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OIG Tracking Fraud, Inappropriate Use Within Rapidly Growing Genetic Testing Industry


NEW YORK (GenomeWeb) – Amid growing genetic testing use, the Office of Inspector General has been expediently going after fraudulent activities in the industry with the help of its data analytics center. 

At a recent lab industry meeting, Karen Glassman, senior counsel within OIG's administrative and civil remedies branch, detailed the types of fraud her group has caught labs committing, and many of them are occurring in the genetic testing space.

"Genetic testing is a very large interest to the government right now," Glassman said. "I'm not sure the things we're seeing always existed or they're newer." Some of the most prevalent types of fraud occurring in genetic testing involve inappropriate kickbacks to doctors for testing patients or for enrolling them into registries, and billing government payors for unnecessary tests.

Sometimes the fraud is perpetrated by the marketing firm hired by the lab, but in such instances the lab would still be held accountable. In an interview, Glassman noted instances where marketing firms hired by labs go to health fairs, church socials, farmers' markets, and adult day cares, and swab every person for genetic testing without getting physicians' orders. "Often those people aren't even receiving results, and they are billing federal healthcare programs for a lot of money for what we would deem not medically necessary,” she said.

Generally, the Centers for Medicare & Medicaid Services covers interventions, including genetic testing, that it deems medically necessary to treat a disease or condition. CMS has put out national coverage determinations and its Medicare contractors have put out local coverage decisions on certain genetic tests that they've determined to be reimbursable under certain circumstances.

But in many cases ― Glassman highlighted pharmacogenetics as an example ― Medicare isn't yet convinced that there is sufficient evidence showing that testing is medically necessary for the majority of indications. “Right now, a lot of [genetic testing] is considered not reasonable and necessary, and not payable by the Medicare program,” she said.

For example, as recently as last month, Prestige Healthcare agreed to pay the US government nearly $1 million to resolve allegations that it participated in a scheme to falsely bill Medicare for unnecessary genetic testing. In announcing this settlement, the government said that Prestige allowed a Southern California-based firm, called Genomix LLC, to conduct genetic testing on patients in its nursing homes without their physician's ordering such testing.

According to the US Department of Justice, Genomix claimed its genetic testing could help patients determine if they were metabolizing their drugs properly. Prestige's settlement doesn't resolve potential liability on Genomix's part, the government noted, and the investigation is ongoing.

"As genetic testing technology is evolving, we see the same types of clinical testing abuses that are evident in more established testing," Lamont Pugh III, the OIG special agent in charge, said in a statement. "Along with our law enforcement partners, we will investigate and prosecute violations in these newer healthcare technologies."

The seeming uptick in fraudulent activities in the genetic testing space may be the symptoms of a rapidly growing industry, hyped to usher in a future where healthcare is personalized. By one recent estimate, there are more than 60,000 genetic testing products on the market, and on average, eight to 10 new tests are launched on the market daily.

"Some of the labs we've looked at from 2013 to 2015 billed the federal healthcare programs in the billions of dollars, and were paid in the hundreds of millions of dollars," Glassman said.

Because the illegal activities her group has recently pursued in genetic testing are similar to the violations that have been prevalent in the lab industry as a whole, Glassman acknowledged that these abusive practices may not necessarily be a new trend. It may just be that OIG was unable to flag these activities in the past.

Historically, genetic testing labs stacked CPT codes to bill for services, which obscured payors' ability to see which tests were being performed and claimed for payment. However, in 2013, a set of new analyte- and procedure-specific codes went into effect for molecular diagnostics. With the help of these more granular CPT codes, OIG's Consolidated Data Analysis Center (CDAC) has been able to identify more precisely which tests doctors are ordering and labs are performing frequently.

Although the frequency with which a test is ordered isn't necessarily proof of wrongdoing, unusual utilization patterns often provide circumstantial evidence that investigators then follow up with audits and interviews. OIG may also get tipped off about wrongdoing via its hotline or through a lawsuit that's filed, and CDAC analysis can be helpful in corroborating these complaints.

The government's investigations have already resulted in a number of fraud allegations that genetic testing labs have paid hefty sums to settle.

