report from the news department of the AARP (American Association of Retired Persons) stated that federal officials have found fake coronavirus testing sites in many states, including Alabama, Arizona, Florida, Georgia, Kentucky, New York, and Washington state.

The FBI, according to AARP, investigated several fake test sites in Louisville, Ky., after a city official reported that people in personal protective equipment (PPE) were collecting biological specimens from residents. Those seeking tests were told to pay $240 in cash or give their Medicare, Medicaid, or Social Security cards to verify their identity.

Fake drive-up testing sites were reported at gas stations and other locations in Louisville over a four-day period, the AARP reported.

On April 2, WRGB TV in Albany, N.Y., reported that scammers pretending to be from the New York State Department of Health (NYSDOH) were taking money and insurance information from people in exchange for fake coronavirus tests. One woman told police she got a fake test at a drive-up site in a Little League parking lot.

North Greenbush police said the scammers identified themselves as being with NYSDOH and collected money and insurance information from multiple people. Police and state officials said the DOH had no connection to the collection site in the parking lot.

Lessons for Lab Directors

For clinical laboratory directors and all clinical lab scientists, the lesson from these stories is to be wary of strangers offering COVID-19 testing, while also making certain to post information for customers about the legitimacy of your lab’s COVID-19 rapid molecular and serological tests. Doing so might involve providing proof that the FDA has allowed your tests to be used for the coronavirus.

Also, medical laboratories should ensure that all employees collecting specimens in public places display proper identification.

—Joseph Burns

Related Information:

HHS Takes Aim at COVID-19 Testing Fraud

FBI Warns of Potential Fraud in Antibody Testing for COVID-19

FBI Warns of Fraudulent Coronavirus Antibody Tests

BBB Scam Alert: Want a COVID-19 Test? There’s a Scam for That

FDA Issues Warning Letters to Companies Inappropriately Marketing Antibody Tests, Potentially Placing Public Health at Risk

FDA Updates List of Fake COVID Tests, Vaccines, and Treatments

COVID-19 Drive-Thru Test Site Shut Down

Homeland Security in Michigan Now Investigating Coronavirus Fraud

LA Sues California Company, Alleging ‘Sophisticated’ COVID-19 Fraud

Reports of Fake Test Sites for COVID-19 Emerge Across U.S.

A Laredo ER Spent $500,000 on Coronavirus Tests. Health Officials Say They’re Unreliable

Scammers in North Greenbush Perform Fake COVID-19 Test, Steal Money, Insurance Details

Federal Government Is Sending Nearly $11 Billion to States for COVID-19 Clinical Laboratory Testing and Testing-Related Activities

Questions remain, however, over how much of the funding will actually reach hospital and health system clinical laboratories

For many cash-strapped clinical laboratories in America, the second round of stimulus funds cannot come soon enough. Thus, lab leaders are encouraged by news that Congress’ $484-billion Paycheck Protection Program and Healthcare Enhancement Act (H.R.266) includes almost $11 billion that will go to states for COVID-19 testing. But how much of that funding will reach the nation’s hospital and health system clinical laboratories?

Dark Daily previously reported on the deteriorating financial conditions at clinical and pathology laboratories nationwide. (See, “COVID-19 Triggers a Cash Flow Crash at Clinical Labs Totaling US $5.2 Billion in Past Seven Weeks; Many Labs Are at Brink of Financial Collapse,” May 4, 2020.) This critical situation is the result of a severe decline in the flow of specimens for routine testing to medical laboratories which, at the same time, are struggling with increasing costs to meet the demand for COVID-19 testing.

The Department of Health and Human Services (HHS) announced the new influx of money to the states on May 18. In a news release outlining the initiative, the HHS said the Centers for Disease Control and Prevention (CDC) will deliver $10.25 billion to states, territories, and local jurisdictions to expand testing capacity and testing-related activities.

