Novel scheme by medical laboratory company to induce patients to collect and return their own specimen for testing is central to a federal whistleblower case alleging violations of the Anti-Kickback Statute
Handing out gift cards only to patients who return a specimen to a clinical laboratory company for colorectal cancer screening is a unique approach that is now at the center of a federal qui tamcase filed by a retired Indiana pathologist.
The defendant in this whistleblower lawsuit is Exact Sciences Laboratories and its parent company Exact Sciences Corporation (NASDAQ:EXAS). Last month, a federal judge ruled the court case will proceed following attempts by the defendant’s attorneys to have the case dismissed.
The plaintiffs (United States of America ex rel. Niles Rosen, MD) allege Exact Sciences Laboratories violated the Federal Anti-Kickback Statute (AKS) and False Claims Act by offering $75 gift cards to induce patients to return self-collected fecal samples for the lab’s Cologuard at-home colon cancer screening kit through its Patient Compliance Program.
Exact Sciences refuted the allegations and moved to have the case dismissed claiming it “had a good faith belief that its [Patient Compliance Program] complied with the law and thus lacked the requisite intent for a violation of the AKS,” according to court documents. The court denied Exact Sciences’ motion to dismiss.
“We are grateful for the hard work and courage of those private citizens who bring evidence of fraud to the Department’s attention, often putting at risk their careers and reputations,” said Brian Boynton, JD (above), Principal Deputy Assistant Attorney General and head of the federal Department of Justice (DOJ) Civil Division in a February 7, 2023, DOJ statement. “Our ability to protect citizens and taxpayer funds continues to benefit greatly from their actions.” Clinical laboratory managers will want to follow this and other qui tam cases claiming violation of anti-kickback laws. (Photo copyright: Department of Justice.)
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Was Exact Sciences’ Patient Compliance Program a Kickback?
Cologuard is a non-invasive testing kit utilized by people to screen for colorectal cancer in the privacy of their own homes. It is intended for those over the age of 45 who are at low or average risk for the disease. Exact Sciences regularly runs television advertisements urging individuals to be screened for colorectal cancer using the Cologuard test.
Following a physician’s order, and after receiving the testing kit in the mail, individuals collect a stool sample using the specimen container in the kit and return the sample to Exact Sciences Laboratories (ESL) for analysis. The test works by looking for certain DNA markers and blood in the stool sample.
According to Report on Medicare Compliance from the Health Care Compliance Association (HCCA), in 2017, a gastroenterologist ordered the Cologuard kit for Rosen, the whistleblower, but Rosen chose not to return a stool sample to ESL. A few months later, ESL sent Rosen a letter offering him a $75 Visa gift card if he performed the at-home specimen collection and then returned it to ESL by March 22, 2018. Persuaded by the offer, Rosen collected a sample, returned it to ESL, and received the gift card.
As part of its Patient Compliance Program, ESL analyzed Rosen’s sample and received $499 from Medicare for performing the test. The complaint filed against Exact Sciences states Medicare paid Exact Sciences more than $160 million for a total of 334,424 Cologuard tests in 2018 while the company offered “unlawful cash equivalent inducements directly to Medicare beneficiaries,” COSMOS reported.
“It was a straight-up kickback,” Rosen’s attorney Marlan Wilbanks, JD, Senior Partner at Atlanta law firm Wilbanks and Gouinlock, told COSMOS. “You can’t offer cash or cash equivalents to anyone to induce them to use a government service.”
DOJ Elects to Not Intervene in Lawsuit
In February 2020, Exact Sciences received a civil investigation demand by the US Department of Justice (DOJ) regarding the gift card incentive. The DOJ later filed a notice that it had elected to decline intervention in the lawsuit. This action did not prevent Rosen from continuing with the lawsuit. Accordingly, in April of 2021, he filed an amended complaint against Exact Sciences alleging violations of the Federal Anti-Kickback Statute and False Claims Act.
Rosen is seeking a monetary award for himself, and on behalf of the US government, for civil penalties, treble damages, fees, and costs.
According to Report on Medicare Compliance, Exact Sciences “refuted the allegations and asserted, among other things, that the arrangement qualifies for the preventive care safe harbor to the anti-kickback statute (AKS) and that the complaint fails for many reasons.”
Exact Sciences also noted in its motion to dismiss that “encouraging a patient to have a medical service that was already ordered by a provider isn’t an inducement under the AKS.”
At this time, the case remains unresolved and continues in federal court.
DOJ Recovers Billions of Taxpayer Dollars from AKS Violations
A qui tam lawsuit or action is a method available for individuals to help the government circumvent fraud and recover money for taxpayers. Types of fraud included in these cases often pertain to Medicare and Medicaid services, defense contractor fraud, and procurement fraud.
