Physician ancillary service joint ventures continue to proliferate and not surprisingly, federal and state regulators are on the lookout for arrangements which may violate fraud and abuse laws .  In its recent “Special Fraud Alert: Laboratory Payments to Referring Physicians”, the Office of Inspector General (OIG) has (once again) expressed concern over financial arrangement between physicians and clinical laboratories to which they may refer.  In the alert, the OIG focus on two types of financial arrangements which they believe raise substantial risk under the anti-kickback statute:

1.            Payments by clinical laboratories to physicians to collect, process, and package patients’ specimens; and

2.            Payments by clinical laboratories to physicians to report patient data to “registries” established by the clinical laboratories.

With regard to specimen collection arrangements, the OIG cites the following characteristics as potentially problematic:

• Payments that exceed fair market value for services actually rendered by the physician;
• Payment for services for which payment is also made by a third party, such as Medicare;
• Payments made directly to the ordering physician rather than to the ordering physician’s group practice, which may bear the cost of collecting and processing the specimen;
• Payments made on a per-specimen basis for more than one specimen collected during a single patient encounter or on a per-test, per-patient, or other basis that takes into account the volume or value of referrals;
• Payments offered on the condition that the physician order either a specified volume or type of tests or test panel, especially if the panel includes duplicative tests;
• Payments made to the physician or the physician’s group practice, despite the fact that the specimen processing is actually being performed by a phlebotomist placed in the physician’s office by the laboratory or a third party.

With regard to registry arrangements, the OIG cites, among other things, the following characteristics of concern:

• The laboratory requires, encourages, or recommends that physicians who enter into Registry Arrangements perform the tests with a stated frequency (e.g., four times per year) to be eligible to receive, or to not receive a reduction in, compensation;
• The laboratory collects comparative data for the Registry from, and bills for, multiple tests that may be duplicative or that otherwise are not reasonable and necessary;
• Compensation paid to physicians on a per-patient or other basis that takes into account the value or volume of referrals;
• Compensation paid to physicians which is not fair market value for the physicians’ efforts in collecting and reporting patient data; and
• Compensation paid to physicians that is not supported by timely documentation memorializing the physicians’ efforts.

Physicians considering entering in to financial arrangements with clinical labs should review their arrangements carefully for compliance with not only the federal anti-kickback statute but other federal and state fraud and abuse laws.