Abusive payment demands for COVID-19 testing
To encourage the widespread availability and public use of COVID-19 testing during the pandemic and to reduce barriers to testing, the federal government enacted speedy but seemingly conflicting guidance regarding coverage of COVID-19 testing services from non-contracted laboratory providers. The guidance increased patient access to testing services and reduced barriers to obtaining testing by encouraging new entrants into the laboratory testing community.
On the flip side, loose federal regulatory guidance led to a number of providers taking advantage of the public health emergency by engaging in abusive billing practices, performing unnecessary services and/or committing fraud. Notably, a number of providers performed unrequested and unnecessary tests and/or submitted excessive billed charges for tests many multiples above Medicare rates.
While a handful of bellwether cases creeping throughout the U.S. court system are highlighting these issues, the full scope and extent of abusive billing by laboratory providers remains unknown. It will take time for claims data to become clearer and more robust and for additional information to be uncovered surrounding the circumstances of the various laboratory tests that were performed and billed.
In the meantime, our team has identified some best practices for preventing and uncovering these abusive billing practices and how to approach litigation in the event that it is necessary.
Tips for uncovering and/or preventing abusive COVID-19 lab billing
- Robust data analytics. Identification of patterns that may establish testing was done as a part of a general surveillance program, such as workplace or school testing, that is not required to be covered under federal regulatory guidance.
- Targeted medical record requests. Medical record requests are an important tool for identifying the circumstances in which the testing was performed and who performed the testing. Record review may also assist in identifying trends.
- Strategic public record requests. Freedom of Information Act requests to the Centers for Medicare and Medicaid Services (CMS) and state licensing agencies can be a goldmine of information. Many of the actors involved in questionable COVID-19 testing and billing practices likely did not comply with state licensing requirements or Commission on Office Laboratory Accreditation (COLA) regulations if they performed testing at unlicensed locations. Information regarding a laboratory’s ownership and affiliation may also reveal fraudulent or abusive practices, such as manipulating the submission of claims for services performed by an in-network entity that were then billed through an out-of-network entity under common ownership to inflate payments.
Tips for developing claims and defenses for COVID-19 lab test litigation
- Consider the tests billed. Single out panel tests, which are often the most expensive tests at issue, and pay attention to collection fees, which might not require coverage. Similarly, to the extent that multiple tests (such as antigen and antibody tests) are performed on the same date, it is possible to argue that both are not required to be covered
- Examine the circumstances around the tests. If a common physician requested laboratory tests involving a significant number of patients in a short time period, examine the circumstances of the patient population. Workplace and school monitoring tests are not required to be covered under federal guidance.
- Consider the theories asserted. Many providers assert claims under the Families First Corona Virus Response Act (FFCRA) and the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), but it can be argued that neither imparts a private right of action. Alternative theories may include unjust enrichment and quantum meruit (pay what’s due) theories where there is a developed body of case law that no benefit confers to a health insurer in the provision of health care services to members by non-contracted providers.
- Examine state price-gouging laws. Such laws cover times during a state of emergency, and they prohibit abusive pricing and billing behavior. Federal guidance on the coverage of COVID-19 lab tests is deferential to state price-gouging laws.
Durable Medical Equipment
A second area where a high risk of abusive and/or fraudulent billing exists is durable medical equipment (DME). This is an area of particular concern due to increased consolidation among DME providers and because these types of medical services and supplies are more difficult to monitor.
Increased risks around DME
- Consolidation among DME providers. This can lead to entities acquiring legacy contracts with generous fee schedules to then pass through a significantly increased volume of supplies or services that were not contemplated under the original contracts. DME providers have been known to structure acquisition agreements in ways to circumvent anti-assignment clauses in contracts.
- Problematic oversight of DME care management companies. Payors often have contracts with third-party companies to assist in managing DME. A lack of adequate oversight of those contracts can lead to contractors ordering large amounts of equipment without specific medical provider orders.
- Failure to align payor coding policies on DME with Medicare policies on DME. Payors may be susceptible to improper or abusive billing of DME under unlisted Current Procedural Terminology (CPT) / Healthcare Common Procedure Coding System (HCPCS) codes where Medicare has provided updated guidance on correct coding for these services. This can lead to overpayment recoveries against payors by CMS and its auditing partners.
- Provider billing abuse of CPT/HCPCS unlisted or miscellaneous codes. These code types are highly susceptible to abusive billing where lower-paying codes might better describe the equipment or services rendered.
Identifying and preventing abusive or fraudulent DME supplies and services
While these types of supplies and services are susceptible to fraud and abuse by health care providers, many options are available to payors to help detect and otherwise prevent making payments for claims involving these problematic behaviors:
- Update provider contracts to more recent template contracts. DME contracts are often legacy contracts that may be 10 or more years old. Updating contracts can help discourage providers from engaging in questionable billing practices.
- Update template contract provisions on notification requirements. Strengthen provisions on the change of ownership / control of a DME contract. Distressing provider billing practices often occur when a new owner or administrator takes control of the provider or the contract. Having robust notification provisions keeps the payor informed about its contractors.
- Update credentialing and re-credentialing requirements to ensure more robust disclosures on provider ownership and management, as well as services and equipment provided. This will help the payor identify whom they are doing business with and prevent “creative” transactions from circumventing contractual anti-assignment provisions.
- Monitor how providers select DME. Consider outreach questionnaires to the DME providers or health care providers to determine whether they are getting any questionable financial incentives for selecting a particular piece of equipment or product.
- Ensure the payor’s fee schedules, coding policies and payment guidelines are up to date and follow current industry practices for coding, including recent Medicare guidance.
- Update coding payment policies regarding the use of unlisted or miscellaneous codes to ensure clear guidance as to when the codes should be used for payment.