According to the DOJ, over $1.9 billion was recovered as a result of qui tam lawsuits pursued by either the government or whistleblowers during fiscal year 2022. The number of these types of lawsuits has increased dramatically over the years with a total of 652 qui tam cases filed in 2022 alone.
Thus, clinical laboratory professionals should be aware that this type of novel scheme to generate more patients could possibly lead to legal issues. Dark Daily would like to credit Laboratory Economics for calling attention to this fascinating case of alleged illegal inducement involving a medical laboratory company.
This fourth edition of the annual event will be held virtually with free registration for pathologists and clinical laboratory professionals
In its fourth year, stakeholders in the clinical laboratory community have promoted thought leadership around the Lab Industry at the Project Santa Fe Foundation’s Clinical Lab 2.0 Workshop. Clinical Lab 2.0 (CL 2.0) which identifies new opportunities for medical labs to add value as the healthcare industry transitions from fee-for-service to value-based delivery models. But how does this concept apply during the era of COVID-19? That’s a key question participants will discuss at the 2020 Clinical Lab 2.0 Workshop, a virtual event scheduled for Oct. 26-27 with a focus on Population Health.
“This workshop will help all clinical laboratory leaders and pathologists to better understand, ‘How do we manage a pandemic, identifying high risk pool, where are the care gaps, and how do we better manage in the future proactively?’” said Khosrow Shotorbani, MBA, MT (ASCP), co-founder of the CL2.0 initiative and a regular speaker at the Executive War College, in an exclusive interview with Dark Daily. He is President and Executive Director of the Project Santa Fe Foundation, the organization that promotes the Clinical 2.0 Movement.
The coronavirus pandemic has “truly elevated the value of the clinical laboratory and diagnostics as one essential component of the care continuum,” he noted. “The value of the SARS-CoV-2 test became immense, globally, and the mantra became ‘test to trace to treat.’”
Project Santa Fe Foundation’s website defines Clinical Laboratory 2.0 as an effort to demonstrate “the power of longitudinal clinical lab data to proactively augment population health in a value-based healthcare environment.” The “goals are to improve the clinical outcomes of populations, help manage population risk, and reduce the overall cost of delivering healthcare,” the CL 2.0 website states.
“It’s about harnessing lab test results and other data that have predictive value and can help us proactively identify individuals that need care,” explained Shotorbani. “In the context of population health or value-based care, our labs potentially can utilize the power of this data to risk-stratify a population for which we are responsible or we can identify gaps in care.”
Clinical Lab 2.0 and the SARS-CoV-2 Pandemic
In the context of COVID-19, “Clinical Lab 2.0 argues that there is a hidden universe of value that can help augment what happens between COVID-19 testing and COVID-19 tracing to convert this reactive approach—meaning we wait for the person to get ill—versus considering who may be most at risk if they were to become infected so that our clinical laboratories can help caregivers create proactive isolation or quarantine strategies,” he added.
Shotorbani then explained how clinical laboratories have data about comorbidities such as diabetes, asthma, heart disease, and immunosuppression that are associated with more serious cases of COVID-19. “This clinical lab data can be harnessed, associated with demographic and risk data such as age and zip codes to help physicians and others identify patients who would be most at risk from a COVID-19 infection,” he noted.
“Historically, the primary focus of a clinical laboratory was very much on the clinical intervention, contacting the care manager physician, and identifying who’s at risk,” he said. But with COVID-19, Shotorbani sees opportunities to forge relationships with public health specialists to encourage what he describes as “consumer engagement.”
“As medical laboratory professionals, we must evolve to accommodate and support the needs of consumers as they take a more active role in their health,” he continued. “This is moving past simply providing lab test results, but to then be a useful diagnostic and therapeutic resource that helps consumers understand their health conditions and what the best next steps are to manage those conditions.”
Khosrow Shotorbani (above) is President, Executive Director, of the Project Santa Fe Foundation and one of the leaders of the Clinical Laboratory 2.0 movement. He is hopeful that the prominent role of medical laboratories in responding to the coronavirus pandemic will lead to an ongoing “seat at the table” in the higher echelons of healthcare organizations. In normal times, “we reside in basements, and we’re done when we release a result,” he said during an exclusive interview with Dark Daily. “COVID-19 was a kick in the rear to get us upstairs to the C-suite, because healthcare CEOs are under the gun to demonstrate more SARS-CoV-2 testing capacity.” Looking ahead, “we want to make sure that our clinical laboratories stay in that seat and design a future delivery model above and beyond COVID-19, maybe even help health systems, hospitals, and other providers drive their strategies.” (Photo copyright: Albuquerque Business First.)
