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:
EKRA (Eliminating Kickback in Recovery Act of 2018).
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.
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.
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.
Medical laboratory leaders must take steps to protect their lab’s financial stability and know how to prepare and respond to investigations and regulatory threats
Clinical laboratories and anatomic pathology groups may soon face a new normal that includes more frequent and tougher audits by both private payers and the government, resulting in larger monetary demands. The financial strain medical laboratories will experience from more aggressive audits will be compounded by the roll out on January 1, 2018, of new Medicare Part B price cuts.
Attorney Richard S. Cooper, Co-chair, National Healthcare Practice Group, McDonald Hopkins, LLC, in Cleveland, says audit activity has been “ramping up” during the past 18 months, but has accelerated in recent months.
“We are seeing a dramatic increase in the number of audits and the dollar amount the payers are trying to recoup as a result of those audits,” Cooper said in an interview with Dark Daily, noting monetary demands can reach “seven to eight” figures.
“We’re seeing that with both government payers as well as commercial payers and we’re seeing much more aggressive audit tactics being utilized than we have in the past.”
Payers Put Clinical Laboratories Under Increased Scrutiny
While toxicology/pharmacogenomics and molecular/genetic testing laboratories frequently are the targets of the increased scrutiny, Cooper says no medical laboratory is immune from questioning. The “medical necessity” of providing and billing for diagnostic tests or services, and laboratory waivers of “patient responsibility” for copays and deductibles, are the two most common compliance issues being cited, states Cooper, who points to Cigna, UnitedHealthcare and Blue Cross Blue Shield as among the most active commercial payers his firm encounters.
“There are large dollars at stake and they are going after those dollars,” Cooper explains.
In this new environment, Cooper maintains medical directors and lab executives must:
Protect the lab’s financial stability in 2018 by considering operational changes and taking other steps to prepare for revenue losses due to PAMA (Protecting Access to Medicare Act).
Get educated about practices that can trigger audits by commercial payers, or state and federal regulators, and consider conducting self-audits using an independent third-party.
Know how to respond if a lab is charged with proficiency test violations, which can result in significant penalties from Centers for Medicaid and Medicare Services (CMS), such as loss of a lab’s CLIA license and revocation of the medical director’s license to operate a medical laboratory for two years.
Expect scrutiny of “piggyback” arrangements with toxicology labs that could raise compliance concerns and violate commercial payer contracts. A “piggyback” arrangement is where a lab bills under the payer contract of another provider because it is unable to contract with the payer directly. This often involves “piggybacking” on lab or hospital (usually Critical Access Hospital) contracts. In many cases, the billing entity does not perform the lab services for which they are billing. The services are instead performed by the non-participating lab, and the billing provider pays most of the collections back to the non-billing laboratory, retaining a fee for using the contracts. There may not be disclosure to the payers about which entity actually performed the test.
Navigating Tougher Clinical Laboratory Laws and Regulations
Attorney Richard S. Cooper, Co-chair, National Healthcare Practice Group, McDonald Hopkins LLC, in Cleveland will be a featured speaker and moderator during a new Dark Daily webinar on the Medicare Part B price cuts, and the critical legal and compliance issues clinical laboratories and pathology groups face starting in 2018. (Photo copyright: McDonald Hopkins LLC.)
This crucial learning event takes place on Wednesday, November 8, 2017, at 1 p.m. EST.
These three attorneys are among the nation’s foremost experts in issues unique to clinical laboratories, pathology groups, hospital labs, toxicology/pharmacogenomics labs, and molecular/genetic testing labs. Following our speakers’ presentations, there will be a question and answer period, during which you can submit your own specific questions to our experts.
You can’t afford to miss this opportunity. Click here to get up to speed on the most serious regulatory, compliance, and managed care contracting issues confronting all labs today. This webinar will provide solutions to the perils facing labs now and in 2018 by helping you map a proactive and effective course of action for your clinical lab or pathology group.
Medical laboratory leaders urged to scrutinize pricing policies, billing decisions, and structural relationships that could trigger commercial payer and regulatory action
Clinical laboratories and pathology groups face another blow to their financial health on January 1, 2018, when new Medicare Part B price cuts take effect. Faced with increasing competition and declining reimbursement rates for anatomic pathology testing, medical laboratories will begin 2018 with their profitability under threat. In addition, healthcare legal experts warn many medical laboratory leaders risk further financial hardships by establishing “problematic” business relationships or developing pricing plans that put their labs at “unreasonable risk” with commercial payers and government regulators.
