Recently, the DOJ expressed its renewed enforcement action against COVID-19-related fraud with the creation of the COVID-19 Fraud Enforcement Task Force.  https://www.justice.gov/opa/pr/attorney-general-announces-task-force-combat-covid-19-fraud  Most of the DOJ’s enforcement activity to date has focused on criminal prosecutions relating to the Paycheck Protection Program, Economic Injury Disaster Loans, and unemployment insurance benefit claims. However, they are now focusing on other areas, such as AKS violations, medically unnecessary testing, telehealth, vaccine-related fraud, and covid relief fraud.

One of the main areas ripe for kickback violations is in the COVID testing space. The most recent case involved a GA man who was paid kickbacks on a per-test basis for every COVID test patient submitted to a lab, provided that those tests were bundled with significantly more expensive respiratory pathogen panel tests. https://www.justice.gov/usao-nj/pr/georgia-man-pleads-guilty-fraud-and-kickback-scheme-involving-covid-19-and-cancer-genetic

Another area prone to abuse and kickbacks is specimen collection service arrangements with labs.   

The services agreements are those arrangements where the collection site is performing only the nasal swab and not undertaking any type of management or marketing functions.  It’s my understanding that these arrangements can be structured on a $/test basis and still comply with EKRA and AKS.  Appraisers are encountering quite a challenge estimating the FMV of specimen collection services.  

In assessing the FMV of specimen collection services, the first instinct is to observe market-based rates and established benchmarks, such as CPT 99211.  Specifically, CMS said; “For the duration of the COVID-19 PHE, we are therefore finalizing on an interim basis that when the services described by CPT code 99211 for a level 1 E/M visit are furnished for the purpose of a COVID-19 assessment and specimen collection, the code can be billed for both new and established patients.” CMS, in the same paragraph, notes that direct supervision for specimen collection may be met through the “virtual presence of the supervising physician or practitioner using interactive audio and video technology for the duration of the public health emergency.” [1]The current Medicare reimbursement for this code is only $23.03 (while the Medicare reimbursement for the entire COVID test is about $51). But, this code and reimbursement were originally intended for testing performed in a traditional medical office where the practice would be reimbursed for performing other services.

The remote specimen collection sites are a new and evolving business model with start-up costs and overhead, albeit lower than a traditional physician’s office. The current reimbursement of $23.03 doesn’t come close to supporting the same services being provided in a dedicated remote site.  Based on this analysis, the appropriate FMV for specimen collections services is somewhere north of the $23.03 reimbursement for CPT code 99211, but less than the $51 Medicare reimbursement for the entire test.  Remember, the specimen collection sites are simply performing a portion of the whole testing service.

If you need an FMV opinion for specimen collection services, please give me a call.


[1] CMS-5531-IFC, released April 30, 2020 page 188