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3 Lab Compliance Policies that Matter Now More than Ever
David W. Gee, Esq. Partner, Davis Wright Tremaine LLP
Legal Framework
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3 Key Policies
Policy 1: Receive & Document Valid Lab Orders
Policy 2: No Third-Party Marketing
Policy 3: Stark Law Compliance
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Policy 1: Obtain & Document Valid Lab Orders
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More and More CERT Audits…
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…As Promised.
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The Law “All diagnostic tests must be ordered by a physician who is treating the beneficiary… Tests not ordered by
the physician who is treating the beneficiary are not reasonable and necessary.” 42 C.F.R. § 410.32(a)
“The laboratory must have a written or electronic request for patient testing from an authorized person.“42 C.F.R. § 493.1241(a). “An ‘authorized person’ means an individual authorized under State law to order tests or receive test results, or both.” 42 C.F.R. § 493.2; CLIA Interpretive Guidelines § 493.1241
“An ‘order’ is a communication from the treating physician/practitioner requesting that a diagnostic test be performed for a beneficiary. The order may conditionally request an additional diagnostic test for a particular beneficiary if the result of the initial diagnostic test ordered yields to a certain value determined by the treating physician/practitioner (e.g., if test X is negative, then perform test Y). … While a physician order is not required to be signed, the physician must clearly document, in the medical record, his or her intent that the test be performed.” Medicare Benefit Policy Manual, ch. 15 § 80.6.1.
“…the signature of the physician or NPP is not required on a requisition for a clinical diagnostic laboratory test … for Medicare purposes…. [Nonetheless, w]e believe that it is the responsibility of the clinical diagnostic laboratory, as it is for the provider of any service, to have sufficient processes and safeguards in place to ensure that all services are delivered only when ordered by the physician or NPP. This proposed rule does not preclude an individual laboratory from requiring a physician’s or NPP’s signature on the requisition. The laboratory may develop its own compliance procedures to ensure that it only furnishes services in response to a physician or NPP order. Such procedures could include internal audits, agreements with ordering physicians or NPPs to provide medical record evidence of the order in the event of an internal or external audit, steps to confirm the existence of an order under certain circumstances, or any other measures including the acceptance of risk by the clinical laboratory.” 76 Fed. Reg. 38345 (June 30, 2011).
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Millenium False Claims Complaint
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Electronic Signatures?CMS provides minimal guidelines on electronic signatures:
Providers using electronic systems need to recognize that there is a potential for misuse or abuse with alternate signature methods. For example, providers need a system and software products that are protected against modification, etc., and should apply adequate administrative procedures that correspond to recognized standards and laws. The individual whose name is on the alternate signature method and the provider bear the responsibility for the authenticity of the information for which an attestation has been provided. Physicians are encouraged to check with their attorneys and malpractice insurers concerning the use of alternative signature methods.
[Medicare Program Integrity Manual, ch. 3, § 3.3.2.4 - Signature Requirements]
There are many types of electronic programs available for electronic medical health records (EMRs). The requirement for Medicare validation is that we must be able to connect the provider of service to the records or notes. The electronic signature component must be able to be authenticated and confirmed by the provider of service.
[Noridian, Physician’s Orders for Diagnostic Laboratory Tests]
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Custom Panels?
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• “Each requisition form shall list all potential tests clearly and distinctly, and the form must require the physician to request (by notation) each ordered test individually (except for test panels established by CMS or other payor billing codes or policies)”
• “Each requisition form shall state that physicians may not order tests under custom profiles, standing orders (unless the physician has established a specific standing order for an individual patient for a defined period oftime based upon a determination ofthe medical reasonableness and necessity ofdoing so), or panels (except for test panels established by CMS or other payor billing codes or policies)”
• “Confirmatory and quantitative tests must be listed separately on the requisition forms, which must indicate that each test should be ordered only where it is medically necessary to have information that screening with qualitative immunoassays alone will not provide”
Some Help from Noridian…
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“These billing providers have partnered in caring for your patient. They will not receive payment from Medicare for the services that are ordered or preferred if you do not provide information from you rmedical records when it is requested.”
