The Department of Health and Human Services Office of Inspector General (“OIG”) recently issued a Special Fraud Alert regarding certain types of remuneration from laboratories to physicians who refer business to them. For laboratories that perform services that are reimbursable under Medicare, Medicaid, or any other federal healthcare program, the arrangements described will potentially violate the federal Anti-Kickback Statute (AKS). 

Under the AKS, it is a crime to knowingly and willfully offer, pay, solicit or receive any remuneration to induce, or in return for, referrals of items and services reimbursable under a federal program. Violators may also be excluded from participation in the Medicare and Medicaid programs. The term “remuneration” includes the payment of anything of value, and often includes arrangements that would be considered logical and acceptable in non-healthcare contexts. The “offer, pay, solicit or receive” language means that a physician who receives a payment from a lab is equally at risk as the lab under the AKS.

The main part of the alert deals with “Specimen Processing Arrangements,” in which labs pay physicians to collect, process, and package patients’ blood specimens. The OIG notes, however, that its AKS analysis would also apply to other similar arrangements, including for the collection and processing of urine samples. Whether the AKS is violated depends on the intent of the parties, even if the payment to the physician is based on the fair market value of the services rendered. In practice, however, arrangements in which payments exceed the fair market rate for the services rendered, or where the services are normally reimbursed in some other manner, are at far greater risk of a claimed AKS violation.

The OIG also points out that payment arrangements that are calculated on a per-specimen basis inappropriately take into account the “volume or value of referrals,” one of the key criteria of the AKS prohibition. Some unlawful Specimen Processing Arrangements even reimburse physicians for collection services that are actually performed by a phlebotomist placed in the physician’s office by the lab.

The Alert stresses that arrangements that “carve out” (do not provide remuneration directly for) federal program business can still potentially violate the AKS. The OIG believes that because physicians typically prefer to use the same labs for their federal and non-federal program patients, payment arrangements that are based on referrals of non-federal business may be intended to induce the referral of federal program business as well.

The Alert also covers “Registry Arrangements” in which laboratories make payments to physicians to collect data on their patients, which the OIG says may also be intended to induce referrals of business from the physicians.