Medical laboratory leaders need to take opportunities to stay abreast of government and payer activity, particularly as payer audits become tougher, say legal experts
Even compliant clinical laboratories and anatomic pathology groups are reporting tougher audits and closer scrutiny of the medical lab test claims they submit for payment. This is an unwelcome development at a time when falling lab test prices, narrowing networks, and more prior-authorization requirements are already making it tough for labs to get paid for the tests they perform.
Clinical laboratory leaders can expect continued scrutiny of
their labs’ operations and financials as government and commercial payers move
forward with invasive programs and policies designed to ferret out fraud and
bad actors.
Federal officials are focusing their investigations on healthcare providers who mismanage or inappropriately use Medicare and Medicaid programs, while commercial payers are closely scrutinizing areas such as genetic testing prior authorization, say healthcare attorneys with Cleveland Ohio-based McDonald Hopkins, LLC.
“The government is looking at fraud, waste, and abuse, and all the different ways they come into play,” said Elizabeth Sullivan, Esq., a Member and Co-Chair of the firm’s Healthcare Practice Group, in an exclusive interview with Dark Daily. “We anticipate there will be more enforcement [of fraud and abuse laws] centered around different issues—anything that can be a false claim.”
Specifically, government officials will key in on violations of the Stark Law, EKRA (the Eliminating Kickback in Recovery Act of 2018), and other anti-kickback statutes and laws, Sullivan said.
“And clinical laboratories, by virtue of the type of
services and service arrangements they offer, will continue to be a target,” she
added.
Medical laboratory leaders also must prepare for aggressive tactics by insurance companies. “On the commercial side, payers are getting more aggressive and more willing to take things to ligation if they don’t get what they want and don’t see a settlement that satisfies their concerns over issues,” said Courtney Tito, Esq., also a Member with McDonald Hopkins, in the Dark Daily interview.
Current Investigations Likely to Impact Clinical
Laboratories
Sullivan and Tito advise clinical labs to be aware of the
following issues being fast-tracked by government and private payers:
EKRA (Eliminating Kickback in Recovery Act of 2018).
The TPE audits program, according to CMS, is focused on providers with high claim error rates or unusual billing practices. During a TPE, a Medicare administrative contractor (MAC) works with a provider to identify and correct errors.
“The TPE audits are real hot right now. We are seeing a lot
of clients go through this,” Tito said.
Feds Crack Down on Genetic Testing Fraud Schemes
Genetic testing is another “hot button” issue for
enforcement by government and private payers, Sullivan and Tito state.
CMS is taking action against testing companies and
practitioners who submitted more than $1.7 billion in claims to Medicare, the
statement added.
The scheme involved medical laboratories conducting the genetic tests, McDonald Hopkins noted in an Alert about the DOJ investigation. The alert described how the scam operated:
Scam recruiters approached Medicare
beneficiaries at health fairs;
In exchange for a DNA sample (in the form of a
cheek swab) and a copy of the victim’s driver’s license, the “representative”
offered a free genetic test;
Representatives allegedly asked the seniors’
doctors to sign-off on test orders. If the seniors’ physicians refused, the
scammers offered kickbacks to doctors already in their group;
Clinical laboratories that performed the tests
were reimbursed from Medicare and, allegedly, shared the proceeds with the scammers.
“Although these opportunities may seem appealing as an
additional revenue source for providers, it is always important to review the
regulatory requirements as well as the potential anti-kickback statute and
Stark implications for any new arrangement,” Sullivan and Tito wrote in the McDonald
Hopkins Alert article.
Criminal Behavior in CMS Programs
Effective Nov. 4, 2019, CMS issued a final rule intended to stop fraud before it happens by keeping “unscrupulous providers” out of the federal healthcare programs in the first place, states a CMS news release.
Additionally, EKRA establishes “criminal penalties for unlawful payments for referrals to recovery homes and clinical treatment facilities,” Dark Daily recently reported. However, as the e-briefing points out, it is unclear whether EKRA applies to clinical laboratories.
