Here's a story about a rapidly growing speciality reference lab, Health Diagnostic Laboratory, that paid physicians $20 per blood sample to ostensibly cover the labor costs of specimen handing but not for drawing the blood. In so doing, it has attracted the attention of HHS that has warned the lab the such payments presented a risk of being a kickback (see: A Fast-Growing Medical Lab Tests Anti-Kickback Law). Below is an excerpt from the article:
Health Diagnostic Laboratory CEO Tonya Mallory...founded the cardiac-biomarker-testing company after leaving a California lab in 2008...[This] fast-growing Virginia laboratory has collected hundreds of millions of dollars from Medicare while using a strategy that is now under regulatory scrutiny: It paid doctors who sent it patients' blood for testing. Health Diagnostic Laboratory...transformed itself from a startup incorporated in late 2008 into a major lab with $383 million in 2013 revenues, 41% of that from Medicare....HDL bundles together up to 28 tests it performs on a vial of blood, receiving Medicare payments of $1,000 or more for some bundles. Until late June, HDL paid $20 per blood sample to most doctors ordering its tests—more than other such labs paid. For some physician practices, payments totaled several thousand dollars a week, says a former company employee. HDL says it stopped those payments after a Special Fraud Alert on June 25 from the Department of Health and Human Services, which warned that such remittances presented "a substantial risk of fraud and abuse under the anti-kickback statute....
Its fee fairly compensated doctors for the labor cost of handling blood that went beyond the $3 that Medicare pays for each blood draw,...[an HDL spokesperson] says....Large established labs like Quest Diagnostics...don't pay such fees. They operate blood-draw sites and sometimes place blood-drawing technicians in physician practices—doctors get no financial compensation for the blood draw. At issue is a "safe harbor" exception to the federal anti-kickback statute. A vendor selling something to doctors may compensate them for certain related services. For instance, a lab could reimburse a doctor the partial cost of employing a blood-drawing technician who sends samples to the lab. Under the exception, payments must not offer a financial incentive for doctors to send more business the vendor's way. They must not exceed a "fair market value" for the service and must be a fixed amount set beforehand. The government is examining whether the labs' payments were excessive and encouraged doctors to send more samples because they were paid for each one. HDL and several other labs under investigation say that their payments were fair-market-value compensation for handling blood, that they had been a widespread industry practice and that the fraud alert represents new government guidance.
I did not include in the excerpt above the cited examples of physicians racking up large handling fee payments for samples submitted to HDL. To me, $20 per tube seems excessive in terms of the labor involved so it's probably no mystery why the Medicare is looking closely at HDL. As noted above, a handling fee per tube also provides an incentive for physicians to order HDL tests for all of their patients even when not clinically indicated. Given that Medicare pays $1,000 or more for such test bundles, the testing costs of HDL policies dwarf the relatively small handling fees remitted to the test-ordering physicians.
Comments