In 2015, Pathway Genomics paid around $4 million to settle a DOJ lawsuit alleging that it improperly paid kickbacks to doctors each time they collected saliva from patients and submitted the samples to the lab for analysis. Some doctors received more than $13,000 in payment from the company, the DOJ alleged, but these doctors had never ordered these tests before enrolling in Pathway's physician payment program. The US government also accused Pathway of billing Medicare for these tests in violation of the law, though the company has denied any wrongdoing and voluntarily ended its physician payment program. 

Similarly, Millennium Health in 2015 agreed to pay $256 million to resolve allegations that it billed government healthcare programs for unnecessary urine testing and pharmacogenetic testing. The government also alleged that Millennium violated the anti-kickback statute by providing free urine drug test cups on the condition that they return the samples to the lab for testing. 

The anti-kickback statute under the Social Security Act restricts any inducements that encourage referrals for services reimbursed by a federal healthcare program. Arrangements between labs and referring physicians that violate this statute have historically been an active area of investigation for the OIG, which has put out a number of alerts on the topic. Most recently, in June 2014, OIG put out a special fraud alert to call out arrangements where labs provide remuneration to doctors for submitting patient data to registries they claim will advance research or accumulate knowledge that will help treat patients. 

This guidance is particularly relevant for the genetic testing industry as companies are increasingly setting up registries to collect the clinical utility evidence they need to demonstrate that testing is medically necessary and therefore should be reimbursed by CMS. Industry players have argued that data submissions to registries take valuable time from physicians' office staff, and that OIG's enforcement has made it challenging to encourage participation in such repositories.

OIG acknowledges that payments to doctors for data collection may be permissible under certain limited circumstances, but it's a violation of the anti-kickback statute if the intent of the compensation is to get doctors to test more patients. In the alert, OIG lays out specific characteristics of registry programs to help labs draw the line between permissible and impermissible compensation schemes. "Not all registries are illegal or violative of the kickback statute," Glassman said. "But intent is really important and it takes only one bad intent in order to violate the kickback statute."

The OIG's interest in tracking fraud in the rapidly growing genetic testing space, meanwhile, coincides with CMS efforts to curb medically unnecessary testing. In a report last year, the OIG estimated that Medicare payments for molecular pathology tests decreased 44 percent between 2014 to 2015, from $466 million to $259 million. 

One of the factors contributing to this reduction, OIG said, was that CMS stopped paying for genetic tests billed by Renaissance RX. The DOJ had also indicated it was looking into Renaissance for paying and pressuring doctors to enroll patients into a large study for evaluating pharmacogenetic testing. The firm was billing Medicare for the testing being done as part of the study. 

Another example of the types of violations OIG has been able to identify in genetic testing using CDAC analysis involves CPT code GO452. Used appropriately, this code is used to report the interpretation and written report of a medically necessary molecular pathology test, but the interpretation must go beyond simply relaying the test result to the patient.

"It's not supposed to be something that can be very quickly done by glancing at the test report, and it's not a code that you'd expect a non-geneticist physician to be claiming with frequency," Glassman said.

But CDAC analysts were able to track suspicious patterns of this kind in claims data, allowing OIG to send subpoenas to 24 doctors and physician practices and one lab. Further investigation showed that often there was no documentation or narrative report for why the code was claimed, according to Glassman. "These physicians were doing the genetic test and doing the same sort of interpretation that they would for any other test, just looking at [the report] and giving the results to the patient and not taking the extra steps that makes that code billable," she said. The settlements with doctors and the lab have so far totaled nearly $900,000.

In the broader lab testing space, CDAC's data-mining efforts have been able to uncover instances where labs are billing for multiple claims for urine drug screening, when only a single unit can be billed for each patient encounter. Another scheme is "up-coding" low-to-moderate complexity drug screening tests in order to bill them as high-complexity tests. OIG's pursuit of these types of abusive practices has resulted in 10 settlements totaling around $9 million.

And there may be more settlements to come, Glassman suggested. OIG is continuing to work with CDAC to mine utilization data and investigate these and other types of violations in genetic testing and in the broader lab industry. “There are many, many ongoing investigations that I can't discuss,” she said.