“None of these are pathologists or come from the lab,” Shotorbani said. “They represent the C-suite and higher organization constituents. These are the healthcare executives who are dealing with their organization’s pain points. As clinical labs, we want to align ourselves to those organizational objectives.”
Pathologist Mark Fung, MD, PhD, will then present a CL 2.0 model for managing COVID-19 or other infectious disease pandemics, followed by a response from the other panelists. Fung is Vice Chair for Population Health in the Department of Pathology and Laboratory Medicine at the Larner College of Medicine at the University of Vermont. He is also on the Project Santa Fe Foundation (PSFF) board of directors.
“Lab 2.0 is a thought leadership organization,” Shotorbani said. “We are developing a template and abstract of this model of clinical laboratory services that other labs can follow while applying some of their own intuition as they make it operational.”
Day Two to the CL 2.0 workshop will feature case studies from the Henry Ford Health System in Detroit and Geisinger Health in Danville, Pa., followed by a discussion with eight PSFF directors. Then, Beth Bailey of TriCore Reference Laboratories in Albuquerque, N.M., will preside over a crowdsourcing session with participation from audience members.
Free Registration for Clinical Laboratories
This will be the first Clinical Lab 2.0 Workshop to be held virtually and registration this year will be free for members of the clinical laboratory community, Shotorbani said. In the past “there has been a hefty tuition to get into this because it’s a very high-touch workshop, especially for senior leaders. But given the critical topic that we’re facing, we felt it was important to waive the cost.”
The Fourth Annual Clinical Lab 2.0 Workshop is partnering this year with the American Society for Clinical Pathology (ASCP), which will provide the software platform for hosting the event, he said. In addition to the live conference sessions, registrants will have access to prerecorded presentations from past workshops. Content will be viewable for six months following the event.
Register for this critical event by clicking here, or by placing this URL in your browser (https://projectsantafefoundation.regfox.com/clinical-lab-20-workshop).
A former officer of a Cigna contractor claims the insurer hatched a scheme to submit invalid diagnostic codes and filed the now-unsealed qui tam action in 2017
In a case that could provide a cautionary tale for clinical laboratories, a federal whistleblower lawsuit alleges that Cigna, through its HealthSpring subsidiary, “received billions in overpayments from the federal government” in a scheme involving the insurer’s Medicare Advantage plans. The Qui tam (whistleblower) lawsuit was filed by Robert A. Cutler, a former officer of Cigna contractor Texas Health Management LLC (THM), under the federal False Claims Act.
Cutler alleged that “Cigna-HealthSpring has knowingly defrauded the United States through an intentional and systematic pattern and practice of submitting to CMS invalid diagnosis codes derived from in-home health assessments.” He claimed this took place “from at least 2012 until at least 2017,” and likely thereafter.
Cigna has denied the allegations. “We are proud of our industry-leading Medicare Advantage program and the manner in which we conduct our business,” the insurer stated in an email to HealthPayerIntelligence. “We will vigorously defend Cigna against all unjustified allegations,” Cigna stated.
As the lawsuit explains, Medicare Advantage (MA) plans are administered by private insurers under Medicare Part C. “Rather than pay providers directly based on the medical services provided, Medicare Part C pays MA Organizations a monthly capitated rate for each covered beneficiary, and tasks the MA Plan with paying providers for services rendered to plan members,” the lawsuit states. “MA insurers are generally paid more for providing benefits to beneficiaries with higher-risk scores—generally older and sicker people—and less for beneficiaries with lower-risk scores, who tend to be younger and healthier.”
The lawsuit notes that CMS relies on information—specifically ICD codes—from the insurers to calculate the risk scores.
Cigna’s 360 Program as Described in Lawsuit
Cutler alleged that Cigna defrauded CMS through its “360 Program,” in which primary care providers (PCPs) were encouraged to perform enhanced annual wellness visits that included routine physical exams. He claimed that “Cigna-HealthSpring designed the program so that, in practice, the 360 assessment was a mere data-gathering exercise used to improperly record lucrative diagnoses to fraudulently raise risk scores and increase payments from CMS.”
Cigna-HealthSpring, he alleged in the court documents, offered PCPs financial bonuses to perform the 360 program exams, especially on patients deemed most likely to yield high-risk scores. However, many clinicians declined, so the insurer recruited third-party contract providers, including THM, to send nurse practitioners (NPs) or registered nurses (RNs) to the homes of MA plan members.
