By now, it’s probably no surprise to healthcare compliance professionals that there’s been a lot of enforcement in the genetic testing lab space. Over the past two or three years, there have been countless settlements, investigations, and indictments related to how genetic labs obtain their referrals. In this particular case, Ark Laboratory Network submitted patient DNA samples to various labs but was compensated in an improper manner. Ark made a deal behind the scene to be paid a percentage of Medicare reimbursements and/or a flat fee per DNA sample. The kickback scheme was covered up by issuing sham invoices to laboratories that purportedly reflected services provided at an hourly rate.
The fair market value fee for marketing services for labs should never be a percentage of Medicare reimbursements or a per-sample/patient fee structure. It’s Stark Law 101…volume or value of referrals.. The AKS and EKRA laws can also sometimes apply. The FMV fee for outsourced sales/marketing or management services is best structured as either a flat fee or a cost plus structure. Beware, under the “cost-plus” fee structure, the costs claimed/submitted by the outsourced management company need to be reasonable. I believe this to be an area prone to abuse.
Here is a link to the DOJ’s press release: https://www.justice.gov/usao-nj/pr/pennsylvania-man-admits-role-46-million-kickback-scheme-related-genetic-testing