OIG focusing on laboratories involved in genetic testing scams


Recently the Department of Justice and Department of Health and Human Services Office of Inspector General announced charges against 35 individuals – including nine doctors – for their alleged participation in fraudulent genetic testing that cost Medicare more than $2 billion in unnecessary charges.


The scam involved recruiters (or marketers) who offered expensive, medically unnecessary genetic testing to Medicare beneficiaries – often seniors, who were approached at health fairs,  door-to-door visits, or who were targeted through aggressive telemarketing calls. The Medicare beneficiaries were offered the genetic tests for free once they provided their Medicare information, a copy of their driver’s license, and a DNA sample from a cheek swab. The recruiters would then get a doctor to sign off on the test so a lab could process it and bill Medicare. If the patient’s own health care provider refused to order the test, the recruiters would offer a kickback to their own group of doctors in exchange for signing off on the test. Once the labs ran the tests and received reimbursement from Medicare, they shared the proceeds of the Medicare payment with the recruiters.

This scam not only cost Medicare billions in unnecessary charges, it puts the victims at risk for identify theft. And, further down the road, they could be denied future coverage for genetic testing when it’s actually needed.  

Many of our clients have been approached about these types of opportunities, even within the past few months.  Keep in mind that Medicare requires testing to be ordered by a physician (or other authorized person) who is involved in the treatment of the patient 42 CFR §410.32 – recognizing that a patient may have multiple treating physicians. In the charges discussed above, similar to the opportunities offered to clients, the physician ordering the genetic test did not have a prior relationship with the patient. Although these opportunities may seem appealing as an additional revenue source for providers, it is always important to review the regulatory requirements as well as the potential Anti-Kickback Statute and Stark implications for any new arrangement. 

Genetic testing continues to be a hot button issue for enforcement, both in the government arena and by private payors. Every arrangement should be closely scrutinized with counsel. If you have questions, contact one of the McDonald Hopkins attorneys listed below.



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