Anti-Kickback Laboratory Enforcement Actions – Special Fraud Alert


There has been significantly enhanced scrutiny of financial relationships between referring physicians by both the Office of Inspector General (OIG) and Pennsylvania authorities.


Pennsylvania enacted amendments to the Pennsylvania Clinical Laboratory Act on December 18, 2013 (the amendments are referred to as Act 122) and the Department of Health and Bureau of Laboratories just issued additional guidance on May 28, 2014 in the form of a Letter and Frequently Asked Questions.

Under Act 122 it is generally unlawful for clinical laboratories to:

  • Pay or receive a commission, bonus, kickback or rebate or engage in a split-fee arrangement in any form with a health care provider/practitioner.
  • Lease or rent space, shelves or equipment or other services within a health care provider’s/practitioner’s office. This includes leasing or renting space for the purpose of establishing a specimen collection station.
  • Directly or indirectly provide personnel to perform functions or duties within a health care provider’s/practitioner’s office for any purpose regardless of whether fair market value is offered or given.
  • Permit the placement of paid or unpaid personnel to perform services (e.g., specimen collection, processing, packaging or handling or genetic counseling) in a health care provider’s/practitioner’s office.


Act 122 also contains three enumerated exceptions to these prohibitions:

  1. A health care provider/practitioner that owns and operates its own clinical laboratory may place its employees in the clinical laboratory.
  2. A clinical laboratory licensed by the Department can refer specimens to another clinical laboratory licensed by the Department or to a CLIA-accredited or certified clinical laboratory.
  3. Clinical laboratories are allowed to own or invest in a building in which space is leased or rented for adequate and fair consideration to health care providers/practitioners.

Federal Enforcement

On June 25, 2014 the Office of Inspector General issued a “Special Fraud Alert: Laboratory Payments to Referring Physicians”.

The OIG has been monitoring physician and laboratory relationships since issuing a Special Fraud Alert on arrangements for the provision of clinical laboratory services in 1994. This new fraud alert addresses two areas:

  1. Blood-specimen collection, processing and packaging arrangements; and
  2. Registry payments.

Specimen Processing Arrangements

The OIG states that characteristics of a questionable specimen processing arrangement may be evidence of unlawful purpose include but are not limited to the following:

  • Payment exceeds fair market value for services actually rendered by the party receiving the payment.
  • 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 to the ordering physician’s group practice, which may bear the cost of collecting and processing the specimen.
  • Payment is made on a per-specimen basis for more than one specimen collected during 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 offered on the condition that the physician order either a specified volume or type of tests or test panel, especially if the panel includes duplicative tests (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information), or tests that otherwise are not reasonable and necessary or reimbursable.
  • Payment is made to the physician or the physician’s group practice, despite the fact that the specimen processing is actually being performed by a phlebotomist placed in the physician’s office by the laboratory or a third party.

Registry Payments

The OIG has become of arrangements under which clinical laboratories are establishing, coordinating or maintaining databases and paying physicians to collect this information under the alleged guise of research and categorizing these payments as “registry arrangements”.

Characteristics of the registry agreement may be evidence of such unlawful purpose include, but are not limited to the following:

  • The laboratory requires, encourages, or recommends that physicians who enter into Registry Arrangements perform the tests with a stated frequency (e.g., four times per year) to be eligible to receive, or to not receive a reduction in, compensation.
  • The laboratory collects comparative data for the Registry from, and bills for, multiple tests that may be duplicative (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information) or that otherwise are not reasonable and necessary.
  • Compensation paid to physicians pursuant to Registry Arrangements is no a per-patient or other basis that takes into account the value or volume of referrals.
  • Compensation paid to physicians pursuant to Registry Arrangements is not fair market value for the physicians’ efforts in collecting and reporting patient data.
  • Compensation paid to the physicians pursuant to Registry Arrangements is not supported by documentation, submitted by the physicians in a timely manner, memorializing the physicians’ efforts.
  • The laboratory offers Registry Arrangements only for tests (or disease states associated with tests) for which is has obtained patents or that it exclusively performs.
  • When a test is performed by multiple laboratories, the laboratory collects data only from the tests it performs.
  • The tests associated with the Registry Arrangement are presented on the offering laboratory’s requisition 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).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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