For each visit, the NPs and RNs were given health reports listing the beneficiary’s previous diagnoses. “Cigna-HealthSpring intended the document to serve as a ‘cheat-sheet’ list of conditions and diagnoses it expected 360 contractors to capture during the in-home visit,” Cutler alleges. “The list of diagnoses did not indicate the date they were reported or any other information concerning their status.”
During each visit, which typically lasted 30-60 minutes, “NPs and RNs relied primarily on the patient’s self-assessment, i.e., subjectively reported information, as well as current medications to the extent available and, during certain time periods and for certain plan members, limited [clinical] laboratory findings,” Cutler alleged.
NPs were expected to record 20 or more diagnoses per visit, he wrote, including diagnoses based on “weak links” involving medications. “For example, Cigna-HealthSpring encouraged contractors to record atrial fibrillation, deep vein thrombosis, and pulmonary embolus based on the presence of certain classes of anti-coagulation medications on members’ medication lists or in their homes,” he stated.
He also alleged that “Cigna-HealthSpring, in purposeful violation of CMS rules, designed its 360 form to force NPs to capture diagnoses that were uncertain, probable, or merely suspected.”
These diagnoses were subsequently submitted as risk-adjustment data to CMS, he alleged, adding up to “hundreds of thousands of false claims from its six contractors during the relevant period. Although the exact amount will be proven at trial, the United States has paid billions of dollars in improper, inflated payments to Defendants under the MA Plan as a result of this scheme.”
The graphic above is taken from an AARP article, titled, “Medicare Under Assault from Fraudsters,” which states, “The amount of tax dollars that are lost each year to Medicare fraud and waste is greater than the entire annual budget of some of the federal government’s most important programs and departments.” Clinical laboratories also are in danger of being drawn into the federal government’s fraud investigations which can be disruptive to business and revenues. (Graphic copyright: AARP.)
The Federal False Claims Act “allows a private citizen to step into the shoes of and pursue a claim on behalf of the government,” explained the Boyers Law Group of Coral Gables, Fla., in an article for HG.org, which states, the lawsuit “may proceed with or without the assistance of the government.”
If the government chooses to intervene, the whistleblower, known formally as the “relator,” can receive 15% to 25% of the proceeds recovered in the action, the law firm explained in another article for HG.org, adding that, in most cases, the government does not intervene, which increases the potential award to 30%.
In the Cigna case, the US Attorney’s office notified the court on Feb. 25, 2020, that the government had decided not to intervene “at this time.”
Significance for Clinical Laboratories
Regardless of how this case proceeds, medical laboratory managers should remember that they are subject to legal action if internal whistleblowers identify policies or procedures that violate federal fraud and abuse laws. And because it involves coding, it is also a reminder of the importance of documenting diagnoses and clinical laboratory test orders as protection against fraud allegations.
Another benefit of carefully documenting each lab test order is that labs can make the information available when auditors from government or private payers show up and want documentation on the medical necessity of each lab test claim.
One medical testing company was led by a convicted felon, another was accused of delays and unreliable results
Like many states, Florida has worked hard to quickly ramp up diagnostic testing for SARS-CoV-2, the coronavirus that causes the COVID-19 illness. For the most part this has been a good thing. However, local media in that state reported problems with two no-bid contracts for clinical laboratory testing, including one with a Dallas-based company whose founder pleaded guilty last year to two felonies involving insurance fraud.
In a press conference announcing the two deals, Florida Governor Ron DeSantis said, “We have two contracts in place with two new labs that will increase our lab capacity by 18,000 samples per day.” He added that he expected a 24- to 48-hour turnaround.
“That’s a lot better than we’ve been getting from Quest and LabCorp,” he said. “These labs will be primarily where we send our samples that we collect in the long-term-care and assisted-living facilities and at the community-based walk-up sites.”
The announcement followed DeSantis’ March 9 emergency decree, which allowed state agencies to award contracts to companies without undergoing formal bidding processes, reported Florida Bulldog, an independent non-profit news site.
In his announcement, DeSantis did not identify the companies that had received the lab test contracts. However, Florida Bulldog reported that those companies were:
Indur Services, a Dallas-based health-coaching company, and
Southwest Regional PCR, a CAP-accredited lab in Lubbock, Texas, that does business as MicroGenDX Laboratory (MicroGen Diagnostics, LLC).
The Indur contract—initially valued at $11.3 million—included $10.2 million for 140,000 COVID-19 RT-qPCR test kits, plus additional payment for supplies, Florida Bulldog reported based on information from the state contract database. Later, the contract was reduced to $2.2 million solely for supplies.
The MicroGenDX contract—valued at $11 million—called for 8,000 tests per day for 14 days at a cost of $99 per test, Florida Bulldog reported. That contract was later cancelled due to concerns about reliability and processing speed.
