Pathology/Lab Coding Alert

Through audit and enforcement action, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) recent report demonstrates how labs continue to be affected by COVID-19-related fraud and abuse.

Context: The OIG’s Semiannual Report to Congress identifies fraudulent and abusive behavior that impacts federal healthcare programs. The agency’s most recent report focuses on incidents and actions from Oct 1, 2021, to March 31, 2022, that involve exploiting the COVID-19 public health emergency (PHE).

“OIG continues to prioritize work related to COVID-19 response and recovery. With 70 audits and evaluations underway … and the issuance of fraud alerts, OIG continues to advance the four goals … with respect to HHS’s COVID-19 response and recovery,” notes Inspector General Christi A. Grimm in the report. “These goals are to: (1) protect people, (2) protect funds, (3) protect infrastructure, and (4) promote effectiveness of HHS programs, now and into the future,” she adds.

OIG Implements COVID Testing Contracts

In January 2022, the OIG Assistant Secretary for Administration (ASA) awarded five sole source COVID-19 testing contracts, totaling $1.8 billion. The action complied with Federal regulations and contract requirements to set reasonable payment rates for COVID-19 tests.

According to the report, “ASA appropriately managed the contracts by establishing and maintaining ongoing communications with contractors, by verifying that laboratory result numbers matched the number of tests administered, and by reviewing invoices to ensure payment rates were in accordance with the contract terms and conditions.”

Lab Test Data Focuses OIG Attention

COVID-19 was a major factor in the OIG report, particularly related to Medicare. The agency points to an alarming increase in COVID testing that ran adjacent to a marked decrease in non-COVID testing for Part B beneficiaries.

The report highlighted that the feds spent $1.5 billion on COVID-19 tests in 2020, but only $1.2 billion for other tests during the same period. “In total, laboratory spending increased by 4 percent, but the decrease in utilization of non-COVID-19 tests raises concerns about potential impacts on beneficiary health,” warns the report, although it contains no recommendation.

Enforcement Hits Lab Genetic Test Fraud Schemes

Exploiting growing telehealth use during the COVID-19 PHE, a laboratory owner conspired to pay kickbacks to telemedicine providers in exchange for authorizing genetic testing orders for his lab. The case involved a $73 million conspiracy to defraud Medicare. The OIG enforcement action resulted in a sentence of 82 months in federal prison and a restitution payment of more than $61 million.

A second enforcement action involved telemarketing executives targeting elderly patients and forming a telemedicine company to bribe physicians to sign orders for cancer genetic testing (CGx). The scheme generated thousands of medically unnecessary CGx test orders, defrauding federal healthcare programs including Medicare and the Department of Veterans Affairs, and resulted in prison sentences of 78 months and 63 months for the two conspirators.

“One of the things that the OIG has discovered is the amount of telehealth schemes that have leveraged the reach of telemarketing schemes in combination with certain unscrupulous physicians conducting sham remote visits to increase the size and scale of their operations because it’s just so easy,” says Terry Fletcher, BS, CPC, CCC, CEMC, SCP-CA, ACS-CA, CCS-P, CCS, CMSCS, CMCS, CMC, QMGC, QMCRC, owner of Terry Fletcher Consulting Inc. and consultant, auditor, educator, author, and podcaster at Code Cast, in Laguna Niguel, California.

Expect Genetic Testing Scrutiny

Although not driven by the recent fraud incidents described above, the OIG Semiannual Report to Congress identifies trends in genetic tests for Medicare Part B as an area of possible concern. Based on an audit period of 2016-2019, the OIG found “that payments for genetic tests, the number of genetic tests performed, the number of laboratories that received more than $1 million for performing genetic tests, and the number of providers ordering genetic tests for beneficiaries all increased.”

The report continues, “Although there are legitimate reasons that genetic testing has increased, these increases indicate areas of possible concern, such as excessive genetic testing and fraud, which may negatively affect beneficiaries. In addition, Medicare requirements and guidance related to coverage of genetic testing have been limited and have varied among MAC jurisdictions. Oversight by CMS and the MACs is critical to prevent fraud, waste, and abuse related to genetic testing and to protect Medicare beneficiaries.” This report contains no recommendations regarding genetic testing.