Nevertheless, Sullivan points out that, “Even without EKRA,
the anti-kickback statute applies to any arrangement between individuals. And,
it is good to have an attorney look at those arrangements. What your sales reps
are doing in the field, how they are communicating, and their practices warrant
oversight. EKRA just makes it all the more important.”
Clinical Laboratories Need Compliance Plan, Focus on
Payers
With so many legal requirements and payer programs, Sullivan
advises medical labs and pathology group practices to work with resources they
trust and to have a compliance plan at the ready. “Have resources in place,
including but not limited to a compliance officer, a committee, and someone who
is spending time on these issues. Monitoring government enforcement and payer
activity is the most critical,” she said.
To assist labs in remaining fully informed on these critical
compliance topics, and the federal government’s latest legislation to combat
fraud, Dark Daily is offering a webinar on November 20th at 1pm Eastern
time. Sullivan and Tito will offer their insights and advice on how labs should
prepare for CMS’ battle to reign in fraud and commercial payers’ increased
scrutiny into prior authorizations.
Clinical laboratory leaders, compliance officers, and
finance staff will benefit greatly from this crucial resource.
This is not the first time genetic-testing company Orig3n has been scrutinized by state and federal investigators over its business practices
It’s not often that multiple employees of a clinical laboratory company go public with criticism about the quality of their lab company’s tests. But that is what is happening at Orig3n. Problems at the Boston-based genetic testing company were the subject of an investigative report published by Bloomberg Businessweek (Bloomberg).
In September, Bloomberg reported that 17 former Orig3n employees said the company’s Deoxyribonucleic acid (DNA) tests sometimes failed to deliver the intended results or were often contaminated or inaccurate. The individuals had been employed by the company as managers, lab technicians, software engineers, marketers, and salespeople between 2015 and 2018.
The former employees claimed that Orig3n “habitually cut
corners, tampered with or fabricated results, and failed to meet basic
scientific standards,” Bloomberg reported. The individuals also stated
that advice intended to be personalized to individual consumers’ genetic
profiles was often just generic information or advice that had no scientific
basis.
According to Bloomberg, the individuals also alleged
that Orig3n’s lab was careless in its handling of genetic samples in several
ways, including:
Multiple samples being labeled with the same
barcode;
DNA and blood samples for stem cell bank
misplaced or mixed up;
No controls to ensure accuracy;
Handling methods that could lead to
contamination; and
Fabricating results when a test outcome was
unclear.
The former employees also stated that “Orig3n ran tests without proper authorization in its lab at the 49ers’ stadium, and that managers regularly compelled them to write positive reviews of Orig3n’s tests on Amazon.com and Google to offset waves of negative feedback,” Bloomberg reported.
“Accurate science didn’t seem to be a priority. Marketing
was the priority,” said a former lab technician who spoke with Bloomberg
on the condition of anonymity. Orig3n denied the accusations in a statement,
describing them as “grossly inaccurate,” and claimed the former employees were
simply disgruntled.
“In some cases, former employees are former employees for a reason,” Orig3n Chief Executive Officer Robin Smith told Bloomberg. “We’ve found after employees are gone that they have not done things appropriately.”
Is it Dog or Human DNA?
In 2018, NBC Chicago(NBC) conducted an investigation into various consumer DNA testing kits. NBC sent DNA samples to several different testing companies. This included non-human samples, which NBC’s investigators had obtained from a female Labrador Retriever.
With the exception of Orig3n, all of companies identified
the DNA as non-human and did not process the kits. Orig3n did, however, process
the canine DNA. It then returned a seven-page analysis that suggested the
subject of the sample “would probably be great for quick movements like boxing
and basketball, and that she has the cardiac output for long endurance bike
rides or runs,” NBC reported.
This would be funny if it weren’t so concerning.
Following reports that it had processed dog DNA, Orig3n stated
it had made changes and improvements to the company’s testing methodologies. Smith
also stated Orig3n’s lab protocols had been improved as well.
“Sometimes we look at the accuracy of things and go, ‘Man,
that’s not working,’” Smith told Bloomberg. “Our approach and our
philosophy is [sic] to constantly improve the products.”