To qualify for the additional funding, governors or “designee of each State, locality, territory, tribe, or tribal organization receiving funds” must submit to HHS its plan for COVID-19 testing, including goals for the remainder of calendar year 2020, to include:

  • “Number of tests needed, month-by-month to include diagnostic, serological, and other tests, as appropriate;
  • “Month-by-month estimates of laboratory and testing capacity, including related to workforce, equipment and supplies, and available tests;
  • “Description of how the resources will be used for testing, including easing any COVID-19 community mitigation policies.”
“As the nation cautiously begins the phased approach to reopening, this considerable investment in expanding both testing and contact tracing capacity for states, localities, territories, and tribal communities is essential,” said CDC Director Robert R. Redfield, MD, in the HHS statement. “Readily accessible testing is a critical component of a four-pronged public health strategy—including rigorous contact tracing, isolation of confirmed cases, and quarantine.” (Photo copyright: Center for Disease Control and Prevention.)

Funding Should Go Directly to Clinical Laboratories, Says ACLA

The American Clinical Laboratory Association (ACLA), argues the funding needs to go directly to clinical laboratories to help offset the “significant investments” labs have made to ramp up testing capacity during the pandemic.

“Direct federal funding for laboratories performing COVID-19 testing is critical to meet the continued demand for testing,” ACLA President Julie Khani, MPA, said in a statement. “Across the country, laboratories have made significant investments to expand capacity, including purchasing new platforms, retraining staff, and managing the skyrocketing cost of supplies. To continue to make these investments and expand patient access to high-quality testing in every community, laboratories will need designated resources. Without sustainable funding, we cannot achieve sustainable testing.”

Some States Are Increasing Testing, While Others Are Not

Since the first cases of COVID-19 were reported in January, the United States has slowly but significantly ramped up testing capacity. As reported in the Washington Post, states such as Georgia, Oklahoma, and Utah are encouraging residents to get tested even if they are not experiencing coronavirus symptoms. But other states have maintained more restrictive testing policies, even as their testing capacity has increased.

“A lot of states put in very, very restrictive testing policies … because they didn’t have any tests. And they’ve either not relaxed those or the word is not getting out,” Ashish Jha, MD, MPA, Director of the Harvard Global Health Institute, told the Washington Post. “We want to be at a point where everybody who has mild symptoms is tested. That is critical. That is still not happening in a lot of places.”

Meanwhile, Quest Diagnostics and LabCorp continue to expand their diagnostic and antibody testing capabilities.

On May 18, Quest announced it had performed approximately 2.15 million COVID-19 molecular diagnostic tests since March 9 and had a diagnostic capability of 70,000 test each day. The company said it expected to have the capacity to perform 100,000 tests a day in June.

LabCorp’s website lists its molecular test capacity at more than 75,000 tests per day as of May 22, with a capacity for conducting at least 200,000 antibody tests per day. Unlike molecular testing that detects the presence of the SARS-CoV-2 coronavirus, antibody tests detect proteins produced by the body in response to a COVID-19 infection.

As states reopen, and hospitals and healthcare systems resume elective surgeries and routine office visits, clinical laboratories and anatomic pathology groups should begin to see a return to normal specimen flow. Nonetheless, the federal government should continue to compensate laboratories performing COVID-19 testing for the added costs associated with meeting the ongoing and growing demand.

—Andrea Downing Peck

Related Information:

HHS Delivers Funding to Expand Testing Capacity for States, Territories, Tribes

As Coronavirus Testing Expands a New Problem Arises: Not Enough People to Test

Quest Diagnostics Performs and Reports Results of 2.15 Million COVID-19 Diagnostic Tests and 975,000 Antibody Tests to Date

ACLA Statement on Expanding Access to Testing

COVID-19 Triggers a Cash Flow Crash at Clinical Labs Totaling $5.2 Billion in Past Seven Weeks; Many Labs Are at Brink of Financial Collapse

CDC Ranks Two More Drug-Resistant Microbes as ‘Urgent Threat’ to Americans; Clinical Laboratories Are Advised to Increase Awareness of Antimicrobial Resistance

In a separate study, HHS finds a 40% increase in sepsis cases, as more patients succumb to infections without effective antibiotics and antimicrobial drugs

Given the drastic steps being taken to slow the spread of the Coronavirus in America, it’s easy to forget that significant numbers of patients die each year due to antibiotic-resistant bacteria (ARB), other forms of antimicrobial resistance (AMR), and in thousands of cases the sepsis that follows the infections.

