OIG Laboratory Audit Shows 17 Percent Increase in Medicare Spending

Sarasota, FL (WorkersCompensation.com) – According to a recent report from the OIG as well as news releases from the Department Of Justice(DOJ), laboratory services appear to be under scrutiny.

In announcement released earlier this week, the OIG reported that Medicare Part B spending on lab tests had increased 17 percent in a year’s time, which is the highest increase since the OIG started monitoring payments in 2014. The cost for lab tests increased from $8.0 billion in 2020 to $1.3 billion in 2021. Overall, Medicare spent $5.5 billion in 2021 on the top 25 tests, which made up 59 percent of total lab dollars. 

While the total spent for COVID-19 tests increased 29 percent from 2020 to 2021 across 26 reimbursable codes, the report indicates that spending for non-COVID lab tests increased as well. The OIG found that genetic tests, which have a high reimbursement, increased by 56 percent going from $1.2 billion in 2020 to $1.9 billion in 2021. The increase represents an increase in spending that exceeds rates prior to pandemic. 

Chemistry lab tests, which is the largest category of lab tests, also saw an increase however, the rates were below pre-pandemic levels. For 2020, the total spent on chemistry lab tests totaled $1.9 billion, and in 2021 that total increased to $2.1 billion. 

With an increase in spending in one certain category, DOJ investigators appear to have been taking a closer look at laboratory billing and practices. Just this week they announced two cases involving laboratory services. 

On December 14th, the DOJ announced a $420,000 settlement to resolve allegations of kickbacks involving laboratories in New Jersey, Texas, and South Carolina. According to the release, Texas physician Vijesh Patel, M.D. and his wife Laju Patel, who was also his office manager, agreed to pay out $422,789 to resolve allegations of receiving kickbacks for referring patients to the three separate laboratories.

According to the release, Dr. Patel allegedly received thousands of dollars disguised as investment returns from management company Indus MG LLC. Investigators assert that the money was for his patient referrals from 2016 to 2018 to True Health Diagnostics LLC, a laboratory in Frisco, Texas.

From 2018 to 2021, Dr. Patel also allegedly received disguised investment returns from management company Avior Group LLC for referrals to RDx Bioscience, Inc. in Kenilworth, New Jersey. The money was paid through an independent contractor, Corum Group LLC. In addition to receiving the investment funds, Dr. Patel received reimbursement that was above usual and customary rates from RDx for collecting urine specimens from his referred patients. 

The third laboratory allegedly involved in the case is Labtech Diagnostics LLC laboratory in Anderson, South Carolina. Investigators assert that Dr. Patel received kickbacks in the form of excessively inflated rental payments for the space rented by Labtech. 

In yet another DOJ announcement the same week, lab owner Minal Patel was convicted in a $463 million genetic testing scheme. Patel, owner of LabSolutions LLC, has been charged with one count of conspiracy to commit health care fraud and wire fraud, three counts of health care fraud, one count of conspiracy to defraud the United States as well as to pay and receive illegal kickbacks, four counts of paying illegal kickbacks, and one count conspiracy to commit money laundering.  Patel is scheduled for sentencing on March 7, 2023 and could be facing over 100 years in prison. 

According to the release, Patel utilized patient brokers, call centers, and telemedicine companies to target Medicare patients and tell them that Medicare covered expensive genetic cancer tests. Patel paid kickbacks to obtain the required doctor’s orders authorizing the tests to be done. To cover up the kickbacks, the patient brokers were required to sign a fake contract stating they were performing advertising services for his company LabSolutions. 

Additionally, the investigators contend that telemedicine physicians involved in the scheme that approved the testing often did not see the patient or even speak with them. As a result, from 2016 to 2019 LabSolutions submitted more than $463 million in fraudulent claims, resulting in $187 million in reimbursement, with Patel receiving $21 million directly. 

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