Office of the Inspector General says no to laboratory EHR fee kickbacks


The Office of the Inspector General (OIG) for the Department of Health and Human Services was recently asked to assess whether a business arrangement between a clinical laboratory, an electronic health record vendor (EHR) and referring physicians violates the federal anti-kickback statute.

Some of you may be thinking “Wait, I thought laboratories could no longer provide kickbacks with EHRs as of January 1, 2014.”

That is correct insomuch as labs can no longer donate an EHR to referring physicians, clinics, etc.  But the question before the OIG was whether a laboratory can legally pay EHR fees that would normally be incurred by referring physicians.

To help explain this issue, I once again asked Mr. Lee Dilworth, Chief Legal and Administrative Officer of American Pathology Partners, to summarize the OIG’s Opinion.

And just as with an earlier OIG Advisory Opinion, Mr. Dilworth readily agreed to help and put together a very nice summary, which is below.

Many thanks to Mr. Dilworth for taking the time to do this.


On April 8, 2014, the OIG posted Advisory Opinion 14-03 which should be of interest to any pathology lab receiving test orders and transmitting test results via electronic interfaces with clients.  EHR and interface vendors should also be interested.

Here, the OIG found that the payment arrangement for an interface involved “potentially problematic financial incentives” presenting “more than a minimal risk” of fraud and abuse under the Federal anti-kickback statute (AKS).  Readers should note that the AKS is a federal criminal statute that subjects both parties involved to potential hefty fines, imprisonment and exclusion from Medicare and Medicaid.

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CBO finds $3.4 billion savings if in-office self-referral loophole closed


The Congressional Budget Office (CBO) has scored President Obama's proposed 2015 budget that, among many other things, seeks to close the in-office ancillary services exception to the Stark Law and found Medicare would save $3.4 billion between 2015-2024 if the self-referral loophole were closed. This represents an 89% increase over the CBO's 2014 budget estimate. You will recall President Obama's 2014 budget sought to close the in-office self-referral loophole for radiation oncology, … [Continue reading]

State senator seeks to close in-office self-referral loophole in California

Ed Hernandez

  California state Senator Ed Hernandez has introduced Senate Bill 1215 which, if passed, would close the in-office ancillary services exception to the Stark Law in the state of California for anatomic pathology, advanced imaging, radiation therapy, and physical therapy. Sen. Hernandez, an optometrist, originally introduced SB-1215 on February 20, 2014 for the purpose of amending the Health and Safety and Insurance Codes. On March 24, 2014, however, the original text of the … [Continue reading]

Dr. Mark Stoler and Dr. Thomas Wright speak out about ATHENA trial

ATHENA trial

  Gynecologic pathologists Dr. Mark Stoler and Dr. Thomas Wright, both reference pathologists in the ATHENA trial, were kind enough to provide me with their thoughts regarding issues that have been raised on this site surrounding the ATHENA trial. First, a little background.  As many already know, the ATHENA trial was a multi-center, prospective study that was conducted to evaluate the Roche cobas HPV test as a potential primary screening test for cervical cancer as well as some … [Continue reading]

Husband may get another chance to prove LabCorp pap smear negligence

Timothy Lavelle, the husband of a woman who died of cervical cancer in 2008, may get another chance to prove a LabCorp cytotechnologist was negligent in missing abnormal cells on his wife's 2006 pap smear, according to the Georgia Court of Appeals. The case was before the appellate court because the trial court granted (in part) the motions LabCorp filed during the discovery period to prevent three expert witnesses from testifying and for summary judgement (ending the case in LabCorp's … [Continue reading]

ACLA and G2 Intelligence Host Webinar On Significant Medicare Payment Reform Changes to Lab Services

ACLA and G2 Intelligence Host Webinar On Significant Medicare Payment Reform Changes to Lab Services  New law establishes a market-based system for determining payment, delays payment adjustments for two years, new reporting requirements for clinical laboratories WASHINGTON, DC -  In order to inform clinical laboratories across the country facing major Medicare payment reform changes as the result of the recent passage of  physician reimbursement legislation, the American Clinical … [Continue reading]

College of American Pathologists introduces new immunohistochemistry validation guidelines