This is why the Centers for Disease Control and Prevention (CDC) issued the report “Antibiotic Resistance Threats in the United States, 2019 (2019 AR Threats Report)” last fall. The federal agency wants to call attention the emergence of new antibiotic-resistant bacteria and fungi. In its report, the CDC lists 18 bacteria and fungi that pose either urgent, serious, or concerning threats to humans. It also placed one fungus and two bacteria on a “watch” list.

The CDC’s website states that “more than 2.8 million antibiotic-resistant infections occur in the US each year, and more than 35,000 people die as a result.” And a CDC news release states, “on average, someone in the United States gets an antibiotic-resistant infection every 11 seconds and every 15 minutes someone dies.”

Those are huge numbers.

Clinical laboratory leaders and microbiologists have learned to be vigilant as it relates to dangerously infectious antimicrobial-resistant agents that can result in severe patient harm and death. Therefore, new threats identified in the CDC’s Antibiotic Resistance Threats in the United States report will be of interest.

Drug-resistant Microbes That Pose Severe Risk

The CDC has added the fungus Candida auris (C. auris) and carbapenem-resistant Acinetobacter (a bacteria that can survive for a long time on surfaces) to its list of “urgent threats” to public health, CDC said in the news release. These drug-resistant microbes are among 18 bacteria and fungi posing a greater threat to patients’ health than CDC previously estimated, Live Science reported.

In 2013, the CDC estimated that about two million people each year acquired an antibiotic-resistant (AR) infection that killed as many as 23,000. However, in 2019, the CDC reported that those numbers were low and that the number of deaths due to AR infections in 2013 was about twice that amount. During a news conference following the CDC announcement, Michael Craig (above), a Senior Adviser for the CDC’s Antibiotic Resistance Coordination and Strategy Unit said, “We knew and said [in 2013] that our estimate was conservative … and we were right,” Live Science reported. In 2019, CDC reported 2.8 million antibiotic-resistant infections annually with more than 35,000 related deaths in the US alone. (Photo copyright: Centers for Disease Control and Prevention.)

The CDC considers five threats to be urgent. Including the latest additions, they are:

Dark Daily has regularly covered the healthcare industry’s ongoing struggle with deadly fungus and bacteria that are responsible for hospital-acquired infections (HAI) and sepsis. This latest CDC report suggests healthcare providers continue to struggle with antimicrobial-resistant agents.

Acinetobacter Threat Increases and C. auris a New Threat since 2013

Carbapenem-resistant Acinetobacter, a bacterium that causes pneumonia and bloodstream and urinary tract infections, escalated from serious to urgent in 2013. About 8,500 infections and 700 deaths were noted by the CDC in 2017. 

C. auris, however, was not addressed in the 2013 report at all. “It’s a pathogen that we didn’t even know about when we wrote our last report in 2013, and since then it’s circumvented the globe,” said Michael Craig, Senior Adviser for the CDC’s Antibiotic Resistance Coordination and Strategy Unit, during a news conference following the CDC announcement, Live Science reported.

Today, C. auris is better understood. The fungus resists emerging drugs, can result in severe infections, and can be transmitted between patients, CDC noted.

Last year, Dark Daily reported on C. auris, noting that as of May 31 the CDC had tracked 685 cases. (See, “Potentially Fatal Fungus Invades Hospitals and Public Is Not Informed,” August 26, 2019.)

By year-end, CDC tracking showed 988 cases in the US.

More Patients Getting Sepsis as Antibiotics Fail: HHS Study

In a separate study published in Critical Care Medicine, a journal of the Society of Critical Care Medicine (SCCM), the US Department of Health and Human Services  (HHS) found that antibiotic-resistant bacteria and fungi are resulting in more people acquiring sepsis, a life-threatening condition, according to an HHS news release.

Sepsis increased by 40% among hospitalized Medicare patients from 2012 through 2018, HHS reported.   

“These (untreatable infections) are happening here and now in the United States in large numbers. This is isn’t some developing world thing. This isn’t a threat for 2050. It’s a threat for here and now,” Cornelius “Neil” Clancy, MD, Associate Chief of Veterans Affairs Pittsburg Health System (VAPHS) and Opportunistic Pathogens, told STAT.