Financial Pressures Lead Clinical Laboratories to Risky Deals and Policies
One such expert is, attorney Jeffrey J. Sherrin, President and Partner at O’Connell and Aronowitz in Albany, New York. He contends that financial pressures are the impetus for many laboratories’ questionable deal-making and pricing policies.
“We’re increasingly dealing with proposed structures that clinical labs are entering into or considering entering into to remain viable, but without properly assessing how those relationships may run afoul of federal or state law or provider agreements,” Sherrin noted in an interview with Dark Daily. “If that doesn’t keep the labs up at night, it keeps us up at night!”
Tougher Auditing and Billing Scrutiny
While the “overwhelming majority of lab directors, owners, and managers are honest and law abiding,” Sherrin maintains they are “stepping into a minefield” by failing to properly vet decisions regarding:
1. Lab billing and referral arrangements that could violate federal and state anti-kickback or fee-splitting laws, or trigger violations of provider agreements with health insurers.
2. Participation in healthcare Management Service Organizations (MSOs) that involve “billing schemes” rather than legitimate administrative services, marketing, or data-collection activities.
3. Pricing plans and billing policies that could trigger increased scrutiny by government and commercial payers over balance-billing of patients, and waiver or partial waiver of co-pays and deductibles.
In an era of shrinking reimbursements and limited access to healthcare networks, Sherrin urges medical laboratory leaders to be aware of another new reality: tougher audits from commercial payers whose investigators “perceive that there is rampant fraud in the industry” that extends beyond toxicology/pharmacogenomics or molecular/genetic testing laboratories.
“In payers’ minds, it’s across the board,” Sherrin says. “When they see patterns of limiting or capping or waiving of patient responsibility, their normal inclination is to assume this is part and parcel of some fraudulent scheme or practice, as opposed to a proper business decision.”
Proactive Steps to Improve Medical Lab Leader Decision-Making
Seeking guidance from a healthcare attorney before establishing new business relationships, and pricing or billing policies, is one way to increase your laboratory’s odds of surviving payer action.
“Most labs adopt a pricing policy without fully vetting whether they are doing it the right way, the best way, or the way that creates as little risk as possible,” Sherrin notes. “A high percentage of labs have not approached this issue with a degree of scrutiny as to whether the marketing of their test menu, their prices, and how they bill puts them in a better or worse position. Most are making business decisions based on what they need to do competitively without having the ramifications and implications analyzed.”
To attend this critical educational opportunity, click here to register (or place this link into your browser: https://ddaily.wpengine.com/product/tougher-lab-regulations-and-new-legal-issues-in-2018-more-frequent-payer-audits-problems-with-contract-sales-reps-increased-liability-for-clia-lab-directors-proficiency-testing-violations-and).
Healthcare attorney Jeffrey W. Sherrin, President and Partner, O’Connell and Aronowitz, will be one of three featured speakers during a new Dark Daily webinar on the upcoming Medicare Part B price cuts, and the critical legal and compliance issues facing clinical laboratories and pathology groups in 2018. (Photo copyright: O’Connell and Aronowitz.)
These three attorneys are among the nation’s foremost experts in issues unique to clinical laboratories, pathology groups, hospital labs, toxicology/pharmacogenomics labs, and molecular/genetic testing labs. Following our speakers’ presentations, there will be a question and answer period, during which you can submit your own specific questions to our experts.
You can’t afford to miss this opportunity. Click here to get up to speed on the most serious regulatory, compliance, and managed care contracting issues confronting all clinical laboratories today. This webinar will provide solutions to the perils facing labs now and in 2018 by helping you map a proactive and effective course of action for your clinical lab or pathology group.
A related issue is the growing use of contract sales representatives to sell clinical laboratory and pathology testing services and whether such arrangements violate federal compliance requirements
Three types of clinical lab companies seem to be the highest-profile targets for these intense payer audits. Reports identify lab companies offering toxicology and pain management testing as undergoing rigorous audits. Medical lab companies with proprietary molecular diagnostic assays and genetic tests are known to have been audited in this manner. Some anatomic pathology groups are believed to have also experienced such audits. (more…)