Serious Accusations of Clinical Laboratory Malfeasance
Founded in 2014 with the intent of creating the world’s largest stem cell bank, by 2016, Boston-based Orig3n had refocused its attention on the burgeoning field of direct-to-consumer DNA testing. On its website, Orig3n sells several DNA-testing kits with varying costs.
Orig3n’s attempt to offer free genetic tests to large numbers of people at a professional sporting event in the fall of 2017 may be what caught the attention of federal investigators and led to a deeper investigation. Dark Daily previously covered this controversy, which centered around Orig3n’s plan to distribute free genetic testing kits to fans at a Baltimore Ravens football game.
In that situation, state and federal healthcare regulators blocked the giveaway over concerns about protected health information (PHI). Now, Orig3n is being accused of questionable business practices by 17 of its former employees.
The former employees’ statements that the company’s genetic
testing lab did not follow appropriate test protocols—and that it allegedly
mishandled specimens and even reported false test results—are serious
allegation of malfeasance and warrants an investigation.
Pathologists and clinical laboratory managers know that patient
harm can potentially result from inaccurate genetic test results if used for
clinical purposes. Dark Daily will continue to follow the investigation
into Orig3n.
Medical fraudsters are targeting Medicare recipients with schemes to persuade them to agree to genetic tests advertised as informing them if they are predisposed to specific chronic diseases or cancer
Medicare scams involving orders for unnecessary, expensive testing are not new. However, clinical laboratory managers and anatomic pathologists need to be aware—particularly those working in hospital and health system labs—that an entirely new wave of fraud involving medical laboratory testing is gaining momentum. This time, instead of specialty cardiology, toxicology, and pain management testing, the scam involves genetic tests.
The shifting focus to genetic tests by fraudsters is a
recent development to which many hospital-based medical laboratory
professionals may be unaware. One reason that the hospital lab managers can be
extraordinarily compliant with federal and state laws is because they don’t
want to threaten the license of their hospital. So, hospital lab staff often
are unaware of the types and extent of fraud involving certain lines of clinical
lab testing that surface in the outpatient/outreach market.
The growing number of fraudulent activities associated with genetic tests is now an issue for federal healthcare fraud investigators. Former US attorney Robert M. Thomas, Jr., a whistleblower attorney, adjunct professor at Boston University School of Law, and a civil rights advocate, wrote in STAT, “What’s going on here is the same pattern of activity that has occurred throughout the healthcare system: a great majority of law-abiding actors and a few that seek out opportunities to game the system of government reimbursement. If you can get a saliva swab and a Medicare number [to provide a specimen for a genetic test] from an unsuspecting senior and falsify a doctor’s order (or find a shady doctor to write one), there’s an easy four-figure sum to be had.”
This aligns with a recent fraud alert from the US Department of Health and Human Services Office of Inspector General (OIG) that states: “Scammers are offering Medicare beneficiaries ‘free’ screenings or cheek swabs for genetic testing to obtain their Medicare information for identity theft or fraudulent billing purposes. Fraudsters are targeting beneficiaries through telemarketing calls, booths at public events, health fairs, and door-to-door visits.
“Beneficiaries who agree to genetic testing or verify
personal or Medicare information may receive a cheek swab, an in-person
screening or a testing kit in the mail, even if it is not ordered by a
physician or medically necessary.
“If Medicare denies the claim, the [Medicare] beneficiary
could be responsible for the entire cost of the test, which could be thousands
of dollars.”
How the Scam Works
As with similar fraud cases, the scamsters pay inducements
to often-unaware patients, physicians, and others to encourage an order for a
genetic test. They then bill federal health programs and private insurers at
inflated prices.
Thomas describes one such scenario used to increase genetic
test orders. “A typical scheme might go something like this: A scammer offers
free ice cream sundaes, gift cards, or even casino chips at a retirement
community or ‘Medicare expo’ for anyone who would like to hear about the
exciting new technology of genetic testing and what it might reveal about ‘your
family’s risk of cancer’ or some other come-on,” explained Thomas. “The scammer
describes this sophisticated technology and downplays or ignores the medical
necessity criteria and the need for a doctor’s order. He or she persuades some
attendees to provide saliva samples and gets identifying information, such as
the senior’s name, date of birth, and Medicare number.
