The DOJ recently announced that Boston Heart Diagnostics Corporation (Boston Heart) has agreed to pay a $26.67 million settlement related to alleged violations of the Federal Anti-Kickback Statute and the Stark Law. This settlement with the Massachusetts-based laboratory specializing in advanced lipid testing stemmed from a DOJ investigation as well as two qui tam lawsuits filed in the District of Columbia and the Eastern District of California. Boston Heart allegedly engaged in kickback schemes designed to provide remuneration to doctors in exchange for referrals, including providing services to hospitals in exchange for per-test payments; paying physicians excessive processing and handling fees; waiving patient copayments and deductibles; inflating billing through “code stacking”; and providing physician practices with in-office dietitians for laboratory testing referrals.
Independent marketers for the hospitals allegedly set up management service organizations (MSOs) to make payments to referring physicians disguised as investment returns. Boston Heart allegedly worked closely with the MSOs to identify physician targets and participated in sales pitches offering remuneration for referrals.
Boston Heart also allegedly encouraged physicians to break up blood sample testing among multiple laboratories in order to collect multiple “packaging fees”, exceeding the $3 Medicare draw fee typically paid to practitioners collecting blood samples. To conceal this practice, payments were allegedly made through third parties and to office staff and family members of physicians, thereby encouraging over-utilization and medically unnecessary testing.
The whistleblowers allege that Boston Heart violated federal law by promising to waive copayments for patients referred by the physicians to increase referrals of lipid-related business. Under the copayment waiver program, patients were charged a “special fee” called a “Know It Now Price.” Most of the prices on the “Know it Now Price” list were $7 or less (falling substantially below the 20% copayment amount), meaning the program may have been “effective waivers” of copayments.
Boston Heart also allegedly inflated its costs by “code stacking,” or billing for each individual component of its lipid tests, rather than using the designated CPT billing code. Boston Heart allegedly included four additional, medically unnecessary tests to circumvent the use of the CPT bundled payment code. Such intentional unbundling violates the False Claims Act and defrauded the Government out of millions of dollars, according to the lawsuits.
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The DOJ noted in its Press Release that Boston Heart created “lots of complex relationships to try to hide what it was doing” and warned that “[d]octors and hospitals need to understand that these kinds of violations will be pursued.” The DOJ further reports that the whistleblowers will receive approximately $4.36 million of the $26.67 million settlement.
Providers, including laboratories, should review their internal compliance policies and practices to ensure that they are compliant with federal and state law. If you have any concerns with your compliance with fraud and abuse laws or the contents of this alert, please contact any member of our health care department, including the authors of this alert.