“Your cooperation is a legal requirement as outlined in the Social Security Act, the law governing Medicare… “
Policy 2: No Third-Party Marketing
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Applicable Federal Law Anti-Kickback Statute
Prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal health care program business. Penalties: fine of up to $25,000, imprisonment for up to five years, mandatory exclusion from participation in federal health care programs.
“Commission-based compensation to contract sales force will not meet the personal services and management contracts safe harbor because it is “not fixed in advance and is determined in a manner that takes into account the value or volume of business generated between the parties, including Federal health care program business…. Percentage compensation arrangements are potentially abusive…because they provide financial incentives that may encourage overutilization of items and services and may increase program costs.”[OIG Advisory Opinion No. 98-1 (March 25, 1998)]
“[M]any commenters suggested that we broaden the [employment] exemption to apply to independent contractors paid on a commission basis. We have declined to adopt this approach because we are aware of many examples of abusive practices by sales personnel who are paid as independent contractors and who are not under appropriate supervision. We believe that if individuals and entities desire to pay a salesperson on the basis of the amount of business they generate, then to be exempt from civil or criminal prosecution, they should make these salespersons employees where they can and should exert appropriate supervision for the individual’s acts.[54 Fed. Reg. 3088, 3093 (1989)]
Civil False Claims Act 13
US vs. BlueWave Healthcare Consultants
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“Pursuant to the various independent contractor agreements, Blue Waiver, Johnson, Dent, and Mallory knowingly and willfully facilitated, paid, solicited and received remuneration meant to induce the arranging, recommending,
purchasing or ordering of HDL and Singulex tests that might be paid for in
full or in part by federal or state healthcare programs.”
BlueWave Healthcare Consultants Inc….became HDL's independent sales-and-marketing contractor.
BlueWave:
“The main new accusation involves HDL’s sales force, who work for an independent but closely related company known as BlueWave Healthcare Consultants Inc. These salesmen persuade physicians and other healthcare providers to order a whole host of unnecessary tests from HDL and, often, from other lab companies as well, including Singulex and Innovative Diagnostic Laboratory (IDL).”
Third-Party Marketing
"Fyi To all I want to refocus that this is an ph fee not a draw fee. One word makes it legal the other illegal."
Sept. 8, 2014
Sept. 18, 2014
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Dear John, (and I guess this is a dear John letter)A couple issues I have with your email….
#1: The high points of working with HDL: No Balance Billing Ever… My territory is doing more business than your current lab partner does nationally, and no insured patient has ever received a bill.
First of all…. The days of zero balance billing is over. You HAVE to charge a copay. It’s the law. The fact that you have so much business is because the average cardiologist is “money minded” and will sell out to the highest bidder without any regard to whats truly best for the patient!!!
#2: Patients with super high deductibles get the first draw (and sometimes two) free, because we won’t bill them.
Question?……Isn’t the above ILLEGAL???
#3: We pay $20 per test, we can carve out anything you want, and we provide free dietary support. I’d love to get a dietician in place for you.
Your approach to me has always been about the money first and the science second or not at all…. Until I asked. . . .
Do you really think you need 40 tests… Some of which are duplicates to treat my patients…. ???? I really don’t even have the time to correct your science on Lp(a) or some of the other bullshit you tried to sell me ( ie HDL invented aspirin works…..Really?)
I was polite in my office the other day simply because I had guests .. but the fact that you think I’d be impressed with draw fees more than being able to explain the science behind your testing…. You must’ve mistaken me for some… other cardiology offices…
I guess in short…. I don’t like what HDL stands for. I will not have my clinic, reputation, or future prevention models associated or tainted by any association with your company.
Am I close to earning your business with HDL???!
Probably not…
Sept. 18, 2014
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Millenium Corporate Integrity Agreement
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“Within 120 days after the Effective Date, Millennium shall establish a comprehensive Field Force Monitoring Program (FFMP) to evaluate and monitor its sales personnel's interactions with healthcare professionals (HCPs) and healthcare institutions…
Representatives ofthe compliance department (Monitoring Personnel) shall conduct observations offield sales representatives (including any contract sales personnel) to assess whether the messages delivered and materials distributed to HCPs and HCis are consistent with applicable legal requirements, and with Millennium's Policies and Procedures, and to ensure that sales representatives are not making any statements regarding medical reasonableness and necessity outside the scope ofMillennium's Policies and Procedures … These observations shall be full day ride-alongs with field sales representatives (Observations), and each Observation shall consist of directly observing all meetings between a sales representative and HCPs and HCis during the workday. The Observations shall be scheduled throughout the year, judgmentally selected by Monitoring Personnel, include a review of each Government Reimbursed Service, and be conducted across the United States.”