It is troubling to see data about so many patient deaths related to antibiotic-resistant infections and sepsis cases when the world is transfixed by the Coronavirus. Nevertheless, it’s important that medical laboratory leaders and microbiologists keep track of how the US healthcare system is or is not responding to these new infectious agents. And, to contact infection control and environmental services colleagues to enhance surveillance, ensure safe healthcare environments and equipment, and adopt appropriate strategies to prevent antibiotic-resistant infections.   

—Donna Marie Pocius

Related Information:

CDC:  Biggest Threats and Data: 2019 Antibiotic Resistance Threats in the United States

More People in the U.S. Dying from Antibiotic-Resistant Infections Than Previously Estimated; Significant Progress Since 2013 Could be Lost Without More Action

These Two Drug-Resistant Microbes Are New “Urgent Threats” to Americans’ Health

CDC Report: 35,000 Americans Die of Antibiotic-Resistant Infections Each Year

The Superbug Candida Auris is Giving Rise to Warnings and Big Questions

On the Emergency of Candida Auris Climate Change, Azoles, Swamps, and Birds

Largest Study of Sepsis Cases Among Medicare Beneficiaries Finds Significant Burden

Sepsis Among Medicare Beneficiaries: The Burdens of Sepsis 2012 to 2018

Dark Daily: Hospital-Acquired Infection

Potentially Fatal Fungus Invades Hospitals and Public is Not Informed

Hospital Associations and Healthcare Groups Battle HHS Efforts to Expand Pricing Transparency Rules to Include Negotiated Rates with Payers

In a federal lawsuit, seven healthcare organizations and hospitals systems allege HHS exceeded its statutory authority and clinical laboratories will want to watch how this court case unfolds

There is quite a brouhaha over the final new federal rule requiring hospitals to allow patients and the public to see the prices they charge for services—including clinical laboratory and anatomic pathology prices. Some very influential hospital associations and healthcare systems are opposing implementation of this rule.

For more than a decade, Dark Daily has reported on the federal government’s efforts to enact pricing transparency in healthcare. In many e-briefings, we advised pathologists and medical laboratory leaders that the outcome of those efforts will likely affect clinical laboratory workflows and bottom lines, and that many clinical laboratories are not prepared to negotiate directly with customers over the price of their services.

Now, the federal Centers for Medicare and Medicaid Services (CMS) has passed a final rule (CMS-1717-F2) that expands on an earlier rule mandating pricing transparency for hospital procedures—including medical laboratory and anatomic pathology services. This new rule requires hospitals to disclose not only their chargemaster prices, but also prices negotiated with payers.

Hospital leaders are not pleased by this, and though the final rule does not go into effect until January 1, 2021, they are already pushing back through representative organizations such as the American Hospital Association (AHA), which has brought a lawsuit to federal court that seeks to overturn the new rule.

New Transparency Rules Include Rates Negotiated with Health Insurers

Beginning Jan. 1, 2019, CMS required hospitals to disclose chargemaster prices to customers. These are essentially the “list prices” for hospital procedures. However, as Dark Daily reported in “California Healthline Report Finds Hospital Chargemaster Prices Fluctuate Dramatically Even Among Hospitals Located Near Each Other,” June 12, 2019, there were problems. Chargemaster prices typically do not reflect the actual fees charged to patients or payers. Thus, consumers still found it problematic to price shop before committing to healthcare.

In an effort to remedy this, the new 2020 final rule expands the pricing information hospitals are required to provide and includes several categories of prices negotiated with health insurers.

Simultaneous to this final rule, CMS also announced a proposed rule (CMS-9915-P) titled, “Transparency in Coverage,” that if passed, will require health insurers to disclose pricing for healthcare services as well.

In a federal Department of Health and Human Services (HHS) press release, the Trump Administration stated that both rules will “increase price transparency to empower patients and increase competition among all hospitals, group health plans, and health insurance issuers in the individual and group markets.”

“Under the status quo, healthcare prices are about as clear as mud to patients,” said CMS Administrator Seema Verma in the HHS press release. “This final rule and the proposed rule will bring forward the transparency we need to finally begin reducing the overall healthcare costs.”