Indur’s Legal Troubles
Indur is a self-described “health and wellness lifestyle and products company” founded in 2017 by Brandt Beal, according to Business Insider. In 2019, Beal pleaded guilty to two felonies involving insurance fraud in Texas and was given 10 years’ probation in each case, Florida Bulldog reported. He also was required to pay restitution. He pleaded guilty to a separate charge of felony theft in 2017 and was sentenced to nine years’ probation.
In an interview with Florida Bulldog, Beal claimed that “the man who pleaded guilty to those charges is actually his cousin with the same name.” However, Beal “would not provide requested contact information for his cousin,” the Florida Bulldog reported, which posted photos demonstrating that the Indur founder and the person who pleaded guilty to the felonies were the same individual.
Jason Mahon, Communications Director at the Florida Division of Emergency Management (above), told Florida Bulldog that Indur’s COVID-19 testing contract was scaled back in May “because Indur Services did not provide testing directly, but rather was providing testing services through another company.” The state then contracted directly with that clinical laboratory company to obtain the COVID-19 testing services. “Time is of the essence when securing these critical testing supplies for Floridians, and that limited time does not allow for the Division to vet every company’s executive leadership or board of directors,” Mahon told Florida Bulldog. (Photo copyright: LinkedIn.)
The amended contract, valued at $2.2 million, called for Indur to deliver swabs and vials. “To date, everything that’s been ordered they’ve delivered on,” said Jared Moskowitz, Director of the Florida Division of Emergency Management department.
Testing Delays Snag MicroGen Diagnostics
The state cancelled its contract with MicroGenDX on May 15, Florida Bulldog reported.
“As with any lab, we do our due diligence to ensure the company will be able to provide reliable services before sending any samples,” said Jason Mahon, Communications Director at the Florida Division of Emergency Management. “Upon further interaction with this vendor, the Division determined that the state could not be 100% confident in the results that would come from this vendor, or with the processing speed, which is critical for COVID-19 testing.”
This came as AdventHealth, a non-profit health system based in Altamonte Springs, Fla., was having its own difficulties with MicroGenDX.
On May 16, AdventHealth announced that it had terminated a COVID-19 testing contract with an unnamed third-party lab, claiming that the provider was “unable to fulfill its obligation.” Multiple media outlets later revealed MicroGenDX as the third-party lab, and USA Today reported that the FDA had launched an investigation.
“This issue impacts more than 25,000 people throughout Central Florida,” stated an AdventHealth press release. “This situation has created unacceptable delays and we do not have confidence in the reliability of the tests.” AdventHealth said it would contact affected individuals about the need for retesting.
However, MicroGenDX CEO Rick Martin refuted the health system’s claims. “You can go after me because I didn’t meet your capacity and I couldn’t deliver on your drive-through testing because of things that I couldn’t control, but don’t attack the reliability of my test,” he told the Orlando Sentinel.
According to MicroGenDX, the company received an emergency use authorization (EUA) from the FDA on April 23 for an internally-developed RT-PCR test that can be performed on nasal swabs or sputum samples, noted a press release. The tests are run in the company’s lab facility in Lubbock, Texas.
One factor in the dispute was the handling of patient samples, USA Today reported. Martin told reporters that representatives from AdventHealth had visited the lab and observed samples that were stored at room temperature. “[Martin] maintains the samples were still valid and that the delays were due to AdventHealth not providing proper patient data and the lab running out of plastic parts used in its equipment,” noted USA Today.
Mahon told Florida Bulldog that the state did not send samples to MicroGenDX for processing. And the Florida Bulldog reported that Martin said his lab was so “hammered with huge volumes of samples” that he would have turned down any requests, adding that Martin “stood by the reliability and accuracy of his firm’s testing and said he looks forward to a day of vindication after federal inspectors conduct any inquiries.”
Collectively, these news stories scratch the surface of a bigger situation involving COVID-19 laboratory testing. The fact that Congress authorized billions of dollars to fund COVID-19 testing was noticed by some individuals who saw the funding as an opportunity to “make a quick buck” if they could get contracts to provide COVID-19 testing—whether they owned a CLIA-certified complex laboratory or not.
Thus, it’s no surprise that more companies are bidding on COVID-19 testing contracts. What remains unknown is how many of those companies are actively soliciting COVID-19 testing contracts throughout the United States.
Given this situation, and the facts recounted above, it is reasonable to ask an obvious question: Why did Florida state officials not do a more rigorous check into the credentials of the clinical laboratory entities they were preparing to award no-competitive-bid contracts to for COVID-19 testing?
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.
