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The Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services recently issued a Special Fraud Alert (“Alert”) that addresses two types of arrangements that the OIG believes pose a substantial risk of fraud and abuse: (1) blood-specimen collection, processing and packing arrangements (“Specimen Processing Arrangements”) and (2) data collection, submission and review services for laboratory registries (“Registry Arrangements”).

The Alert highlights the OIG’s continuing concern that some laboratories may be entering into these arrangements to generate business from referring physicians that potentially violate the federal Anti-Kickback Statute. Clinical laboratories and physicians using such arrangements should examine their practices and consider whether they should be restructured as Specimen Processing and Registry Arrangements are now considered “inherently suspect” by the OIG, which will undoubtedly intensely scrutinize such arrangements.

Specimen Processing Arrangements

The Alert first addresses Specimen Processing Arrangements, which are arrangements where laboratories, either directly or indirectly, though marketing or other agents, pay physicians to collect, process and package patient blood specimens. Often this may involve expensive or specialized tests that require centrifuging or special storage/packaging efforts to ensure the integrity of the sample during transport. Payments are typically made on a per-specimen or per-patient-encounter basis. Suspect Specimen Processing Arrangements may feature one or more of the following characteristics:

  • Payment that exceeds fair market value for services actually rendered by a physician;
  • Payment is for services for which payment is also made by a third party, such as Medicare;
  • Payment is made directly to the ordering physician, rather than the physician’s group practice, which more likely bears the processing costs;
  • Payment is made on a per-specimen basis for more than one specimen collected in a single patient encounter, or on a per-test, per-patient, or other basis that takes into account the volume or value of referrals;
  • Payment is conditioned on a specified volume of tests or test panel, especially if the panel includes duplicative tests; and
  • Payment made to the physician or group practice, even though the specimen collection is performed by an in-office phlebotomist.

Registry Arrangements

The OIG also addresses Registry Arrangements – payments by clinical laboratories to physicians for collecting, submitting and reviewing patient data in registries established by laboratories to collect data on the demographics, presentation, diagnosis, treatment, outcomes or other attributes of patients who have or will undergo tests offered by the laboratory. According to the OIG, Registry Arrangements may induce physicians to order medically unnecessary or duplicative testing or to refer to laboratories that offer Registry Arrangements in lieu of more clinically superior laboratories. The following characteristics may signal questionable Registry Arrangements:

  • Arrangements that require a physician to perform tests with a stated frequency, that do not require appropriate documentation of the physician’s services, do not reflect fair market value or that pay on a per-patient basis, or vary with the volume or value of referrals;
  • Laboratories collecting comparative data and billing for tests that may be duplicative or are not reasonable and necessary;
  • Registry Arrangements that are only offered for proprietary tests or disease states associated with those tests; and
  • Tests on the registry are presented in a panel format on a requisition form, making it difficult for the physician to make an independent decision about which tests are medically necessary.

Carving Out Federal Health Care Program Business

Significantly, the OIG once again emphasized that even if payments under a Specimen Processing Arrangement or Registry Arrangement carve out Medicare, Medicaid and other federal health care program business, suspect arrangements may still implicate the Anti-Kickback Statute by disguising remuneration for federal health care program business through the payment of amounts purportedly related to non-federal health care program business.