AHA Sues HHS in Federal Court

In response, four hospital organizations and three health systems filed a lawsuit in federal court against the HHS. The suit alleges the final rule “exceeds the agency’s statutory authority,” and violates the First Amendment by requiring public disclosure of prices negotiated with payers. This information, they say, is “highly confidential and commercially sensitive.”

The plaintiffs include the:

In court documents, the plaintiffs argue that “the Final Rule is arbitrary and capricious and lacks any rational basis. The agency’s explanation for the Final Rule runs counter to both logic and evidence. In fact, it is belied by the agency’s own research regarding what patients care about most when selecting a hospital: their own out-of-pocket costs. The agency’s justification for the Final Rule therefore does not stand up to even the barest of scrutiny. That is the epitome of arbitrary and capricious agency action.”

A brief filed by the plaintiffs contends that patients’ actual out-of-pocket costs are determined by a complex set of factors and aren’t reflected in negotiated rates. In addition, the brief states, “the sheer burden of compliance with the rule is staggering, and way out of line with any projected benefits associated with the rule.”

Charles N. Kahn III (above), President and CEO, Federation of American Hospitals (FAH), said in an AHA press release that, “CMS’ final rule fails to offer patients easy-to-understand information regarding their out-of-pocket obligations for care, so we feel obligated to contest the regulation. We contend the agency exceeded its authority and should go back to the drawing board.” (Photo copyright: FAH.)

Details of the Final Rule on Hospital Price Transparency

If it goes forward, starting Jan. 1, 2021, the final rule requires hospitals to disclose five types of standard charges, according to the HHS and AHA press releases:

  • The chargemaster rate, also known as the gross charge;
  • The discounted cash price, which CMS defines as the amount the hospital will accept from self-paying patients;
  • The payer-specific negotiated charge, defined as “the charge that the hospital has negotiated with a third-party payer for an item or service.” This would be the charge that applies if a patient uses an in-network provider;
  • The maximum charge negotiated with payers; and
  • The minimum charge negotiated with payers.

Hospitals must list these charges for all billable “items and services,” including medical laboratory and pathology services, in a machine-readable format, such as a CSV file that can be opened in a spreadsheet program.

In addition, they must provide a “consumer-friendly” list of charges for at least 300 “shoppable services,” defined as services that consumers can schedule in advance. Each list would include 70 services specified by CMS and an additional 230 services selected by the hospital.

The CMS-specified shoppable services include 14 laboratory and pathology tests. They include:

  • Basic metabolic panel
  • Blood test, comprehensive group of blood chemicals
  • Obstetric blood test panel
  • Blood test, lipids (cholesterol and triglycerides)
  • Kidney function panel test
  • Liver function blood test panel
  • Manual urinalysis test with examination using microscope
  • Automated urinalysis test
  • PSA (prostate specific antigen)
  • Blood test, thyroid stimulating hormone (TSH)
  • Complete blood cell count, with differential white blood cells, automated
  • Complete blood count, automated
  • Blood test, clotting time
  • Coagulation assessment blood test

Blood Brother Clinical Laboratories Also Affected by Price Transparency

Price transparency is also at the center of two federal lawsuits involving Laboratory Corporation of America (LabCorp) and Quest Diagnostics. The Dark Report, Dark Daily’s sister publication, reported on these suits in “Lawsuits Alleging Overcharges to Proceed in Two Courts in 2020,” December 16, 2019.

The plaintiffs in those cases are uninsured or underinsured customers who claim they were charged far more for medical laboratory tests than customers covered by insurance. In both cases, customers were charged at the chargemaster rates. The plaintiffs contend that the medical laboratories should have disclosed their rates in advance.

Whichever way this all goes, clinical laboratories will need to monitor the multiple efforts by the states and the federal government to make it easy for patients to see the prices of hospital, physician, and other medical services in advance of treatment. This has the potential to be a disruptive trend, particularly for hospitals.

