By Jeff Overley
Law360, New York (March 25, 2015, 3:03 PM ET) — A laboratory’s proposal to waive fees for certain patients referred by physician practices could violate the Anti-Kickback Statute and result in serious discipline, according to an opinion released Wednesday by the Office of Inspector General at the U.S. Department of Health and Human Services.
The advisory opinion addressed an unnamed laboratory chain’s request for feedback on whether waiving some fees in exchange for receiving all referrals from physician practices would raise kickback concerns, and it concluded that problems would indeed arise.
Under the lab’s proposed arrangement, fees would be waived for patients referred by practices that have exclusive agreements with insurers to only use a particular lab. For other patients, such as those with government health care benefits, regular fees would apply.
According to the OIG, that situation presents the potential for kickbacks because the practices would benefit from the convenience of working with a single lab. In addition, the use of lab interfaces that electronically transmit test results typically leads to extra billing of practices by vendors of electronic health records, and that billing would be reduced if only one lab were used.
“The proposed arrangement could relieve physician practices of this expense for any interface that the physician practice no longer would maintain,” the OIG said. “Thus, under the proposed arrangement, by declining to charge certain patients, the [lab] would offer physician practices a means to work solely with the requestor, reducing administrative and possibly financial burdens associated with using multiple laboratories.”
As a result, there is reason to believe that the lab would be offering services of value in order to induce referrals, which could result in the lab being hit with sanctions or even being excluded from Medicare, the inspector general said. The OIG added that its conclusion was reached in part because no obvious quality or safety improvements would derive from the lab’s arrangement and because no safeguards were proposed to reduce the risk of improper billing.
“In fact, the requestor’s proposed actions could result in inappropriate steering of patients, including federal health care program beneficiaries,” according to the opinion.
A separate problem would stem from the fact the waiving fees for some patients means that Medicare and Medicaid would often be charged “substantially in excess” of the rates charged to other payors, likely violating a federal ban on such disparities, the OIG said.
Although there is wiggle room in federal law for modest differences in rates, the lab’s proposal “would completely relieve patients and their exclusive [insurance] plans of any obligation to pay, in order to pull through all of the federal health care program business, which would be charged at the full rate,” the opinion noted.
Wednesday’s opinion joins a long line of OIG advisories over the years concerning lab business practices, and it also calls to mind a “special fraud alert” that the inspector general issued last year regarding lab payments to referring doctors.
–Editing by Christine Chun.