Given your busy practice, you may have missed the front-page expose in the Wall Street Journal last September documenting the US Department of Justice’s ongoing investigation into the allegedly fraudulent business practices of five of the largest specialty reference labs.
Health Diagnostic Labs (HDL), Singulex, Boston Heart Diagnostics, Berkeley HeartLab, and Atherotech are all under investigation for allegedly providing physicians with excessive fees to draw blood.
Earlier this month, WSJ published a follow-up piece indicating that Health Diagnostics’ CEO, Tonya Mallory, has stepped down.
You might have also missed the continuing investigative journalism in Forbes entitled, Way Beyond Kickbacks, More Serious Conduct Alleged Against Medical Testing Company. In this expose, Forbes uncovered a pattern suggesting that HDL promoted excessive and often unnecessary laboratory testing by actively waiving patient co-pays in order to mask the amount of over-testing. The waiving of co-pays would constitute a breach of contract with payors.
And if you don’t keep up on medicolegal issues, you probably did not see that Cigna Health and Life Insurance filed an $84 million lawsuit claiming “HDL ‘lures’ patients to use its services by waiving patient co-pays, co-insurance or deductibles.” Cigna claims that HDL has billed the insurer “exorbitant and unjustified” charges and is involved in “a fraudulent fee-forgiving scheme.”
The ongoing federal investigation into the other four clinical laboratories also centers on whether these companies have employed illegal mechanisms to wave patient co-pays. Expect more fallout to come.
Physicians Under Scrutiny
As a physician, you might erroneously believe that you are shielded from liability. Not so!
There are reports that the FBI has been showing up in selected primary care offices to gather information on physicians’ laboratory practices. In New Jersey, 22 physicians and 11 others have admitted their role in a “bribery scheme” that prosecutors say was masterminded by New Jersey-based Biodiagnostic Laboratory Services. Jail sentences are now being handed out to these doctors.
In the coming months, it is going to be hard to avoid the fight for your patients’ blood, given the latest announcement that BlueWave Healthcare Consultants, the contract sales force that had been working for HDL, filed a lawsuit in US District Court in Alabama against HDL seeking nearly $205 million. The lawsuit was filed immediately after HDL terminated their contract with the Alabama-based BlueWave. Several BlueWave executives have ownership in HDL.
Expect your phones to ring as a horde of sales reps from both companies vie for your business. The finger-pointing has now begun, and it is going to get messy.
Finding the High Road
It’s time to take the high road. There are ethical specialty labs that aren’t being investigated for these allegedly fraudulent practices. These companies have maintained their ethics—to the extent of sacrificing growth—in the face of unsavory and likely illegal practices.
As you determine which specialty clinical reference laboratories deserve your business, keep in mind the following “red flag” guidelines that have been reference by several laboratory groups and ask:
1) Are the tests being offered to you bundled together in a defined panel that requires clinicians to order the same set of tests on all of patients, with no option to tailor the tests based on clinical assessment and physician judgment?
2) Along with the testing, is the lab suggesting a waiver of co-pays and all patient fiscal responsibility so that patients “will never see a bill?”
3) Are you being offered an above-market rate for your time and materials or space?
4) Does the lab offer free services such as health coaching or other programs intended to increase your referrals?
If you are evaluating a particular lab, and you answer “Yes” to any these questions, you should definitely raise your index of suspicion. Multiple “Yes” answers are a clear warning sign.
While it is not possible to get blood from a stone, it is possible for innocent physicians to avoid getting caught between the rock and the hard place where greed and poor decision-making have supplanted ethical patient care. Keeping abreast of the latest business practices in healthcare is just as important as staying current with the latest treatments.
Bottom line: When it comes to specialty testing labs, keep your eyes wide open!
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