—Stephen Beale

Related Information:

Hospitals Sue HHS Over Negotiated Price Disclosure Rule

Hospitals Vary in Publishing CMS Chargemaster Prices

Providers Critical of CMS Price Transparency Push in Pay Rule

Verma: Chargemaster Rule Is ‘First Step’ to Price Transparency

Trump’s Transparency Executive Order Leaves Details to HHS, CMS

CMS May Not Have Power to Make Hospitals Disclose Negotiated Prices

HFMA Summary Negotiated Rate Posting Requirement CY 2020 OPPS Proposed Rule

Rules Issued on Disclosure of Hospital and Health Plan Negotiated Rates

Joint Statement from National Hospital and Health System Groups on Public Disclosure of Privately Negotiated Rates Final Rule

Hospital Groups File Lawsuit Over Illegal Rule Mandating Public Disclosure of Individually Negotiated Rates

Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States

Trump Administration Announces Historic Price Transparency Requirements to Increase Competition and Lower Healthcare Costs for All Americans

Lawsuits Alleging Overcharges to Proceed in Two Courts in 2020

Latest Push by CMS for Increased Price Transparency Highlights Opportunities and Risks for Clinical Laboratories, Pathology Groups

Preparing Clinical Laboratories for Invasive Federal Enforcement of Fraud and Abuse Laws, Increased Scrutiny by Private Payers, New Education Audits, and More

Medical laboratory leaders need to take opportunities to stay abreast of government and payer activity, particularly as payer audits become tougher, say legal experts

Even compliant clinical laboratories and anatomic pathology groups are reporting tougher audits and closer scrutiny of the medical lab test claims they submit for payment. This is an unwelcome development at a time when falling lab test prices, narrowing networks, and more prior-authorization requirements are already making it tough for labs to get paid for the tests they perform.

Clinical laboratory leaders can expect continued scrutiny of their labs’ operations and financials as government and commercial payers move forward with invasive programs and policies designed to ferret out fraud and bad actors.

Federal officials are focusing their investigations on healthcare providers who mismanage or inappropriately use Medicare and Medicaid programs, while commercial payers are closely scrutinizing areas such as genetic testing prior authorization, say healthcare attorneys with Cleveland Ohio-based McDonald Hopkins, LLC.

“The government is looking at fraud, waste, and abuse, and all the different ways they come into play,” said Elizabeth Sullivan, Esq., a Member and Co-Chair of the firm’s Healthcare Practice Group, in an exclusive interview with Dark Daily. “We anticipate there will be more enforcement [of fraud and abuse laws] centered around different issues—anything that can be a false claim.”

Specifically, government officials will key in on violations of the Stark Law, EKRA (the Eliminating Kickback in Recovery Act of 2018), and other anti-kickback statutes and laws, Sullivan said.

“And clinical laboratories, by virtue of the type of services and service arrangements they offer, will continue to be a target,” she added.

Medical laboratory leaders also must prepare for aggressive tactics by insurance companies. “On the commercial side, payers are getting more aggressive and more willing to take things to ligation if they don’t get what they want and don’t see a settlement that satisfies their concerns over issues,” said Courtney Tito, Esq., also a Member with McDonald Hopkins, in the Dark Daily interview. 

Current Investigations Likely to Impact Clinical Laboratories

Sullivan and Tito advise clinical labs to be aware of the following issues being fast-tracked by government and private payers:

The TPE audits program, according to CMS, is focused on providers with high claim error rates or unusual billing practices. During a TPE, a Medicare administrative contractor (MAC) works with a provider to identify and correct errors.

“The TPE audits are real hot right now. We are seeing a lot of clients go through this,” Tito said.

Feds Crack Down on Genetic Testing Fraud Schemes

Genetic testing is another “hot button” issue for enforcement by government and private payers, Sullivan and Tito state.

In fact, the US Department of Justice (DOJ) and the US Department of Health and Human Services (HHS) in September announced charges against 35 people including nine physicians for allegedly participating in healthcare fraud schemes involving genetic cancer testing of seniors nationwide, states a DOJ news release.

CMS is taking action against testing companies and practitioners who submitted more than $1.7 billion in claims to Medicare, the statement added.

