OIG Revisits Clinical Laboratory Electronic Data Transmission Fees

by Baker Donelson

Prior Opinion Rescinded and Negative Opinion Issued

The Office of Inspector General (OIG) recently issued a negative advisory opinion about an arrangement that offered relief of a $1 electronic data transmission fee to physicians using “in-network” clinical laboratories. Advisory Opinion 14-03 [PDF] concluded that the laboratory’s payment of a per-order fee for each laboratory test order, which relieved the physician of a financial obligation to pay a transmission fee, could be viewed as remuneration in exchange for the physicians’ referrals to the laboratories and that the risk of fraud and abuse was more than minimal. Significantly, the OIG concurrently rescinded Advisory Opinion 11-18 [PDF], a related prior favorable opinion. That three-year-old opinion approved an arrangement under which certain health professionals who received an electronic transmission of related health information paid the company for that service and related services. This is the first rescission of a published advisory opinion since the establishment of the advisory opinion process.

The Arrangement: Electronic Data Transmission Three Ways

The requestor, a publicly traded company operating clinical laboratories nationwide, generates a significant portion of its laboratory testing revenue from referrals from office-based physicians.

Clinical laboratories have recently relied increasingly on the electronic transmission of test orders and test results — to the benefit of both the laboratories and the ordering physicians. In fact, the OIG noted in Advisory Opinion 14-03 that clinical laboratories not offering electronic data transmission were at a competitive disadvantage.

The requestor offers physicians three electronic ways to order and retrieve test results. The first method is a free web-based order and result program. The majority of the referring physicians use this free software to order laboratory tests and to retrieve the laboratory’s test results. This free program does not interact with the physician’s electronic health record (EHR) system. The second method is a one-way electronic interface that allows the physician to receive and incorporate the test results directly into a patient’s EHR. The third method is a two-way interface that allows the physician to order the tests from the EHR system and receive and incorporate the results into the patient’s EHR.

Under the arrangement addressed by the OIG, the EHR software provider charges an electronic data transmission fee to either the clinical laboratory or the ordering physician for the two-way interface. Clinical laboratories that offer the two-way interface are listed by the EHR provider as "in-network" laboratories. Physicians are charged a transmission fee of up to $1 per order for tests ordered from a laboratory that is not an in-network laboratory. A physician is not, however, charged a transmission fee when he or she orders the test from an in-network laboratory. In-network clinical laboratories such as the requestor pay a fee for each order transmitted through the EHR software provider’s service.

OIG Analysis: Relief from Transmission Fees Pose Risk of Fraud and Abuse

The OIG’s analysis focused on an ordering physician’s decision to order a laboratory test from a laboratory that is not an in-network laboratory and pay a transmission fee of up to $1, or to order a laboratory test from an in-network laboratory and not pay that fee. A physician’s choice to avoid the fee was tied to which laboratory received the referral. The OIG concluded that this posed more than a nominal risk of fraud and abuse.

The OIG based its conclusions on the following observations. First, given that practices generally order laboratory tests at high volume, a real risk existed that the fee structure could meaningfully impact a physician’s choice of laboratory. The OIG’s position was supported by the requestor’s certification that some physicians had stated that they would continue referring the same volume of laboratory tests only if the laboratory was in network with the EHR software provider.

Second, there was little value in paying the per-order fees for the two-way interface except for the purpose of securing referrals. No additional technological benefit arose from an ordering physician’s use of the EHR provider’s interface compared to the requester’s free web-based program to order tests.

Termination of Favorable Advisory Opinion 11-18

By comparison, in Advisory Opinion 11-18, issued November 30, 2011, the EHR software provider had received a favorable advisory opinion with respect to charges to health professionals for receipt of health information and other services related to referrals transmitted using its electronic software. As part of the coordination services, the software provider would also offer a special “trading partner” status to potential referral recipients (i.e., the laboratories). Physician practices purchasing the referral coordination services received a discount on their monthly EHR subscription fees. That discount, however, was subject to a reduction each time the physician referred to a non-trading partner. The total penalty or reduction was capped at an amount equal to the original discount provided. No financial impact was felt when a referral was made to a trading partner.

At the time of review, the OIG concluded that the payment arrangements would be unlikely to influence ordering health professionals’ referrals in a meaningful way. Through the termination notice, the OIG reconsidered and rescinded that conclusion, concluding instead that in light of the facts presented by Advisory Opinion 14-03 — in the case of services ordered with high frequency — it was possible that the previously approved structure could improperly influence referrals.

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.

© Baker Donelson | Attorney Advertising

Written by:

Baker Donelson

Baker Donelson on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.