On June 25, the Department of Health and Human Services Office of the Inspector General (OIG) issued "Special Fraud Alert: Laboratory Payments to Referring Physicians." This fraud alert represents at least the fourth time that OIG has singled out the laboratory-referring physician relationship for its focused attention.

The OIG has repeatedly emphasized that a lab providing free or below-market goods or services to a physician who is a source of referrals, or paying a physician more than fair market value for his or her services, could constitute illegal remuneration under the federal anti-kickback statute.

This new fraud alert supplements the prior anti-kickback statute guidance on laboratories compensating referring physicians or physician group practices for (1) blood specimen collection, processing and packaging ("specimen processing arrangements") and (2) for submitting patient data to a registry.

In light of this special fraud alert, physicians and laboratories should review any compensation arrangements that they may have as the OIG will be paying particular attention to such relationships.

1. Blood-specimen collection, processing and packaging arrangements

The OIG is aware that clinical laboratories provide remuneration — directly or indirectly — to physicians in specimen processing arrangements. The OIG believes the following characteristics may be evidence that such arrangement has an unlawful purpose and constitutes an anti-kickback statute violation:

  • Payment exceeds the fair market value of services provided by physicians;
  • Payment is for physician services, for which payment is also provided by a third party;
  • Payment for services is made to a physician or physician group practice, but services are actually provided by a phlebotomist, who is paid by a third party or the laboratory;
  • Payment is made directly to the ordering physician, not the physician's group practice; or
  • Payment is made on a basis that takes into account, or is conditioned upon, the volume or value of services, like on a per-patient, per-test basis or the condition that a physician orders a specified volume of tests.

Physicians may properly bill Medicare for collecting and processing blood specimens under certain conditions. (see:CPT Code 36415 "Routine venipuncture — Collection of venous blood by venipuncture" and CPT Code 99000 "Handling and/or conveyance of specimen for transfer from office to a laboratory.")

2. Registry payments

The OIG is aware that clinical laboratories provide remuneration to physicians for assistance in establishing, coordinating or maintaining databases that purportedly "collect data on the demographics, presentation, diagnosis, treatment, outcomes or other attributes of patients who have undergone, or who may undergo, certain tests performed by the offering laboratories."

The OIG believes that the following characteristics may be evidence that a registry arrangement has an unlawful purpose and constitutes an anti-kickback statute violation:

  • Physicians are required or encouraged to perform tests with a stated frequency to be eligible for compensation;
  • Physicians are compensated on a basis that accounts for volume or value of referrals, such as a per-patient basis;
  • Physicians receive more than fair market value for their services;
  • Physicians' compensation is not supported by timely documentation, nor memorialized;
  • The registry arrangement is limited to tests for which a laboratory has patents or tests that it performs exclusively;
  • For tests that can be performed at multiple labs, the laboratory only collects data from tests that it performs;
  • The laboratory collects comparative data for the registry from, and bills for, multiple tests that may be duplicative or not reasonable and necessary; or
  • The registry arrangement's relevant tests are offered "in a manner that makes it more difficult for the ordering physician to make an independent medical necessity decision with regard to each test for which the laboratory will bill (e.g., disease-related panels)."

The anti-kickback statute does not prohibit laboratories compensating physicians for aiding in legitimate research activities. However, neither claims that the arrangement supports clinical research nor approval by an independent review board regarding the study's protocols will protect a registry arrangement from liability if one purpose of the arrangement is to induce or reward referrals.