OIG Special Fraud Alert on Laboratory Payments to Referring Physicians


On June 25, 2014, the Office of Inspector General (OIG) published a Special Fraud Alert titled “Laboratory Payments to Referring Physicians” in which it addresses compensation arrangements and potential anti-kickback statute concerns between laboratories and physicians (including physician group practices).  In the report, OIG emphasizes two types of lab/physician arrangements that could present a substantial risk of fraud and abuse.  These include blood-specimen collection, processing, and packaging arrangements (“Specimen Processing Arrangements”) and arrangements involving the submission of patient data to a registry or database (“Registry Arrangements”).  OIG’s concerns with these types of arrangements stem from the fact that patients tend to have limited input in selecting a laboratory or test and physicians typically can make or influence such decisions.  

With respect to Specimen Processing Arrangements, OIG sets forth a non-exhaustive list of factors that may evidence an unlawful purpose, such as 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, but the group practice 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 a specified volume or type of tests or a 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 third party.

OIG also emphasizes that the potential risks associated with the Specimen Processing Arrangement are not mitigated when those arrangements apply only to specimens collected from non-Federal health care program patients.  Carve out arrangements could implicate the anti-kickback statute by “disguising remuneration for Federal health care program business through the payment of amounts purportedly related to non-Federal health care program business.”

With respect to Registry Arrangements, OIG explains that labs often assert that they are intended to advance clinical research to promote treatment, and that payments from a lab to a physician for services related to data collection and reporting may be reasonable in only limited circumstances.  According to OIG, factors that may be evidence of unlawful conduct include without limitation 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 not to receive a reduction in, compensation.
  • The laboratory collects comparative data for the Registry form, 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.
  • 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 test it performs.

OIG provides that the Special Fraud Alert, available here, reiterates the agency’s longstanding concerns about laboratory and physician relationships. 

Reporter, Juliet M. McBride, Houston, +1 713 276 7448, jmcbride@kslaw.com.


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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