Regulatory Issues for Functional Medicine Practices

Practices that participate with insurance companies need to be aware of regulations such as the Stark Law, Anti-Kickback Statutes (AKS) and rulings by the Office of the Inspector General (OIG). These regulations address not only how practices can bill and collect for specialty labs, but also how practices can receive compensation from the specialty labs for specimen collection fees. The relationship between practices and labs was one of the topics of the OIG’s first Special Fraud Alerts. In June 2014, the OIG updated its position on payments from labs to practices, including specimen collection and registry payments (Click Here).

The OIG 2014 alert again emphasizes that payments between practices and labs are subject to Stark and AKS regulations. Creating payments for maintaining a registry or database–which would in theory change payments from being for designated health services–are criticized by the OIG. Shifting payments from the practice to an individual physician is also rejected as a response to circumvent regulations. While payments from labs to practices are not entirely off-limits, the OIG 2014 alert lists criteria of suspect payments and includes ANY relationship between a lab and a practice where payment exceeds fair market value for services rendered OR payments reflect the volume of services performed.

In April 2015, The Department of Justice announced a $48 million settlement with Health Diagnostics Laboratory, Inc (HDL) and Singulex, Inc. The settlement alleges that these companies 1) Paid physicians for referrals and 2) Performed unnecessary medical testing. Physicians were paid between $10 and $17 for processing and handling of each lab specimen collected. Both labs were accused of waiving patient co-pays and deductibles. In addition, HDL was accused of using BlueWave Healthcare Consultants as a third-party marketing company with common ownership with HDL to avoid issues with physician payments. Over a dozen physicians were charged with anti-kickback violations and served time in jail.

For the Department of Justice’s settlement with HDL and Singulex, Click Here.

For a detailed review of HDL’s rise and fall, Click Here.

Previous: Specialty Labs Billing Information (Click Here)

Next: Specialty Labs Specimen Collection Payment Settlement Offers (Click Here)