As the year comes to a close, the government has signaled a specific focus on clinical laboratories for 2023.  On December 6, 2022, the U.S. Department of Health and Human Services Office of the Inspector General (OIG) issued a Report entitled, “Labs With Questionably High Billing for Additional Tests Alongside COVID-19 Tests Warrant Further Scrutiny” (Report).  The Report discusses why the study pertaining to the billing of additional tests alongside COVID-19 testing was conducted, how it was conducted, and what the key takeaways of the study are.  This was followed by OIG’s issuance in mid-December of a Data Brief reviewing Medicare Part B spending on lab tests entitled, “Medicare Part B Spending on Lab Tests Increased in 2021, Driven by Higher Volume of COVID-19 Tests, Genetic Tests and Chemistry Tests” (Data Brief). 

The Report first addresses the fact that Medicare Part B spending on COVID-19 laboratory tests increased steadily with additional add-on tests that indicated a possible set of “outlier” laboratories billing for tests, raising a concern about potential fraud, waste, and abuse. As such, the OIG conducted a study into the billing for additional tests alongside COVID-19 tests.The initial analysis of Medicare Part B claims data demonstrated that “certain labs billed Medicare Part B for questionably high levels of add-on tests alongside COVID-19 tests.”  OIG performed an outlier analysis to identify labs that billed for add-on tests at questionably high levels when compared to other labs that billed for COVID-19 tests. There were two categories created for outlier labs.  One category focused on labs in which add-on tests constituted a high proportion of each lab’s total number of tests. The second category was those labs for which add-on tests constituted a high proportion of each lab’s total payments for tests. All Medicare Part B claims paid for COVID-19 tests during 2020 involving the add-on of individual respiratory tests, respiratory pathogen panels, and genetic tests were examined.

In short, the OIG found that:

  • 378 labs billed Medicare Part B for add-on tests at questionably high levels in volume, payment amount, or both compared to the 19,199 other labs;
  • 276 labs billed for high volumes of add-on tests on claims for COVID-19 tests;
  • 263 labs billed for high payment amounts from add-on tests on claims for COVID-19 tests;
  • 161 labs billed for both high volumes of add-ons and high payment amounts from add-ons on claims for COVID-19 tests; and
  • A small number of labs had at least 10 claims for which two labs had billed for the same enrollee for the same tests on the same day.

OIG further explained that on their claims for COVID-19 tests, some of the 378 labs billed for add-on tests in combinations that had little if any variation across patients, suggesting that the tests were not tailored to individual patients’ needs. In fact, one outlier lab regularly billed for a combination of five add-on respiratory tests on almost all of its claims for COVID-19 tests. OIG noted that for these “outlier labs,” the average per-claim Medicare payment was $666, covering both COVID-19 and add-on tests, compared to an average payment of $89 to all other labs that billed for COVID-19 tests and any add-on tests.

The OIG concluded that such high levels of billing for add-on tests raise concerns about potential fraud, which demonstrates a need for additional investigation into the 378 outlier labs.  OIG therefore referred these labs to the Centers for Medicare & Medicaid Services (CMS) for further investigation.

The OIG also issued a data brief detailing the Medicare Part B spending on laboratory tests since 2020, noting a “17 percent increase from 2020.” The OIG found that despite the Protecting Access to Medicare Act of 2014 that lowered the Medicare rates for many laboratory tests, there was a significant increase in spending on laboratory tests. OIG identified the top 25 tests, which mirror many of the findings in the Report, and noted that COVID-19 tests, certain chemistry tests, and genetic tests had increased in volume.  Notably, the OIG called out the increase spending on genetic tests, stating that there has been “an upward trend since OIG began monitoring spending on lab tests in 2014.”  The OIG further stated, “The number of genetic test procedure codes on the CLFS continues to grow and total spending on genetic tests has more than tripled since OIG began monitoring payments in 2014.” 

The Report and Data Brief continue 2022’s trend of focusing on payments made to laboratories, particularly with respect to genetic testing and COVID-19 testing.  The enhanced oversight by OIG and CMS continues to suggest that labs should focus on compliance and ensure adherence to all statutory and regulatory billing requirements.