As payers consider genetic-test coverage, specter of fraud looms large

Imagine there was a test that could personalize medical care. A quick blood draw or a swab of your cheek could customize medical treatment, offering new information on family illnesses, and providing physicians with a new tool for making or altering a critical diagnosis.

Actually, there's no need to imagine it. That test already exists. It's called genetic testing, and its newfound possibilities have generated significant excitement within the medical industry--understandably so. If genetic testing lives up to the hype, it could change the way doctors treat and manage serious illnesses, and prescribe medication.

The drawback: The tests can be expensive, ranging from less than $100 to more than $2,000, according to the National Genome Research Institute. Genetic testing is also relatively new, which means researchers still haven't completely uncovered which tests are reliable and how they should be integrated into medical care.

At least one rather important person believes genetic testing can live up to the hype. Last year, President Barack Obama announced a $215 million Precision Medicine Initiative that devoted significant resources toward genetic testing research. The bulk of that funding ($130 million) went to the National Institutes of Health to recruit more than one million volunteers, which Obama said will "propel our understanding of health and disease."

It all sounds pretty wonderful, but as Dr. Robert McDonough, senior director of clinical policy research and development at Aetna, told the New York Times last year, "We want to make sure the enthusiasm doesn't outpace the evidence."

McDonough sums up the thoughts of many payers. Even after Obama's announcement, insurers--both public and private--were reluctant to dive headlong into genetic testing. But within the last year, more insurers have jumped in. Most recently, Philadelphia-based Independence Blue Cross took genetic testing coverage up a notch becoming the first major insurer to cover whole-genome sequencing for a variety of cancers. Some wondered if the industry would face more pressure to cover a broad array of tests as a result.  

If more payers do decide to expand genetic testing coverage (and many probably will), fraud detection and prevention better be a priority. When it comes to testing, the words "new" and "expensive" might as well be a neon sign for fraudsters and nefarious laboratories looking to cash in.

There's been evidence of this kind of foul play already. Last year, the Department of Justice began investigating a New Orleans-based laboratory called Renaissance RX after Medicare suspended payments and at least one doctor accused the company of improper billing, according to the New York Times. The company reimbursed physicians $75 for every patient enrolled in a study that received $130 million from Medicare, the article says. Dr. Scott Wilson, who initially participated in the study, dropped out claiming the company pushed for volume over eligibility.

Fraudsters have also targeted elderly patients. Last year, the Virginia Senior Medicare Patrol (SMP) announced it had received reports from surrounding states that people were hosting ice cream socials at senior centers while conducting free swab tests. Virginia SMP noted that despite the claims of these individuals, Medicare only covers genetic tests in certain situations and the tests require a physician order.

Sure enough, in December a New Jersey man was charged with convincing elderly residents to undergo genetic tests. Medicare paid out more than $1 million to two laboratories in Virginia and California that allegedly paid the man tens of thousands in commissions.

It's no secret that labs are under intense scrutiny, and we've already seen some major investigations and settlements from companies such as Millennium Health, Health Diagnostics Laboratory and Biogdiagnostic Laboratory Services that were in the business of urine tests, blood samples and x-rays. Moreover, the Office of Inspector General has been cautiously eyeing genetic testing for the last several years, a sure sign that that this could be a problem that is gaining in prominence.

If genetic testing lives up to the hype, then more insurers should be covering it. But payers making those decisions should also be reminded that new, high-priced tests are bound to be prone to fraud. If a thoughtful approach toward detecting and preventing fraudulent payments isn't included in those coverage discussions, you can be sure a new, innovative industry will blossom; it just won't be the one everyone's hoping for. - Evan (@HealthPayer)