The scheme involved medical laboratories conducting the genetic tests, McDonald Hopkins noted in an Alert about the DOJ investigation. The alert described how the scam operated:

  • Scam recruiters approached Medicare beneficiaries at health fairs;
  • In exchange for a DNA sample (in the form of a cheek swab) and a copy of the victim’s driver’s license, the “representative” offered a free genetic test;
  • Representatives allegedly asked the seniors’ doctors to sign-off on test orders. If the seniors’ physicians refused, the scammers offered kickbacks to doctors already in their group;
  • Clinical laboratories that performed the tests were reimbursed from Medicare and, allegedly, shared the proceeds with the scammers.

“Although these opportunities may seem appealing as an additional revenue source for providers, it is always important to review the regulatory requirements as well as the potential anti-kickback statute and Stark implications for any new arrangement,” Sullivan and Tito wrote in the McDonald Hopkins Alert article. 

Criminal Behavior in CMS Programs

Effective Nov. 4, 2019, CMS issued a final rule intended to stop fraud before it happens by keeping “unscrupulous providers” out of the federal healthcare programs in the first place, states a CMS news release.

The rule (CMS-6058-FC), called “Program Integrity Enhancements to the Provider Enrollment Process,” has new revocation and denial authorities to stop waste, fraud, and abuse, the news release points out.

Reasons CMS can revoke or deny enrollment to providers, according to another McDonald Hopkins Alert, include:

  • Outstanding debt to CMS following overpayment to the provider;
  • Coming back into CMS programs with a new identity;
  • Billing for services from non-compliant locations;
  • Abusive ordering or certifying under Medicare Part A or Medicare Part B.

Additionally, EKRA establishes “criminal penalties for unlawful payments for referrals to recovery homes and clinical treatment facilities,” Dark Daily recently reported. However, as the e-briefing points out, it is unclear whether EKRA applies to clinical laboratories.

Nevertheless, Sullivan points out that, “Even without EKRA, the anti-kickback statute applies to any arrangement between individuals. And, it is good to have an attorney look at those arrangements. What your sales reps are doing in the field, how they are communicating, and their practices warrant oversight. EKRA just makes it all the more important.”

During an upcoming Dark Daily webinar, attorneys Elizabeth Sullivan (left) and Courtney Tito (right) of McDonald Hopkins, LLC, will advise clinical laboratory leaders and financial staff on how to prepare for future aggressive payer audits, rigid enforcement of fraud and abuse laws, and more. (Photos copyright: LinkedIn/Dark Daily.)

Clinical Laboratories Need Compliance Plan, Focus on Payers

With so many legal requirements and payer programs, Sullivan advises medical labs and pathology group practices to work with resources they trust and to have a compliance plan at the ready. “Have resources in place, including but not limited to a compliance officer, a committee, and someone who is spending time on these issues. Monitoring government enforcement and payer activity is the most critical,” she said.

To assist labs in remaining fully informed on these critical compliance topics, and the federal government’s latest legislation to combat fraud, Dark Daily is offering a webinar on November 20th at 1pm Eastern time. Sullivan and Tito will offer their insights and advice on how labs should prepare for CMS’ battle to reign in fraud and commercial payers’ increased scrutiny into prior authorizations.

Clinical laboratory leaders, compliance officers, and finance staff will benefit greatly from this crucial resource.

Register for “Bracing for Aggressive Payer Audits, Rigid Enforcement of Fraud and Abuse Laws, and More” at https://www.darkdaily.com/product/payor-audits-webinar/ or by calling 512-264-7103.

—Donna Marie Pocius

Related Information:

Dark Daily Webinar: What Lab Leaders Need to Know About How to Prepare for 2020: Bracing for Aggressive Payer Audits, Rigid Enforcement of Fraud and Abuse Laws, and More

Federal Law Enforcement Action Involving Fraudulent Genetic Testing Results in Charges Against 35 Individuals Responsible for Over $2.1 Billion in Losses is One of the Largest Healthcare Fraud Schemes Ever Charged

OIG Focusing on Laboratories Involved in Genetic Testing Scams

CMS Announces New Enforcement Authorities Reduce Criminal Behavior in Medicare, Medicaid, and CHIP

CMS Aims to Combat Criminal Behavior Through Enrollment Process

Does New Opioid Law Require Clinical Laboratories to Change How They Pay Sales Employees?

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