Clinical laboratories have played an essential role in the nationwide response to the COVID-19 pandemic. By testing extraordinary numbers of patients, laboratories have helped to stop the spread, and many laboratories have gone to great lengths in order to do so.

In the early days of COVID-19 testing last year, federal authorities such as the U.S. Department of Health and Human Services Office of Inspector General (OIG) relaxed some of the rules that typically apply to clinical laboratories. In order to ensure that laboratories could test as many people as possible as quickly as possible, they provided laboratories with more flexibility than usual to adapt to the unique circumstances presented. Now, however, the OIG is once again expecting strict compliance, and it is working with the U.S. Department of Justice (DOJ) to prosecute laboratories that fall short of their compliance obligations.

Laboratory Compliance and COVID-19 Testing

With this in mind, laboratory owners and executives need to prioritize compliance in 2021. They must ensure that they have a comprehensive understanding of their facilities’ compliance obligations, and they must adopt policies and procedures that will serve to protect their facilities during an OIG or DOJ investigation.

There are numerous aspects to OIG compliance for clinical laboratories—including aspects that are specific to certain types of testing and aspects that apply to laboratories’ operations across the board. Here are 10 areas of OIG compliance that are of particular concern for clinical laboratories with regard to COVID-19 testing:

• COVID-19 Test Validation – Prior to providing COVID-19 tests to patients, laboratories must ensure that the tests are valid and appropriate for use. Among other things, this involves obtaining the validation form for each test and reviewing it to make sure it meets all pertinent requirements.
• Medical Necessity for COVID-19 Testing – Medical necessity has been a key focus in recent OIG and OIG investigations targeting clinical laboratories in relation to COVID-19 testing. Laboratories cannot rely on physicians’ orders when making judgments regarding medical necessity, but must instead implement protocols and procedures that allow them to make their own determinations.
• Correct HCPCS Codes – The Centers for Medicare and Medicaid Services (CMS) have approved two specific HCPCS codes for COVID-19 testing. Clinical laboratories must use the newly-created U0001 HCPCS code to bill for CDC RT-PCR COVID-19 diagnostic test panels, and they must use a second newly-created code, U0002, for other non-CDC tests.
• Using Patient Information and Samples for Additional Tests – Many laboratories have gotten into trouble in 2021 for using patients’ information and samples obtained for COVID-19 testing purposes in order to bill Medicare for other tests. This includes, but is not limited to, cancer genetic testing, allergy testing, and respiratory pathogen panel tests. Laboratories can only bill for these additional tests if authorized and if the tests are deemed medically necessary.
• Compliance Regarding Physicians – The OIG expects clinical laboratories to take several steps in order to ensure that physicians do not order or bill for medically-unnecessary tests. This includes COVID-19 screenings. Laboratories must take the OIG’s expectations into account when developing their policies and procedures pertaining to standing orders, custom profiles, review of test orders, and other physician-related matters.
• Fees for Custom Profiles and Other Transactions – When entering into financial relationships with physicians, marketers, and other third parties, laboratories must be very careful to avoid running afoul of the Anti-Kickback Statute (AKS), Eliminating Kickbacks in Recovery Act (EKRA), and other pertinent federal laws. Unlawful financial relationships (i.e. prohibited referral fees for COVID-19 testing) are red flags for OIG and DOJ investigators, and they can lead to invasive investigations and serious federal charges.
• Patient Testing Documentation – Due to the heavy scrutiny clinical laboratories are facing with regard to COVID-19 testing, laboratories must be especially careful to maintain comprehensive and accurate patient files. Among other things, this means maintaining documentation of medical necessity for all tests, and it means having billing compliance documentation available to present to OIG and DOJ investigators if and when necessary.
• Test Result Reporting – Several clinical laboratories have also recently gotten into trouble for failing to report test results to patients and their physicians. Laboratories must timely report all COVID-19 test results (and other test results) in order to validate their Medicare billings.
• Medicare Billing – With regard to Medicare billing, there are numerous other aspects to compliance for laboratories as well. Laboratory owners and executives need to be absolutely certain that their Medicare billing compliance policies and procedures (as well as those of their third-party billing administrators, if applicable) are working effectively to prevent “false and fraudulent” claims.
• Demonstrating OIG Compliance – Finally, due to the OIG’s and DOJ’s recent focus on clinical laboratories’ COVID-19 testing practices, all laboratories that provide COVID-19 testing should be prepared to demonstrate compliance when asked to do so. Laboratories need to have all necessary documentation on hand, and they need to have response protocols in place that they can implement in the event of an OIG or DOJ investigation.

