December 14, 2016

U.S. Health and Human Services Office of the Inspector General Advisory Opinion: Free Lab Labeling Services May Violate Anti-Kickback Statute

By the C|C Whistleblower Lawyer Team

The U.S. Health and Human Services Office of the Inspector General (HHS-OIG) recently reiterated that “The OIG’s position on the provision of free or below-market goods or services to actual or potential referral sources is longstanding and clear: such arrangements are suspect and may violate the anti-kickback statute, depending on the circumstances.”

In addition to cracking down on fraud by conducting audits, investigation, and evaluations nationwide, HHS-OIG also has authority to counsel the industry through Special Fraud Alerts and Advisory Opinions. OIG’s advisory opinions, issued in response to specific requests by those attempting to act within the bounds of law, are of particular value in providing guidance not only to the requestor, but also to others in the industry, especially those engaged in or considering certain “gray-area” practices. 

The HHS-OIG opinion quoted here weighed in on potential violation of the Anti-Kickback Statute (AKS), a complex statute that generally prohibits hospitals, physicians, pharmacies, nursing homes, durable medical equipment (DME) companies, medical device manufacturers, laboratories, and other medical providers from paying or receiving kickbacks, remuneration, or anything of value in exchange for referrals of patients who will receive treatment or services paid for by government healthcare programs such as Medicare and Medicaid. If providers “knowingly and willfully” provide something of value with a purpose to induce referrals, they can run afoul of the AKS.

The question put to the OIG was whether a lab that routinely provided laboratory testing services to dialysis patients pursuant to contracts with dialysis facilities would violate the AKS by offering labeling services for test tubes and specimen collection containers. The lab specified it would offer the labeling service as an incentive to obtain or retain the business of specific dialysis facilities. Lab personnel would perform the labeling services in the lab itself, rather than onsite at the dialysis centers, where this type of labeling generally occurs.

The OIG cautioned that such an arrangement could generate remuneration prohibited by the AKS, and noted that as described, the provision of services certainly looks like it is intended to influence the dialysis facilities’ choice of a lab. However, the OIG stopped short of calling a clear statutory violation on the hypothetical facts given, which did not include adequate information about intent.

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