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COVID-19 Related Healthcare Fraud and Anti-Kickback Enforcement Focuses on Laboratory Testing
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More Healthcare & Pharmaceuticals Aricles → Latest Firm's PressHaynes and Boone, LLP While the U.S. Department of Justice (DOJ) has identified and pursued a variety of fraud schemes and activities related to COVID-19 (such as sales of fake testing kits and PPE, price gouging, and fraudulent offers for free COVID-19 testing in order to obtain Medicare beneficiary information that is used to submit false medical claims), several recent cases involving laboratory testing demonstrate that this is a key area of healthcare fraud and anti-kickback enforcement during the pandemic.In March, the DOJ issued a series of communications related to its commitment to detecting, investigating, and prosecuting fraud related to the pandemic.1Although kickbacks for COVID-19 tests and bundling were not specifically mentioned in the DOJ memos, these activities have been a focus of recent healthcare fraud and anti-kickback enforcement related to COVID-19. Specifically, the DOJ issued press releases related to three cases between March 30, 2020 and June 9, 2020:
While regulatory agencies have issued various guidance, waivers, and other flexibilities during the COVID-19 public health emergency (PHE), the pandemic has also brought additional questions and regulatory complexity, particularly for laboratories and others involved in the COVID-19 testing process. For example, the Centers for Medicare and Medicaid Services (CMS) changed the Medicare payment rules during the PHE to provide payment to independent laboratories for specimen collection from beneficiaries who are homebound or inpatients not in a hospital for COVID-19 testing under certain circumstances, as well as payment for COVID-19 tests without the requirement of an order from a treating physician or non-physician practitioner.5 In addition, as discussed in our Client Alert, effective March 1, 2020, the Secretary of the Department of Health and Human Services issued nationwide blanket waivers of certain Stark Law regulations related to COVID-19 purposes, and the Office of Inspector General issued a policy statement regarding its intention to exercise enforcement discretion not to impose administrative sanctions under the federal Anti-Kickback Statute for certain remuneration related to COVID-19 that is covered by the Stark Law blanket waivers. Further, traditional healthcare fraud and anti-kickback enforcement actions unrelated to COVID-19 continue, including those involving laboratories. For example, the DOJ announced a recent settlement for $12 million with a laboratory conducting drug testing, alleging kickbacks for urine testing referrals.6In addition, since March 1, 2020, the DOJ announced at least nine healthcare fraud and abuse actions involving laboratories and has continued pursuing “Operation Brace Yourself / Operation Double Helix,” which was initiated last September as one of the largest healthcare-fraud-enforcement schemes to date, with over $1.7 billion collected from unlawful schemes involving genetic testing, braces, pain creams, and other items. Finally, this year saw what is believed to be the first conviction under the Eliminating Kickbacks in Recovery Act (EKRA). As discussed in a previous client alert, EKRA was introduced in 2018 to prohibit receiving or offering remuneration in exchange for referrals to a recovery home, clinical treatment facility, or laboratory.7Notably, EKRA’s broad scope is not limited by the type of payor, extending to both governmental and commercial insurers. The EKRA enforcement action involved an office manager of a substance abuse treatment clinic soliciting kickbacks from a toxicology laboratory in exchange for urine drug testing referrals.8 Though the current PHE has created uncertainty and made regulatory enforcement difficult to predict in many ways, laboratories and other healthcare companies should continue to ensure that their compliance programs remain robust and focused on identifying and remediating healthcare fraud and abuse. This could include, for example, performing a careful evaluation of financial arrangements with employees and referral sources, as compensation structures that vary based on the number of referrals, the number of tests performed, or the amount collected are potential targets for enforcement. For questions on healthcare fraud enforcement or the information contained in this article, please contact a member of our Healthcare and Life Sciences practice group.
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