“The scammer then approaches a testing lab, saying, ‘I can find you a lot more business and get you a lot more patients if you share the proceeds with me.’ This, of course, violates the federal anti-bribery law known as the Anti-Kickback Act. But the lure of high-volume profits can be strong enough for some to ignore that roadblock,” he noted.
What Medical Laboratories Need to Know about Fraud and
Genetic Tests
Regardless of how the fraudster proceeds—whether asking the
lab company outright to split profits or by simply sending a high volume of the
same genetic test to the lab without explanation—clinical laboratory managers
should be alert to such activities.
Thomas writes: “An ethical lab would detect that something
is amiss with such a request [involving a genetic test]. An alert lab might
question how an individual, who is not a doctor, has gotten so many saliva
samples and [so much] personal information from so many ‘patients.’ Other [genetic
testing] lab companies may simply play the game without asking enough
questions, or worse, knowing that the tests are not medically necessary, as
required by the rules. The promise of easy money can be just too alluring.”
Physicians and medical laboratories that participate in
these scams are in violation of the federal anti-bribery laws. In “Federal
Investigations into Alleged Kickback Schemes between Hospitals and Physicians
Increase in Number and Scope,” Dark Daily reported on new OIG
investigations into hospitals alleged to have violated anti-kickback
legislation.
Current Cases Involving Genetic Testing Scams
Fraudulent medical test ordering schemes are an ongoing problem that Dark Daily has repeatedly covered. Though the genetic testing aspect is relatively new, there are several recent and current cases that outline the consequences of participating in the new scam.
For example, in February GenomeDx Biosciences Corp. (GenomeDx) agreed to pay $1.99 million to settle a federal case regarding unnecessary genetic testing. In this case, post-operative prostate cancer patients were given a genetic test called Decipher even though they “did not have risk factors necessitating the test,” a Department of Justice (DOJ) press release states. The DOJ claimed GenomeDx fraudulently billed Medicare for the tests, violating the False Claims Act.
A similar federal case involved a doctor who was charged with ordering genetic tests for patients he never saw or treated. Though the doctor was licensed to practice medicine in Florida, the “patients” in question resided in Oklahoma, Arizona, Tennessee, and Mississippi. One patient testified to having responded to a Facebook ad that offered a $100 gift card “for people interested in genetic testing,” a press release from the US Attorney’s Office District of New Jersey stated.
One important recommendation is that medical laboratory
professionals learn how to spot and question potentially fraudulent testing
requests. This shift to genetic testing is just the latest threat. Even clinical
labs that are well prepared could be caught unaware, particularly if the
fraudster sends genetic test orders to multiple labs to process what are
probably medically-unnecessary tests.
Clinical laboratories may soon find opportunities to assist retail pharmacists who are doing genetic test counseling, as employers’ support of genetic testing advances
In another market example of acceptance of genetic tests by major employers, a new pilot program is underway by Kroger Prescription Plans that offers GeneSight by Myriad Genetics as a benefit. GeneSight is an LDT, a laboratory-developed pharmacogenomic test, used to treat psychiatric disorders, such as depression.
As part of the agreement with Myriad Genetics, Inc. (NASDAQ:MYGN), pharmacists at more than 2,300 Kroger stores will offer counseling about GeneSight to eligible employees and coordinate the testing with referring healthcare providers, according to a news release.
Clinical laboratory leaders and clinical pathologists will want to observe these early steps by Kroger to offer genetic tests and genetic test counseling in a retail pharmacy setting. If the GeneSight benefit option and in-store pharmacy interventions prove popular, Kroger Prescription Plans may soon offer other genetic tests, as well.