On March 19, the College of American Pathologists (CAP) released new evidence-based guidelines by which laboratories should validate all non-prognostic immunohistochemical (IHC) stains, and Dr. Allen Gown of PhenoPath was kind enough to give me his take on them. According to the CAP press release, the 14 recommendations/guidelines will "help ensure that an IHC test accurately measures the analyte of interest and that validation is appropriate for the test’s intended use."  The CAP also … [Continue reading]

New Medicare database does not go far enough to expose self-referral

The Centers for Medicare and Medicaid Services yesterday released the long-contested database which contains information on how much Medicare paid individual physicians in 2012.  While it does indeed provide some helpful information, it does not go far enough, in my opinion, in exposing the true financial impact of inappropriate self-referral. This data, which has been shielded from public view since 1979, is "part of the Obama administration’s efforts to make our healthcare system more … [Continue reading]

Dr. R. Marshall Austin discusses the ATHENA trial and the Roche cobas HPV test


Dr. R. Marshall Austin, Director of Cytopathology at Magee-Womens Hospital at the University of Pittsburgh, was kind enough to provide me with some of his thoughts about the ATHENA trial and the recent decision by a Food and Drug Administration (FDA) advisory panel to approve the Roche cobas HPV test as a first-line screening test for cervical cancer in women 25 years of age and older. I wrote about the panel's decision a couple of weeks ago, and that article led to a very nice reader … [Continue reading]

Aurora Diagnostics cites reimbursement woes in latest filing

Aurora Diagnostics filed its final 2013 financial report with the Securities and Exchange Commission (SEC) on March 25, and it highlights some of the difficulties laboratories are facing due to declining reimbursement from federal payors and pathology insourcing by referring physicians. The complete filing can be read here, but here are some of the more significant findings: Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to $37 million, a 44% … [Continue reading]

CMS reverses BRCA test reimbursement cut; Myriad Genetics stock rises

Myriad 8-K screenshot

The Centers for Medicare and Medicaid Services (CMS) has now decided to increase reimbursement for BRCA-1 and -2 gene sequencing by 52% to $2,184 effective April 1, 2014, effectively reversing its November 2013 decision to cut reimbursement for BRCA-1 and -2 gene sequencing to $1,438.  Since the announcement on April 1 after the market closed, the stock price for Myriad Genetics has increased almost 12%. The BRCA reimbursement roller coaster I first learned about this on April 1st when a … [Continue reading]

Senate passes CLFS reimbursement fix, SGR patch and ICD-10 delay

The US Senate last night passed the Protecting Access to Medicare Act of 2014 (HR 4302) which contains changes to the manner with which laboratory codes on the Clinical Laboratory Fee Schedule (CLFS) will be valued going forward, a year-long extension of the Sustainable Growth Rate (SGR), and a year-long delay in the transition to ICD-10. The bill now heads to President Obama's desk, and I am sure he will sign it. CLFS Readers will recall the Centers for Medicare and Medicaid Services … [Continue reading]

Uropathology laboratory LabMD files suit against Federal Trade Commission

FTC building

Uropathology laboratory LabMD, which was forced to suspend operations in January 2014, has filed suit against the Federal Trade Commission (FTC), stating the agency has abused its power in the manner with which it has handled the data breach action the FTC brought against LabMD. LabMD's complaint There is quite a bit of information in the 43 page complaint, which readers can refer to if interested, but the following represents a very brief summary of pertinent points within the … [Continue reading]

U.S. House seeks to change CLFS reimbursement policy in SGR legislation

House of Representatives

The US House of Representatives yesterday introduced legislation that would extend the flawed sustainable growth rate (SGR) formula until April 1, 2015, but would also change the manner by which tests on the Clinical Laboratory Fee Schedule (CLFS) are reimbursed going forward. Readers will recall it was not all that long ago a full repeal of the SGR looked like a real possibility, as it has never been cheaper to do so and actually had a good amount of bipartisan support.  But then politics got … [Continue reading]

Quest Diagnostics CEO Steve Rusckowski named new Chairman of ACLA board

Not a whole lot of pathology news out there so far this week.  Must be a lot of Spring Breaks going on around the country.  But, the American Clinical Laboratory Association (ACLA) was kind enough to let me know Quest Diagnostics President and CEO Steve Rusckowski is replacing David King, chairman and CEO of LabCorp, as the new Chairman of the Board of the ACLA. ACLA's press release is here. Many thanks to the ACLA for letting me know. … [Continue reading]