Wednesday, March 29, 2023

Brief Blog: Lab Owner "Pleads Guilty," $89M in Genomic Tests, and Surprise: In Florida

On March 28, 2023, DOJ issued a press release that a lab owner had "pled guilty" in an $89M fraud and kickback scheme.   DOJ here.   The DOJ press release links to a 21 page indictment here. Coverage at Genomeweb.

The indictment refers to several people by name, but the lab is just "Laboratory 1," making it harder to find CMS records of what was billed and how  much money was spent.   

However, I did find a name matching the indictment on a Linked In page (here).  This Linked In entry refers to these lab entities: Clinical Lab Solutions, DBA, myTest Diagnostics.  There is also a remark, "looking for partners" for genomic testing in 2/2021.  

Since CMS data at the level of individual labs has so far only been released up to CY2020, we'll have to see if there was activity at these labs in 2020.  But we can infer from "partners" remark that the lab was still active and growing in 1H2021.

MyTest Diagnostics has an active (or once-active) Facebook page. It gives an address as 9671 Gladiolus Drive, 102, Ft Myers FL, and we found the NPI is 1417407727.   

Using the NPI, we looked at the CMS lab-by-lab data for 2020.  This NPI was paid for about 66 tests, about $8M that year, but 96% were funds were a series of genetic tests, and about half of that were spent onjust a few higher-cost Tier 2 costs (81403-408), with almost $2M in code 81408 alone.  (FN1)  See cloud data here.  

click to enlarge

In this snapshot, every patient, one by one, and 892 patients in a row, individually needed all 6 of the Tier 2 codes 81403-08.  Presumably, each needed these tests to work up his or her distinct signs and symptoms for each elderly patient up to the 892nd.  

AMA defines Tier 2 codes as rarely used codes (they don't have enough usage to be Tier 1 codes).  Often these labs have 75% plus billing in Tier 2 codes.  This lab would have  done so, too, had it billed Tier 2 codes like 81408 in pairs per patient (x2).  

Leaving this lab behind, let's look at national Part B lab industry data for CY2021.  By my calculations, for 2021, assuming near all Tier 2 billing including 81408 is improper in Medicare patients (billed by mills specializing in these codes, billing all Tier 2 codes for each elderly patient, and only billing in states with no edits), about a third of genomic payments in 2021 were fraudulent.  See bar chart below.  This  pattern continued from 2018 and 2019 into 2021, even though the patterns that allowed this literally impossible and absurd billing at the First Coast and Novitas MACs were evidence by mid 2019. 

Click on graphic to enlarge.

click to enlarge (FN2)


Since Medicare billing was only $8M in 2020 from the lab we discussed, and since DOJ asserts that $89M was involved, it's a reasonable inference that CMS did nothing to pick up the truly absurd billing pattern we see in 2020.  So, much more money was lost to the same sinkhole in 2021 likely expanding on the pattern in 2020.   This isn't fraud you need AI and supercomputers to find: you could train a 14 year old to recognize this fraud pattern in two minutes.

FN1.    Somewhat atypically, the family tier 2 codes were billed here, at least in 2020, in units of 1 per patient. Some would pay 2 under MUE edits, a trick which many labs specializing in Tier 2 codes used. For example, 2 x code 81408 = $4000.     

FN2.  These bar charts were prepared from CMS Part B spending data in 2021.  I used simple blocks of codes; all the 80,000 series codes are laboratory; those 88,000 and up are physician pathology, and so on.  The data won't be precise to the decimal point but is close.  I added all the PLA codes as human genomic, although a slim fraction (especially when monetized) are proteomic.