California Law: No Third-Party Marketing
A lab’s payment of percentage of sales commissions to contract sales personnel has been held by California courts to violate the Medi-Cal AKS.
CCLA Compliance Matrix
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Policy 3: Stark Law Compliance
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Pete Stark: Law Regulating Doctors Mostly Helped Lawyers
“Pretty soon the law got to be as thick as a phonebook for all the exemptions for this, that and the other thing….”
Mr. Stark says that, while he thinks some type of law curbing self-referral should be in place, he probably wouldn’t vote for his namesake legislation today unless it were changed.
“I have every lawyer in town bowing gratitude to me for the work they got out of that law….”
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Stark Stakes Higher than Ever
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“The United States also alleged that
Millenium’s provision of free
point of care urine drug test cups to
physicians… violated the
Stark Law and the Anti-Kickback
Statute .”
“Millenium has agreed
to pay $227 million to
resolve False Claims Act
allegations...”
Federal Physician Self-Referral (Stark)Law
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• Strict Liability – Violation regardless of the referring physician’s intent or a “common sense” reason for the relationship.
• Prohibits a physician from making a referral for certain designated health services to an entity in which the physician (or a member of his family has an ownership/investment interest or with which he has a compensation arrangement (exceptions apply)
• Medicare claims tainted by an arrangement that does not comply with Stark are not payable. Up to a $15,000 fine for each service provided. Up to a $100,000 fine for entering into an arrangement or scheme
• State “Mini-Stark” Laws
Key Stark Law Exceptions for Labs
Non-Monetary Compensation Lab Supplies (solely for Lab) Lab Equipment (solely for Lab) Personal Services Agreements Physician Office Leases Equipment Leases Bona Fide Employment Phlebotomists (solely for Lab – NOT in CA)
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Non-Monetary Compensation• Limited to $392 (2015)
per physician annually• Gifts must be tracked• Gifts cannot:
• Be solicited by the physician, practice group or staff
• Be based on volume or value of referrals from the physician
• Otherwise violate the Anti-Kickback Statute
• Cash or a cash equivalent (e.g., gift cards)
• Aggregation 24Nice idea. But No.
Key Stark Exceptions—Non-Monetary Compensation (Cont’d)
Labs can “fix” inadvertent breach of Stark limit, IF:– The excess is no more than 50 percent of the
$359 limit (i.e., $538.50)– The physician returns the value of the excess
non-monetary compensation by the earlier of calendar year-end or 180 calendar days
– One “fix” every 3 years for the same physician
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Stark Law Enforcement Actions—Non-Monetary Compensation
June 2009. Memorial Hospital of Union County, Ohio, self-disclosed and agreed to pay $31,202 for allegedly violating the Anti-Kickback Statute and the Stark law.
Memorial provided gifts to 10 physicians in excess of the Stark annual limit by about $310 per physician. The “gifts” involved weather clocks provided to some of the doctors, and paying for physicians to attend a seminar.
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Stark Law Enforcement Actions—Non-Monetary Compensation
“Referral sources received bottles of alcohol and tickets to athletic events and concerts from Nurses' Registry and House, according to the U.S. Attorney's Office. The practice was so commonplace that physicians would contact the home health agency to ask for tickets to popular events, such as Taylor Swift concerts or the Kentucky Derby”
Law360
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“This settlement only resolves the government’s claims against Vicki House;
it does not resolve any allegations for False Claims
Act violations against Nurses’ Registry or Lennie
House’s Estate”
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$14.755 million – Reduced to $11.26
million
Ameritox Verdict June 2014: POCT Cups
September 3, 2015 –
11TH CIRCUIT US COURT OF APPEALS:
We VACATE the judgment below and REMAND with instructions to dismiss the state-law claims without prejudice so that the parties can litigate their claims in a proper forum.
