COVID-19 Testing Compliance: What Labs Need to Do to Avoid OIG Prosecution
Federal authorities are cracking down on laboratories that conduct COVID-19 testing. These authorities, which include the U.S. Department of Health and Human Services Office of Inspector General (OIG) and the U.S. Department of Justice (DOJ), are already pursuing charges in numerous cases, and they are continuing to target laboratories across the United States in compliance investigations.
The OIG and DOJ have identified a number of recurring issues pertaining to laboratories’ COVID-19 testing services and billings. The prevalence of these issues has forced the OIG and DOJ to expand their enforcement efforts—after initially only targeting a small number of laboratories and related entities. The OIG and DOJ are currently focused on issues pertaining to doctors’ orders, laboratories’ testing procedures, and laboratories’ billings; and, given the ongoing nationwide crackdown, all laboratories that provide COVID-19 testing should review their current compliance policies and procedures to ensure that they are adequate.
5 Key Compliance Areas for COVID-19 Testing
With regard to COVID-19 testing, there are several issues that laboratories need to address in order to maintain OIG compliance. Here are five issues in particular that have the potential to lead to charges (either civil or criminal) during an OIG or DOJ investigation:
1. COVID-19 Test Validation Forms
Prior to utilizing COVID-19 tests, laboratories must ensure that they have the correct validation forms. Unfortunately, there have been several cases of companies rolling out COVID-19 tests that have proven to be unreliable—if not entirely ineffective. Fraud and counterfeiting are concerns as well, as companies are both selling unauthorized tests and selling counterfeit versions of authorized tests developed and manufactured by legitimate pharmaceutical companies.
Prior to ordering COVID-19 tests, laboratories should proactively seek to obtain validation forms from the tests’ manufacturers. For tests already in use, laboratories should ensure that they have validation forms on hand. During an OIG or DOJ investigation, agents will ask for the laboratory’s validation forms; and, if a laboratory is unable to produce the requisite validation forms for all COVID-19 tests, this will be a red flag for possible additional compliance violations.
2. Validation of Doctors’ Orders for COVID-19 Tests
When filling doctors’ orders for COVID-19 tests, clinical laboratories have a legal obligation to ensure that the orders satisfy Medicare’s requirements. As the OIG explains (emphasis added):
“We recognize that laboratories do not and cannot treat patients or make medical necessity determinations. However, there are steps that such facilities can and should take to help maximize the likelihood that they only bill federally funded health care programs for tests that meet the reimbursement rules for those programs.
“[T]he OIG recognizes that physicians must be able to order any tests, including screening tests, that they believe are appropriate for the treatment of their patients. However, we believe that physicians must be made aware that Medicare will only pay for tests that meet the Medicare definition of ‘medical necessity’ and . . . laboratories themselves are in a unique position to deliver this information to their physician clients.“
The OIG goes on to state that, “laboratories can and should advise physicians that when they instruct the laboratory to seek Medicare reimbursement for tests ordered, they should only order those tests that they believe are medically necessary for the diagnosis and treatment of their patients.” In other words, laboratories are responsible for ensuring that they do not bill Medicare for medically unnecessary tests, and they cannot assume that all ordered COVID-19 tests are medically necessary.
Due to the unprecedented nature of the COVID-19 pandemic, laboratories have been conducting (and billing for) COVID-19 tests at extraordinarily high rates. The OIG and DOJ are now in the process of cracking down on both laboratories and physician practices to ensure that they are not simply defaulting to recommending screenings for the novel coronavirus. Given the OIG’s position on laboratories’ role in preventing frivolous testing, it is predominantly laboratories that are under the microscope at this time.
What can (and should) laboratories do to validate doctors’ orders for COVID-19 tests? The OIG’s guidance includes, among other recommendations:
- Requisition Design – Laboratories should “use common, uniform requisition forms that emphasize physician choice and encourage doctors to order, to the extent possible, only those tests that they believe are appropriate for each patient. In addition, the requisition forms should require physicians to document the need for each test ordered by inserting a diagnosis code for each such test.”
