On Wednesday, June 25, 2014, the Office of Inspector General (OIG) issued a Special Fraud Alert (the Alert) addressing compensation paid by laboratories to referring physicians. The latest in a series of guidance documents and advisory opinions addressing remuneration offered and paid by laboratories to referring physicians, the Alert sets out two specific problematic scenarios: “Specimen Processing Arrangements” and “Registry Arrangements.”  

The first of two problematic arrangements that OIG discussed was the collection, processing and packaging arrangements for blood specimens (Specimen Processing Arrangements). These Specimen Processing Arrangements typically involve payments from laboratories to physicians for certain duties, including collecting the blood specimens, centrifuging the specimens, etc. 

The Alert explains that the anti-kickback statute is implicated when a clinical laboratory pays a physician for Specimen Processing Arrangement services. It specifically identifies certain characteristics of a Specimen Processing Arrangement that may be evidence of unlawful purpose:

• 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.

The Alert goes on to say that the OIG’s concerns regarding Specimen Processing Arrangements are not abated when those arrangements apply only to specimens collected from non-Federal health care program patients. It is the OIG’s view that arrangements that “carve out” Federal healthcare program beneficiaries or business from otherwise questionable arrangements implicate the anti-kickback statute and may violate it by disguising remuneration for Federal health care program business through the payment of amounts purportedly related to non-Federal health care program business. OIG was careful to highlight that both the lab and physician entering the arrangement may be at risk for criminal liability under the statute. 

The second major area addressed in the Alert is the existence of Registry Arrangements, whereby clinical laboratories are establishing databases, either directly or through an agent, purportedly to collect data on the attributes of patients who have undergone certain tests performed by the offering laboratories. Registry Arrangements, no matter their form, typically involve payments from laboratories to physicians for certain specified duties. OIG’s principle concern is that the payments may induce physicians to order medically unnecessary or duplicative tests. 

OIG highlighted some characteristics of Registry Arrangements that could be evidence of an unlawful purpose, including (but not limited to):

• 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 on 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 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 it 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).

The OIG’s Alert should serve as a guide, albeit not a comprehensive one, for both laboratory companies and physicians as they establish the contractual terms that cover both specimen collection payments and payments under Registry Arrangements.