Dismissing the supplemental claims at this point would not waste resources; the waste occurred long ago. Ameritox advanced outlandish legal theories and Millennium went along with it. Either party could have halted this farce long ago.
At the end of the day, the attorneys here left their clients with gargantuan legal bills and “a tale/ Told by an idiot, full of sound and fury,/ Signifying nothing.” William Shakespeare, Macbeth, act 5, sc. 5.
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Solely vs. Primarily
“a template for laboratories to funnel valuable items to doctors so long as they are attached in some way to items, devices or supplies that fall within an applicable exclusion…“Millennium could simply add a five dollar bill (the approximate cost of the testing strips) to each specimen collection cup – a practice that both the Stark Law and the AKS plainly prohibit – and argue that the laboratory supplies carve-out applies because, from the laboratory’s perspective, the cup was used ‘solely’ for specimen collection.”
US as Amicus Curiae opposed Millennium’s interpretation as creating an “enormous loophole” in the Stark Law:
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The Last Laugh?
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“The United States also alleged that
Millenium’s provision of free point of care
urine drug test cups to physicians… violated the Stark Law and
the Anti-Kickback Statute .”
Appendix
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Consequences for Failures to Obtain Valid Orders
October 2013: The president/CEO of two urine drug testing facilities, agreed to be excluded from participating in Federal health care programs for a period of fifteen years under 42 U.S.C. § 1320a-7(b)(7). OIG alleged that the president/CEO knowingly submitted or caused to be submitted claims for urine drug testing that lacked an appropriate physician order, were medically unnecessary, and were fraudulently coded and for providing services that were reimbursable by Medicare in violation of the president/CEO's previous exclusion. OIG further alleged that the president/CEO knowingly submitted or caused to be submitted to Medicare: (1) claims for payment under a provider number that was obtained by knowingly submitting false information to the State of Michigan and the Medicare Administrative Contractor for the State of Michigan; (2) claims for payment for urine diagnostic tests that were not ordered by a physician; (3) separate claims for payment for urine diagnostic tests under separate CPT codes when only one CPT was allowed; and (4) claims for payment that were coded to circumvent computer edits in order to fraudulently increase payments from Medicare for services that were not ordered or provided.
March 2015: After it disclosed conduct to OIG pursuant to its Corporate Integrity Agreement, LifeWatch Services, Inc. (LifeWatch), Illinois, agreed to pay $737,572.50 for allegedly violating the Civil Monetary Penalties Law. OIG alleged that LifeWatch submitted claims to Medicare for Ambulatory Cardiac Telemetry (ACT) services for which the medical record documentation did not support that the physician had ordered ACT services.
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Electronic Signatures?Examples of Acceptable Electronic Signatures [per Palmetto]:• Chart “Accepted By” with provider’s name
• “Electronically signed by”with provider’s name
• “Verified by” with provider’s name
• “Reviewed by” with provider’s name
• “Released by” with provider’s name
• “Signed by” with provider’s name
• "Signed before import by" with provider’s name
• "Signed: John Smith, M.D." with provider’s name
• Digitized signature: Handwritten and scanned into the computer
• "This is an electronically verified report by John Smith, M.D."
• "Authenticated by John Smith, M.D."
• "Authorized by: John Smith, M.D."
• "Digital Signature: John Smith, M.D."
• "Confirmed by" with provider’s name
• "Closed by" with provider’s name
• "Finalized by" with provider’s name
• “Electronically approved by” with provider’s name
• “Signature Derived from Controlled Access Password”
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Individual Accountability for Corporate Wrongdoing
“One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing. Such accountability is important for several reasons: • it deters future illegal activity, • it incentivizes changes in corporate behavior, • it ensures that the proper parties are held responsible
for their actions, and • it promotes the public's confidence in our justice
system.”September 9, 2015 Department of Justice
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Individual Accountability for Corporate Wrongdoing
1. To be eligible for anv cooperation credit, corporations must provide to the Department all relevant facts about the individuals involved in corporate misconduct.
2. Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation.
3. Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
4. Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals.
5. Corporate cases should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires and declinations as to individuals in such cases must be memorialized.
6. Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual's ability to pay.
September 9, 2015 Department of Justice
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