Kroger Not the Only Pharmacy to Offer Genetic Tests and
Counseling
Headquartered in Cincinnati, Ohio, Kroger (NYSE:KR) is the largest supermarket chain in the US and the country’s fourth-largest employer. Kroger Prescription Plans—a pharmacy benefit manager (PBM)—provides pharmacy management services and clinical programs to employers, including Kroger, in 32 states. But it’s not the only pharmacy company to offer genetic tests and genetic counseling.
Last year Albertsons Companies and Genomind, a personalized medicine platform, launched Genecept Assay (now known as Professional PGx)—a genetic test designed to help doctors make informed treatment decisions for their mental health patients—as well as pharmacy-based genetic counseling at select Albertsons and its subsidiaries, according to Supermarket News.
Participating locations include:
21 Sav-On pharmacies at Albertsons in Boise,
Idaho;
Five Jewel-Osco pharmacies in the Chicago area;
and
Two Sav-On pharmacies at Acme supermarkets in
the Philadelphia area.
The Albertsons-Genomind partnership is aimed at patients who
may be struggling with a medication for depression, anxiety,
obsessive-compulsive disorder, or other mental illnesses. Patients can receive
counseling from “specially trained pharmacists” who work with referring
clinicians to offer [Professional PGx], noted Supermarket News.
Pharmacists as Genetic Test Counselors?
Pathologists and medical laboratory leaders may be intrigued
by the concept of putting pharmacists into the role of a genetic test
counselor. However, pharmacists may need to increase their knowledge of
pharmacogenomics, reported Drug
Topics.
“The science advances in the field are just making it more
critical that pharmacists have a really strong understanding of how to blend [pharmacogenomics]
into their training,” Kathleen Jaeger,
National Association of Chain Drug Stores
(NACDS) Senior Vice President of Pharmacy Care and Patient Advocacy, told Drug
Topics.
However, some see pharmacists as the natural experts in the space. “In my opinions, [pharmacists] should be the people who own pharmacogenetics. It’s a relatively new field, and who better than pharmacists to optimize drug therapy?” Daniel Dowd, PharmD, Vice President of Medical Affairs at Genomind, told Drug Topics.
Pharmacists will need to be proactive in working with companies that provide genetic testing, according to a Managed Health Care Connect Pharmacy Learning Network analysis, which also indicated billing for pharmacists’ informational services would need to be addressed.
“These opinions about this type of role for pharmacists will not be what pathologists want to hear,” stated Robert L. Michel, Editor-In-Chief of The Dark Report, Dark Daily’s sister publication. “Pathologists have had the role of the ‘doctor’s doctor’ for decades. Pathologists are trained in how to recognize disease, how to determine which medical laboratory tests are appropriate for the symptoms displayed by a patient, and how to interpret the results to select the best therapies.
“Additionally, pathologists are trained to understand the
technical performance of clinical laboratory tests, such as whether the sample
was of acceptable quality to produce a reliable result, whether the analyzer
that produced a result was performing within specifications, and what factors
should be considered in tandem with the lab test results when making a
diagnosis,” he explained. “It is easy to see why the pathology profession would
argue that pharmacists lack this depth of knowledge and experience when
ordering and interpreting medical laboratory tests. How the pathology
profession will respond to these developments involving pharmacists,
interpretation of genetic test results, and counseling patients is not yet
clear.”
Opportunities for Clinical Laboratories to Assist
Pharmacies
Additionally, we suggested, clinical laboratory leaders and
pathologists could find opportunities helping others understand the results of
the genetic tests.
The recent partnerships between genetic test companies and
corporate retail pharmacies suggest that clinical laboratories could benefit
from reaching out to pharmacists who are now at a point-of-care and who may be
looking to improve their knowledge of pharmacogenomics.
For blood brothers Quest and LabCorp this is good news, since the two medical laboratory companies perform most of the testing for the biggest DTC genetic test developers
Should clinical laboratories be concerned about direct-to-consumer (DTC) genetic tests? Despite alerts from healthcare organizations about the accuracy of DTC genetic testing—as well as calls from privacy organizations to give DTC customers more control over the use of their genetic data—millions of people have already taken DTC tests to learn about their genetic ancestry. And millions more are expected to send samples of their saliva to commercial DTC companies in the near future.
