American Association for Clinical Chemistry
Better health through laboratory medicine
June 2009 Clinical Laboratory News: Regulatory Profiles

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June 2009: Volume 35, Number 6

OIG Report Finds Improper Billing

In some cases, labs are billing improperly for patients that are eligible for both Medicare and Medicaid, according to a recent report from the HHS Office of Inspector General (OIG). Medicare alone is supposed to pay lab services for these “dual eligibles,” but OIG’s report found a total of $1.3 million in improper payments during fiscal year 2005 and 2006 for outpatient lab services in its survey of 11 states. In eight of the 11 states, labs were incorrectly billing both Medicare and Medicaid.

Five common CPT codes represented 55% of all improper payments that the report identified: collection of venous blood by venipuncture; complete, automated, and automated differential white blood cell count; comprehensive metabolic panel; urinalysis, non-automated with microscopy; and HIV-1, quantification.

The full report is available online.

Disaster Preparedness at Local Hospitals Improving

U.S. Hospitals are significantly better prepared for disasters and public health emergencies now than they were in 2001, according to a University of Pittsburgh Medical Center study produced under contract with HHS. The study evaluated hospitals from 2002 through 2007 and established that the most useful indicators for measuring the preparedness were a hospital’s ability to surge and accommodate more patients during disasters; how well the hospital trained its staff for disasters with realistic exercises; and how well a hospital actually performed during a disaster.

The report found that overall, hospital leaders are more supportive and active in preparedness activities, training has become more rigorous, and hospitals’ plans are more comprehensive and better coordinated with community plans and local hazards. The full report is available online.

California Sues Labs for Defrauding Medicaid

Seven independent laboratories—including Quest and LabCorp—provided discounts to private health providers but not to the state’s Medi-Cal program, according to a suit filed by California’s attorney general Jerry Brown. California law prohibits healthcare providers from charging Medi-Cal more than other purchasers.

For example, the suit alleges that LabCorp charged Medi-Cal $30.09 to perform a HCV antibody screening, while it charged some of its other customers only $6.44. Similarly, Health Line Clinical Laboratories charged Medi-Cal $12.65 to perform an HIV antibody screening, while charging some of its other customers $1.75 for the test. The law suit also alleges that in exchange for these steep discounts, the labs expected customers to refer all of their other patients, including those covered under Medi-Cal, to its lab.

According to Brown, this amounts to providing an illegal kickback. The lawsuit is asking for triple the amount of California's damages, civil penalties of $10,000 for each false claim, as well as recovery of costs, attorneys’ fees and expenses. The attorney general estimated that damages could amount to hundreds of millions of dollars.

The state’s case is outlined in a press release on the attorney general’s website.

Legislation Lets Independent Labs Bill Medicare Directly

Under current Medicare regulation, the date of service for a lab test ordered less than 14 days after a patient’s discharge from a hospital is the date on which the specimen was collected, requiring hospitals to pay independent labs for tests that are ordered within this time frame, then bill Medicare for reimbursement. The effect of this rule is to treat lab tests ordered less than 14 days after a patient is discharged as having been performed when the patient was actually in the hospital.

Under legislation introduced by Jason Altmire (D-Pa.), independent labs could bill directly for complex genetic tests performed within the 14-day window. According to Altmire, the current payment scheme is discouraging hospitals from ordering these tests.

The bill, H.R. 1699, is available on the congressional website.