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Natera Settles Billing Lawsuit With US Government for $11.4M

NEW YORK (GenomeWeb) – Natera last week agreed to pay $11.4 million to settle a lawsuit with the US government that alleged the firm submitted false claims to several government health programs.

Two former Natera employees filed a whistleblower lawsuit in 2015 against Natera, alleging it used incorrect CPT codes when billing government health programs. The suit, filed in the US District Court for the Western District of Kentucky, claimed that between 2013 and 2016 the firm used incorrect CPT codes for its genetic testing services when billing Medicaid, TriCare – a healthcare insurance program for US military personnel – and the Federal Employee Health Benefits Program. According to the suit, the incorrect CPT codes enabled non-reimbursable tests to be reimbursed or enabled tests to be reimbursed at a higher rate than otherwise allowed.

According to the complaint, the former employees who filed the suit are Sallie McAdoo, who most recently served as director of medical education and clinical affairs, and her husband, Steven Aldridge, who worked in test accessioning and followed up with providers to see whether results of Natera's Panorama were confirmed by diagnostic testing.

Natera denied the allegations and as part of the settlement terms did not admit any wrongdoing.

Under the terms of the settlement, Natera will pay $5.3 million immediately, another $5.3 million plus interest in four quarterly installments, and $756,183 to state Medicaid programs. The former Natera employees who initially brought the suit are entitled to 19.6 percent of each payment.

In a statement, Natera said that the company agreed to the $11.4 million settlement "with no admission of wrongdoing. There will be no corporate integrity agreement associated with the settlement and Natera will continue working with all government payors."

US Attorney Russell Coleman, on behalf of the Inspector General of the Department of Health and Human Services, said in a statement that pursuing healthcare fraud was a priority of its office. "Overbilling federal healthcare programs steals from taxpayers and drives up the cost of healthcare for us all," he said.

In the suit, the former Natera employees alleged that the improper CPT codes resulted in over $80 million in improper claims for its products of conception test, Anora, and its Panorama noninvasive prenatal screening test and microdeletion test.

Specifically, the suit alleged that Natera should have used a code specific to SNP-based testing, rather than the code it used for DNA and chromosomal analysis. Natera's tests use next-generation sequencing to analyze a set of SNPs that enables it to determine whether a sample has specific chromosomal aneuploidies.

The US Centers for Medicare & Medicaid Services does not reimburse for the SNP code, but does reimburse for chromosomal testing.   

The suit also alleged that Natera billed multiple codes per tests to obtain higher rates of reimbursement.

In an interview, Natera officials said that when it launched its tests, there was not an assay-specific code available, and so it enlisted a "nationally recognized coding expert" to help it determine how to bill for its tests. Natera added that the fact that the settlement did not include a corporate integrity agreement was important since that indicated there was no intentional wrongdoing. In addition, there are now CPT codes available specific to NIPT for chromosomal aneuploidy screening, as well as for microdeletion testing that Natera now uses. 

Piper Jaffray analyst William Quirk wrote an in research note that the investment bank does "not believe that this has any future implications because of the exhaustive nature of the investigation (and since Natera uses specific codes which clearly identify the tests)."