Lab services, pay arrangements draw OIG's eye

The Office of Inspector General released a new report on questionable Medicare claims for clinical laboratory services, for which program spending rose 29 percent between 2005 and 2010.

The agency found 1,032 labs with unusually high utilization in at least five measures of dubious billing in 2010. And Medicare paid $1.7 billion across all the program's labs for questionable claims. Though some labs can justify high utilization, the OIG's findings call for stricter monitoring of Medicare claims for clinical lab services.

Another key finding includes 80 percent of labs topping thresholds for five or more questionable billing metrics frequently filed claims with invalid ordering physician numbers. Nearly half these labs are located in California and Florida. Many of their billings contained compromised insurance identification numbers, the report stated. And 21 percent of these labs billed for patients living more than 150 miles from referring physicians.

One reason clinical lab services are often abused is because practitioners order them instead of providing services directly, according to The Wall Street Journal.

"Whenever you've got a set of multiple parties involved in the care of a given patient, you've got an opportunity for the dishonest to make something of it," anti-fraud consultant Bill Mahon told the WSJ.

The OIG's report dovetails with a special fraud alert about lab payments to physicians in excess of fair market value. The alert highlights risks that specimen processing and registry payment arrangements pose under the anti-kickback statute.

"The risk of fraud and abuse would be particularly high if a laboratory were to pay, and collect data for its registry from, only a subset of physicians who were selected on the basis of their prior or anticipated referral volume," the alert states.

Registry arrangements refer to laboratories establishing, coordinating or maintaining databases on patients who have certain tests, according to the law firm SheppardMullin. OIG's fraud alert focuses on labs paying doctors to submit beneficiary data into the registry and review registry reports, and arrangements prompting doctors to order needless tests to generate comparative data.

For more:
- read the OIG report and fraud alert (.pdfs)
- here's the WSJ article
- see the SheppardMullin blog post

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