- Notice to Physicians – Laboratories should give physicians the opportunity to create customized profiles; and, in doing so, they should provide physicians with various notices (including “inform[ing] physicians that the OIG takes the position that a physician who orders medically unnecessary tests for which Medicare reimbursement is claimed may be subject to civil penalties”). The OGI also instructs laboratories to provide various notices to all physicians on an annual basis regardless of whether they establish customized profiles.
- Physician Acknowledgements – The OIG also advises that physicians that offer custom profiles should require execution of a Physician Acknowledgement. This document should include several provisions, including an acknowledgment that, “the physician will order individual tests or a less inclusive profile when not all of the tests included in the customized profile are medically necessary for an individual patient.”
- Monitoring Test Utilization – Under the OIG’s compliance guidance, laboratories should monitor physicians’ test utilization for signs of excessive ordering. “[T]here are steps laboratories can take to determine whether physicians are being encouraged to order medically unnecessary tests . . . [and] a laboratory which has reason to believe that its clients are ordering medically unnecessary tests has a duty to determine why that behavior has occurred.”
3. Documentation of Medical Necessity
In addition to validating the medical necessity of COVID-19 testing, laboratories must also maintain comprehensive documentation of medical necessity. This is important not only as an element of compliance, but also as a defense mechanism for OIG and DOJ investigations. Even if a laboratory is taking adequate steps to ensure medical necessity, if it cannot prove that it is doing so with appropriate documentation, the laboratory can still face prosecution as the result of a federal compliance inquiry.
In terms of what constitutes “appropriate” documentation, laboratories must assess their needs in light of their specific operations. Custom profiles, standing orders, and other unique circumstances can call for different types of documentation. Ultimately, laboratory owners and executives need to feel confident that their efforts at documenting medical necessity are sufficient to (i) prevent compliance failures, (ii) identify mistakes when they arise, and (iii) convince OIG and DOJ agents that the laboratory is meeting its compliance obligations.
4. Performing Additional Tests
In several recent cases, the OIG and DOJ have targeted laboratories, physicians, and others for using COVID-19 testing as a means to perform (and bill for) additional tests. In particular, the OIG and DOJ are focusing on whether laboratories have sufficient authorization and documentation of medical necessity for tests such as cancer genetic testing, allergy testing, and respiratory pathogen panel tests. In several cases, the DOJ has alleged that laboratories have billed for these tests without patient authorization and without clinical justification.
With this in mind, when performing tests in addition to COVID-19 screenings, laboratories should pay particular attention to documenting patient authorization and medical necessity. Laboratories’ policies and procedures should call for the generation, collection, and storage of all necessary documentation in connection with each patient visit, and such documentation should be readily available in each patient’s file. Prior to billing Medicare for these tests, laboratories’ policies and procedures should call for a systematic review to ensure that only valid claims are being presented for reimbursement.
5. Reporting Test Results
Many laboratories have also recently gotten into trouble for failing to report test results to patients and their doctors. This includes the results of COVID-19 tests as well as the results of additional tests ordered using COVID-19 testing patients’ information and samples. Not only is failing to provide test results potentially dangerous for the patient (and the public, in the case of COVID-19 testing), but it also raises red flags for the OIG and DOJ with regard to the medical necessity of the tests performed.
Given these concerns, laboratories should include provisions in their OIG compliance programs that address test result reporting. Laboratories should have policies that emphasize the importance of timely and accurate reporting, and that articulate internal processes and procedures for reporting test results to patients and their doctors. As with all aspects of OIG compliance, laboratories should adopt mechanisms for auditing their reporting efforts on an ongoing basis, and they should adopt mechanisms to address any one-off or systemic reporting issues as well.
Speak with a Senior Lawyer at Oberheiden P.C. about OIG Compliance
Do you have concerns about your laboratory’s testing, recordkeeping, or billing practices? Do you have questions about compliance or the OIG and DOJ’s crackdown on clinical laboratories pertaining to COVID-19 testing? If so, we strongly encourage you to contact us promptly. To speak with a senior OIG compliance lawyer at Oberheiden P.C., call 888-680-1745 or request an appointment online today.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.