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Stark Law And Anti-Kickback Statute Violations: Clinical Laboratory Flat Fee Laboratory Service Contracts

Doctors Get Unlimited Clinical Laboratory Services For $1,500 Flat Fee Per Month

Posted on Friday, December 28, 2012, 06:11:36 PM Eastern Time USA by JOSEPH J. PAPPACODA, ESQ..




Stark Law Violations and Anti-Kickback Statute Violations address unlawful patient referrals, for financial remuneration, for which no safe harbor rules exist.

The Stark Law, codified at 42 U.S.C. § 1395nn, prohibits physicians from referring patients to entities furnishing "designated health services", otherwise reimbursable under Medicare and/or Medicaid.

The term designated health services is defined in 42 U.S.C. § 1395nn (h)(6) as follows:

(6) Designated health services

The term “designated health services” means any of the following items or services:

(A) Clinical laboratory services...

42 U.S.C. § 1395nn (h)(6)(2012)(see also 42 C.F.R. § 411.351)

This blog addresses a common scenario being utilized by unscrupulous clinical laboratories to solicit Medicare and Medicaid patient billing numbers, which can only be for the purpose of perpetrating Medicare and Medicaid fraud under the False Claims Act on a large scale.

This is how the Clinical Laboratory Scheme Works:

A Clinical Laboratory Representative will cold call a doctor's office and agree to provide all clinical laboratory services to the doctor for a flat fee of $1,500 per month, regardless of actual cost for the clinical laboratory services ordered. The motive by the laboratory is to obtain Medicare and Medicaid patient billing numbers. Depending on the percentage of Medicare and Medicaid patients seen at the doctors office, the flat fee charged may increase or decrease slightly.

The doctor who is used to paying five times that amount for monthly clinical laboratory services, cancels his or her old lab and signs up for the flat fee lab. The doctor sees immediate profits because now the doctor can charge all patients, including private pay patients, for clinical laboratory services at standard rates, but does not need to pay for those services ordered. Sort of like an all you can eat buffet. The cost savings to the doctor is an upfront-cash kickback to the doctor, for which the doctor is likely to keep his or her mouth shut. This results in a substantial windfall to the doctor immediately.

The Clinical Laboratory then engages in unscrupulous billing practices once it obtains the new Medicare and Medicaid patient billing numbers in house.

The Clinical Laboratory keeps an accounts receivable on the books for that doctor, which keeps growing monthly, based on actual cost of the laboratory services ordered by the doctor, minus the $1,500 monthly flat fee charged to the doctor. These accounts receivable numbers get massive rather quickly. The Clinical Laboratory never expects to receive this money from the doctors, it just keeps the balance running on the books. It is believed that the Clinical Laboratory keeps these accounts receivables on the books in order to create some kind of defense in the event it is audited. Moreover, it could be the basis for a tax loss for reported uncollected accounts receivables for income tax purposes.

The Clinical Laboratory must be involved with billing fraud, because it could not afford to charge a $1,500 flat fee to doctors utilizing $10,000+ monthly in laboratory services. That is deductive logic. If something was not askew with the Clinical Laboratories Medicare and Medicaid billing practices with these referred patients, it would be bankrupt in a very short period of time.

This above-described practice by unscrupulous clinical laboratories is rampant in the United States right now. Tens of thousands of doctors in the United States have current flat fee arrangements with clinical laboratories across America, just as described above.

The Clinical Laboratory Flat Fee Scenario described above blatantly violates The Stark Law and Anti-Kickback Statute and fosters Medicare Fraud and Medicaid Fraud by the laboratories related to illicit use of patient billing numbers.

It is unnecessary to prove unlawful billing practices by the Clinical Laboratory to Medicare or Medicaid if a case can be made relative to patient referrals obtained from a doctors office based upon a flat fee clinical laboratory contract that grossly understates actual services provided to that doctor by the lab and actual costs incurred for those services by the lab. It is unlikely that a reputable Clinical Laboratory would ever bill a doctor for laboratory services rendered at an 85% loss monthly. That is the bright line indicator of fraud.

For further information on the False Claims Act, or your specific Quitam case, please contact Attorney Joe Pappacoda directly at 954-560-2616, or use the link found at USFraudCases.com.

Copyright 2012 Law Offices Of Joseph J. Pappacoda, Fort Lauderdale, Florida 33301.



The blog material on this page is provided for reference only, and it is not to be construed as legal advice in any fashion. For more information, please see the written DISCLAIMER.

 

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