Consequences of Non-Compliance Regarding COVID-19 Testing

In today’s world, maintaining compliance is much more than a matter of simply checking a few boxes in the realm of corporate responsibility. For clinical laboratories, non-compliance can have significant consequences—especially when the area of compliance at issue is an OIG or DOJ enforcement priority. For laboratories that fail to devote sufficient time and attention to COVID-19 testing compliance, the potential consequences include:

• OIG/DOJ Investigation – The OIG and DOJ are currently targeting clinical laboratories for COVID-19 testing fraud. Laboratories that are non-compliant are far more likely to face invasive and high-risk investigations.

• Civil Enforcement Action – Even if OIG and DOJ investigators do not find evidence of intentional COVID-19 testing fraud, unintentional compliance failures can lead to civil enforcement action for clinical laboratories, their owners and executives, and other related entities.
• Criminal Prosecution – If OIG and DOJ investigators find evidence of intentional fraud (i.e. intentionally billing for additional tests without authorization and proof of medical necessity), this can lead to a federal indictment and criminal prosecution on healthcare fraud charges.
• Financial Penalties – In both civil and criminal cases, COVID-19 testing compliance violations can lead to financial penalties. These penalties include fines, fees, recoupments, and prepayment review of future claims.
• Medicare Exclusion – Clinical laboratories accused of fraudulently billing Medicare for COVID-19 tests (or other tests) can also face Medicare exclusion. Unable to bill Medicare, many laboratories will face financial struggles that will put the viability of their businesses in jeopardy.
• Additional Consequences – Prosecution for healthcare fraud can lead to various other serious consequences as well. For example, in criminal cases, laboratory owners and executives can face federal incarceration for years, if not decades, under the False Claims Act and other statutes.

Establishing and Maintaining COVID-19 Testing Compliance

Given these risks, what can – and should – laboratory owners and executives do to ensure that they are not at risk due to COVID-19 testing compliance failures? Some of the key steps toward establishing and maintaining COVID-19 testing compliance include:

1. Conduct a Risk Assessment

The first step is to conduct an internal risk assessment. How comprehensive (and effective) is the laboratory’s current OIG compliance program? What gaps exist, and what issues need to be remedied? These are critical questions that need to be answered before new policies and procedures can be put into place.

2. Develop a Custom-Tailored OIG Compliance Program

After conducting an internal risk assessment, the next step is to develop an OIG compliance program. This compliance program should be custom-tailored to the laboratory’s specific risks and needs. It should address all aspects of compliance—from test validation to Medicare billing—and it should do so in a way that reflects the unique aspects of the laboratory’s operations.

3. Implement the Compliance Program Effectively

With appropriate policies and procedures in place, the next step is implementation. This involves publicizing the laboratory’s compliance program internally, conducting training programs for all relevant personnel, and implementing any necessary operational or technological changes.

4. Generate and Store Appropriate Documentation

Beyond developing compliance policies and procedures, clinical laboratories should also be generating and storing compliance-related documentation on an ongoing basis. Laboratories’ compliance programs should include systems that are designed to ensure that documentation will be available to demonstrate compliance to the OIG and DOJ when necessary.

5. Monitor and Enforce Compliance Internally

Clinical laboratories must also monitor and enforce OIG compliance on an ongoing basis. Among other things, this involves conducting periodic audits, remedying any issues identified through these audits, and imposing discipline for employees who commit compliance violations as warranted. In its compliance guidance, the OIG makes clear that it expects laboratories to impose discipline as an element of their compliance enforcement efforts.

Speak with an OIG Compliance Lawyer about Your Laboratory’s Needs

Our senior lawyers and consultants provide comprehensive OIG compliance representation for clinical laboratories. If you have concerns about your laboratory’s compliance efforts, our former DOJ prosecutors and OIG agents can help. To schedule a complimentary consultation at your convenience, please call 866-603-4540 or tell us how we can reach you online today.

cindi update links

Understanding the Importance of OIG Compliance for Laboratories in the COVID-19 Era

Clinical laboratories have played an essential role in the nationwide response to the COVID-19 pandemic. By testing extraordinary numbers of patients, laboratories have helped to stop the spread, and many laboratories have gone to great lengths in order to do so.

