With COVID-19 testing having become the primary focus of the clinical laboratory world, it should be no surprise that related fraud is likewise an area of growing concern.
Last month, the HHS Office of Inspector General announced that it had begun examining trends in Medicare claims data for lab testing to look for ordering patterns that could indicate fraud.
While the OIG, which declined to comment for this story, does not anticipate issuing a report on its findings until next year, the U.S. Department of Justice has already charged a number of actors with fraud related to SARS-CoV-2 testing.
The strong demand for and limited supply of SARS-CoV-2 tests along with the move by CMS to relax rules for certain test orders during the pandemic makes the situation a potentially ripe one for fraud. At the same time, some attorneys expressed that the lack of clarity around medical necessity and SARS-CoV-2 testing could expose innocent labs to liability.
In its statement announcing its planned fraud analysis, the OIG noted that CMS "has relaxed rules related to COVID-19 testing and other associated diagnostic laboratory testing to no longer require an order from the treating physician or nonphysician practitioner (NPP) during the COVID-19 public health emergency."
This, the OIG added, "could allow unscrupulous actors more leeway for fraudulent billing of unnecessary add-on testing."
In March, the FBI arrested a Georgia man on charges of conspiring to violate the Anti-Kickback Statute and conspiring to commit healthcare fraud. The government alleged that the man, Erik Santos, had steered Medicare patients to labs for SARS-Cov-2 testing in exchange for kickbacks. According to the FBI, Santos had allegedly been collecting kickbacks on genetic cancer tests prior to the pandemic and had expanded into SARS-CoV-2 testing. Santos is also charged with bundling testing for the virus with more expensive respiratory virus panel testing.
In May, the Department of Justice also charged a Georgia woman, Ashley Hoobler Parris, with conspiring to violate the Anti-Kickback Statute and conspiring to commit healthcare fraud. As with Santos, the government alleged that Hoobler Parris was already receiving kickbacks for recruiting patients for cancer genetic testing when she moved into SARS-CoV-2 testing and respiratory panel testing.
In June, the DOJ charged Mark Schena, president of protein array firm Arrayit, with submitting more than $69 million in false claims for allergy and SARS-CoV-2 testing. The DOJ alleged that in 2018 Schena launched a scheme paying kickbacks to recruiters and doctors to order unnecessary allergy testing from the company and that this year Schena made false claims about the company's ability to launch a SARS-CoV-2 on its platform in an effort to deceive potential investors.
SARS-CoV-2 testing is not particularly lucrative in and of itself; rather, as the OIG announcement noted, the office's primary concern with regard to SARS-CoV-2 testing fraud is "unnecessary add-on testing."
"A $60 COVID test in and of itself, even if you find 10,000 patients, that alone is probably not enough to warrant the government's attention," said Jason Mehta, a partner at Bradley Arant Boult Cummings. "But that, coupled with more expensive tests, with many more patients, etc., that is when it gets on the government's radar screen."
Mehta, who previously handled a number of healthcare fraud cases as an assistant US attorney, added that "the one overarching theme I have seen with healthcare fraud prosecution is it is really all about the money. The government follows those cases where there is a lot of money going out the door, and the defendants that are charged either civilly or criminally are often the ones that are the most financially successful."
"Most prosecutions have not been solely COVID-19 based," he said. "Going forward, these prosecutions will likely be based on other badges of fraud, as well."
Mehta noted, though, that "where [the government] can rightfully claim that some of this is at least linked to COVID-19 fraud, I think they are going to do so."
"When I was a prosecutor, we felt it was very appropriate to publicize cases of alleged fraud with press releases because we viewed part of our job as deterrence, and one way you deter people is by advertising other cases," he said. "With a lot of the cases during COVID-19, if you dig deeper into the cases, there are other issues in play, but DOJ is trying to link it to COVID-19 to get a splashy headline."
David Gee, a healthcare attorney and partner at Davis Wright Tremaine, said that given the attention being paid to add-on testing, he was advising his lab clients to be careful about how they offered panels of testing related to SARS-CoV-2.
He said he had seen several proposals recently for testing with infectious disease panels, particularly in long-term care.
"It has been my reaction to remind people very clearly about add-on testing or panels and the need for transparency both as to the contents of the panel and the price and the principal of choice, of needing to give the ordering practitioners the option to elect the larger panel or just its components," he said.
Gee said that another potential trouble area is with reflex testing, particularly in the case of point-of-care tests where it could make sense to follow up a result with a higher performance lab-based SARS-CoV-2 test.
"If there is a purpose for a reflex or follow-up, that might be OK, but it needs to be the case that the ordering practitioner makes that decision," he said.
He added that the hurry with which SARS-CoV-2 testing is being ordered and the shifting guidelines around who should be tested are also cause for concern.
"Because testing is happening very quickly, there are circumstances where there is less opportunity for the ordering practitioner to review or consider the various options or even interface directly, except maybe telephonically, with the patient," he said. "My concern with all this is that at some point in retrospect, someone like DOJ will say, hey, a lot of this ordering was done without clear documentation of the physician making a knowing choice or without even a physician in the mix."
There is also the opportunity for more straightforward illegal activity, said Matthew Diggs, Gee's colleague at Davis Wright Tremaine and a former assistant United States attorney for the Western District of Washington with experience prosecuting lab fraud.
"Any time there is a new test that requires a practitioner's order, particularly here where there is so much public desire to get the test, you have a situation that is ripe for kickbacks, where HHS is going to be looking at labs incentivizing practitioners to write orders for these tests, whether that is by something you would think of as a classic kickback or something more like [providing] sample collectors or swabs," he said.
Diggs said that given the strong demand for tests, another form of SARS-CoV-2-related fraud that could take place is people offering fake tests in order to collect patient information that they could then use in a future scheme.
"Any time a pop-up lab is collecting patient information, there is the risk that that information can be used to bill insurance companies in fraudulent ways," he said. "When you have a health crisis, patients are going to be less careful about giving over personal information to someone they think is providing them a test."
One issue that could muddy the waters with regard to certain fraud cases is the fact that medical necessity remains somewhat hazily defined when it comes to SARS-CoV-2 testing.
"I think with many other alleged fraud schemes, the government can clearly point to medical necessity or lack thereof to prove its case," Mehta said. "With COVID-19 it is much more difficult. It's hard to determine who is a presumptive patient. You have a lot of people who are very bright who are advocating for much more expansive testing with much more relaxed conditions as the basis for testing. So I think the medical necessity angle is going to be much harder to allege in these cases."
"When you have these long lines for testing and you have limited testing, people waiting in a car for six hours to be tested, it's somewhat hard to overutilize tests," he added.
Gee, suggested, however, that this fuzziness around medical necessity could cut both ways.
"If you look back a couple of months, I would say… that in trying to respond to the demand with a number of conflicting messages and directives from states and from the federal government, it has been difficult for labs to know what the right thing is to do," he said.
He cited as an example, the seemingly contradictory attitudes towards employer, school, and nursing home SARS-CoV-2 testing, which is widely advocated by many public health and government officials but which, according to HHS guidance, falls outside of required coverage for insurers.
Gee said that some level of uncertainty was understandable given "that all of this is emerging and guidance and positions change, but there is risk in that situation."
"I can imagine down the road when all the money has been spent and people are looking around to find out where it has been overspent, this could be a concern," he said. Payors "looking back will see spikes in utilization and will want to try to recover money. It's going to be an interesting time trying to sort that out."
This story first appeared in our sister publication 360Dx, which provides in-depth coverage of in vitro diagnostics and the clinical lab market.