This growing demand for at-home DTC tests does not appear to be subsiding. And since most of the genetic testing is completed by the two largest lab companies—Quest Diagnostics (NYSE:DGX) and Laboratory Corporation of America (NYSE:LH)—other medical laboratories have yet to find their niche in the DTC industry.
Another factor is the recent FDA authorization allowing DTC company 23andme to report the results of its pharmacogenetic (PGx) test directly to customers without requiring a doctor’s order. For these reasons, this trend looks to be gaining momentum and support from federal governing organizations.
Dark Daily has
reported on DTC genetic
testing for many years. According to MIT’s Technology Review, 26 million people—roughly
8% of the US population—have already taken at-home DNA tests. And that number
is expected to balloon to more than 100 million in the next 24 months!
“The genetic genie is out of the bottle. And it’s not going
back,” Technology Review reports.
The vast majority of the genetic information gathered goes into the databases of just four companies, with the top two—Ancestry and 23andMe—leading by a wide margin. The other two major players are FamilyTreeDNA and MyHeritage, however, Ancestry and 23andMe have heavily invested in online and television advertising, which is paying off.
As more people add their data to a given database, the likelihood they will find connections within that database increases. This is called the Network Effect (aka, demand-side economies of scale) and social media platforms grow in a similar manner. Because Ancestry and 23andMe have massive databases, they have more information and can make more connections for their customers. This has made it increasingly difficult for other companies to compete.
Quest Diagnostics and LabCorp do the actual gene sequencing
for the top players in the DTC genetic testing sector. The expected wave of new
DTC genetic test costumers (74 million in the next 24 months) will certainly
have a beneficial revenue impact on those two lab companies.
Why the Explosion in Genetic
Testing by Consumers?
In 2013, just over 100,000 people took tests to have their
DNA analyzed, mostly using Ancestry’s test, as Dark Daily reported. By 2017, that
number had risen to around 12 million, and though Ancestry still had the
majority market share, 23andMe was clearly becoming a force in the industry,
noted Technology Review.
And now there are several health-related reasons as well. For
example, the study of pharmacogenetics has led clinicians to understand that
certain genes reveal how our bodies process some medications. The FDA’s clearance
allows 23andMe to directly inform customers about “genetic variants that may be
associated with a patient’s ability to metabolize some medications to help
inform discussions with a healthcare provider. The FDA is authorizing the test
to detect 33 variants for multiple genes,” the FDA’s press
release noted.
Controversy Over DTC
Genetic Tests
The use of DTC genetic tests for healthcare purposes is not without scrutiny by regulatory agencies. The FDA removed 23andMe’s original health test from the market in 2013. According to Technology Review, the FDA’s letter was “one of the angriest ever sent to a private company” and said “that the company’s gene predictions were inaccurate and dangerous for those who might not fully understand the results.”
23andMe continues to refine its DTC tests. However, the debate continues. In February of this year, the New York Times (NYT) editorial board published an op-ed warning consumers to be wary of health tests offered by 23andMe, saying the tests “look for only a handful of [genetic] errors that may or may not elevate your risk of developing the disease in question. And they don’t factor into their final analysis other information, like family history.”
Anne Wojcicki, CEO and co-founder of 23andMe, responded with her own op-ed to the NYT, titled, “23andMe Responds: Empowering Consumers.” In her letter, Wojcicki contends that people should be empowered to take control of their own health, and that 23andMe allows them to do just that. “While 23andMe is not a diagnostic test for individuals with a strong family history of disease, it is a powerful and accurate screening tool that allows people to learn about themselves and some for the most common clinically useful genetic conditions,” she wrote.
Nevertheless, privacy concerns remain:
Who owns the results, the company or the
consumer?
Who can access them?
What happens to them a year or five years after
the test is taken?
When they are sold or used, are consumers
informed?
Even as experts question the accuracy of DTC genetic testing
in a healthcare context, and privacy concerns continue to grow, more people
each year are ordering the tests. With predictions of 74 million more tests
expected in the next 24 months, it’s certain that the medical laboratories that
process those tests will benefit.