In the early days of COVID-19 testing last year, federal authorities such as the U.S. Department of Health and Human Services Office of Inspector General (OIG) relaxed some of the rules that typically apply to clinical laboratories. In order to ensure that laboratories could test as many people as possible as quickly as possible, they provided laboratories with more flexibility than usual to adapt to the unique circumstances presented. Now, however, the OIG is once again expecting strict compliance, and it is working with the U.S. Department of Justice (DOJ) to prosecute laboratories that fall short of their compliance obligations.

Laboratory Compliance and COVID-19 Testing

With this in mind, laboratory owners and executives need to prioritize compliance in 2021. They must ensure that they have a comprehensive understanding of their facilities’ compliance obligations, and they must adopt policies and procedures that will serve to protect their facilities during an OIG or DOJ investigation.

There are numerous aspects to OIG compliance for clinical laboratories—including aspects that are specific to certain types of testing and aspects that apply to laboratories’ operations across the board. Here are 10 areas of OIG compliance that are of particular concern for clinical laboratories with regard to COVID-19 testing:

• COVID-19 Test Validation – Prior to providing COVID-19 tests to patients, laboratories must ensure that the tests are valid and appropriate for use. Among other things, this involves obtaining the validation form for each test and reviewing it to make sure it meets all pertinent requirements.
• Medical Necessity for COVID-19 Testing – Medical necessity has been a key focus in recent OIG and OIG investigations targeting clinical laboratories in relation to COVID-19 testing. Laboratories cannot rely on physicians’ orders when making judgments regarding medical necessity, but must instead implement protocols and procedures that allow them to make their own determinations.
• Correct HCPCS Codes – The Centers for Medicare and Medicaid Services (CMS) have approved two specific HCPCS codes for COVID-19 testing. Clinical laboratories must use the newly-created U0001 HCPCS code to bill for CDC RT-PCR COVID-19 diagnostic test panels, and they must use a second newly-created code, U0002, for other non-CDC tests.
• Using Patient Information and Samples for Additional Tests – Many laboratories have gotten into trouble in 2021 for using patients’ information and samples obtained for COVID-19 testing purposes in order to bill Medicare for other tests. This includes, but is not limited to, cancer genetic testing, allergy testing, and respiratory pathogen panel tests. Laboratories can only bill for these additional tests if authorized and if the tests are deemed medically necessary.
• Compliance Regarding Physicians – The OIG expects clinical laboratories to take several steps in order to ensure that physicians do not order or bill for medically-unnecessary tests. This includes COVID-19 screenings. Laboratories must take the OIG’s expectations into account when developing their policies and procedures pertaining to standing orders, custom profiles, review of test orders, and other physician-related matters.
• Fees for Custom Profiles and Other Transactions – When entering into financial relationships with physicians, marketers, and other third parties, laboratories must be very careful to avoid running afoul of the Anti-Kickback Statute (AKS), Eliminating Kickbacks in Recovery Act (EKRA), and other pertinent federal laws. Unlawful financial relationships (i.e. prohibited referral fees for COVID-19 testing) are red flags for OIG and DOJ investigators, and they can lead to invasive investigations and serious federal charges.
• Patient Testing Documentation – Due to the heavy scrutiny clinical laboratories are facing with regard to COVID-19 testing, laboratories must be especially careful to maintain comprehensive and accurate patient files. Among other things, this means maintaining documentation of medical necessity for all tests, and it means having billing compliance documentation available to present to OIG and DOJ investigators if and when necessary.
• Test Result Reporting – Several clinical laboratories have also recently gotten into trouble for failing to report test results to patients and their physicians. Laboratories must timely report all COVID-19 test results (and other test results) in order to validate their Medicare billings.
• Medicare Billing – With regard to Medicare billing, there are numerous other aspects to compliance for laboratories as well. Laboratory owners and executives need to be absolutely certain that their Medicare billing compliance policies and procedures (as well as those of their third-party billing administrators, if applicable) are working effectively to prevent “false and fraudulent” claims.
• Demonstrating OIG Compliance – Finally, due to the OIG’s and DOJ’s recent focus on clinical laboratories’ COVID-19 testing practices, all laboratories that provide COVID-19 testing should be prepared to demonstrate compliance when asked to do so. Laboratories need to have all necessary documentation on hand, and they need to have response protocols in place that they can implement in the event of an OIG or DOJ investigation.

Consequences of Non-Compliance Regarding COVID-19 Testing

In today’s world, maintaining compliance is much more than a matter of simply checking a few boxes in the realm of corporate responsibility. For clinical laboratories, non-compliance can have significant consequences—especially when the area of compliance at issue is an OIG or DOJ enforcement priority. For laboratories that fail to devote sufficient time and attention to COVID-19 testing compliance, the potential consequences include:

• OIG/DOJ Investigation – The OIG and DOJ are currently targeting clinical laboratories for COVID-19 testing fraud. Laboratories that are non-compliant are far more likely to face invasive and high-risk investigations.

• Civil Enforcement Action – Even if OIG and DOJ investigators do not find evidence of intentional COVID-19 testing fraud, unintentional compliance failures can lead to civil enforcement action for clinical laboratories, their owners and executives, and other related entities.
• Criminal Prosecution – If OIG and DOJ investigators find evidence of intentional fraud (i.e. intentionally billing for additional tests without authorization and proof of medical necessity), this can lead to a federal indictment and criminal prosecution on healthcare fraud charges.
• Financial Penalties – In both civil and criminal cases, COVID-19 testing compliance violations can lead to financial penalties. These penalties include fines, fees, recoupments, and prepayment review of future claims.
• Medicare Exclusion – Clinical laboratories accused of fraudulently billing Medicare for COVID-19 tests (or other tests) can also face Medicare exclusion. Unable to bill Medicare, many laboratories will face financial struggles that will put the viability of their businesses in jeopardy.
• Additional Consequences – Prosecution for healthcare fraud can lead to various other serious consequences as well. For example, in criminal cases, laboratory owners and executives can face federal incarceration for years, if not decades, under the False Claims Act and other statutes.

Establishing and Maintaining COVID-19 Testing Compliance

Given these risks, what can – and should – laboratory owners and executives do to ensure that they are not at risk due to COVID-19 testing compliance failures? Some of the key steps toward establishing and maintaining COVID-19 testing compliance include:

1. Conduct a Risk Assessment

The first step is to conduct an internal risk assessment. How comprehensive (and effective) is the laboratory’s current OIG compliance program? What gaps exist, and what issues need to be remedied? These are critical questions that need to be answered before new policies and procedures can be put into place.

2. Develop a Custom-Tailored OIG Compliance Program

After conducting an internal risk assessment, the next step is to develop an OIG compliance program. This compliance program should be custom-tailored to the laboratory’s specific risks and needs. It should address all aspects of compliance—from test validation to Medicare billing—and it should do so in a way that reflects the unique aspects of the laboratory’s operations.

3. Implement the Compliance Program Effectively

With appropriate policies and procedures in place, the next step is implementation. This involves publicizing the laboratory’s compliance program internally, conducting training programs for all relevant personnel, and implementing any necessary operational or technological changes.

4. Generate and Store Appropriate Documentation

Beyond developing compliance policies and procedures, clinical laboratories should also be generating and storing compliance-related documentation on an ongoing basis. Laboratories’ compliance programs should include systems that are designed to ensure that documentation will be available to demonstrate compliance to the OIG and DOJ when necessary.

5. Monitor and Enforce Compliance Internally

Clinical laboratories must also monitor and enforce OIG compliance on an ongoing basis. Among other things, this involves conducting periodic audits, remedying any issues identified through these audits, and imposing discipline for employees who commit compliance violations as warranted. In its compliance guidance, the OIG makes clear that it expects laboratories to impose discipline as an element of their compliance enforcement efforts.

Speak with an OIG Compliance Lawyer about Your Laboratory’s Needs

Our senior lawyers and consultants provide comprehensive OIG compliance representation for clinical laboratories. If you have concerns about your laboratory’s compliance efforts, our former DOJ prosecutors and OIG agents can help. To schedule a complimentary consultation at your convenience, please call 866-603-4540 or tell us how we can reach you online today.

Brian J. Kuester

Brian Kuester offers his extensive experience to counsel companies and individuals under civil or criminal government investigation. When resolution requires litigation, clients choose Mr. Kuester’s proven court and litigation experience.