Genomic Health and Oncotype DX: The Hospital Invoice That Was Not Sent

In the Genomic Health 14 day rule settlement, the company agreed to pay $32.5 million to resolve allegations that it improperly billed Medicare for Oncotype DX cancer tests and wrote off charges hospitals owed. The government described an unusual referral benefit: laboratory services the hospital should have paid for, with the unpaid fees wiped away. For someone working with test orders or hospital accounts, the important part of this case is a bill that never arrived.

The Justice Department announced the civil settlement on October 2, 2023. Genomic Health, headquartered in Redwood City, California, provided genomic diagnostic tests. Its principal test, Oncotype DX, was used for patients diagnosed with breast, colon and prostate cancer. Exact Sciences acquired the company in November 2019.

The government’s allegations followed the business behind the test: who ordered it, when the order reached the laboratory, which institution owed the laboratory, and which institution actually paid.

Who Was Supposed to Pay for Oncotype DX?

Under the 14-day rule as it applied during the settlement period, the laboratory was supposed to bill the hospital. The government’s account distinguishes inpatient and outpatient payment, a distinction that explains why sending a separate claim to Medicare mattered.

For an inpatient, a covered test ordered within 14 days after discharge belonged in the hospital’s lump-sum Medicare payment for the stay. The hospital received that payment, known as the Diagnosis-Related Group payment, and the performing laboratory billed the hospital. A separate laboratory claim sought payment for a test already included in the hospital’s payment.

For an outpatient, during most of the period covered by the settlement, a test ordered within that window also had to be billed to the hospital. The hospital could then seek reimbursement from Medicare. Here, the allegation concerned the laboratory taking a payment route that belonged to the hospital.

Performing the test did not by itself give the laboratory the right to send its bill straight to Medicare. The order date and the hospital encounter helped determine who could bill.

The Stored Specimen and the Order Date

The date of service generally follows the date the specimen was collected, tying later testing to the hospital encounter. For specimens stored no more than 30 days, using the test’s performance date required a physician’s order at least 14 days after discharge, along with conditions on specimen collection, treatment use and medical necessity.

That makes the original order significant. Waiting to run a test and obtaining a new order are different events. A billing system showing the later event cannot, by itself, explain when the physician first asked for the test.

The Outpatient Rule Changed in 2018

Effective January 1, 2018, the Centers for Medicare & Medicaid Services created an outpatient exception for molecular pathology tests and certain advanced diagnostic laboratory tests. Qualifying tests performed after discharge could use the performance date and be billed directly by the laboratory.

How the Alleged Scheme Moved the Bill

The United States alleged that Genomic Health bypassed the hospital payment route through direct Medicare claims and changes to test orders. Its account separated the conduct by patient setting and by what happened to the order.

Direct Medicare Claims After Inpatient and Outpatient Care

For inpatient beneficiaries, the government alleged that Genomic Health sought and received direct Medicare payment when Oncotype DX tests had been ordered and submitted for testing within the discharge window. Those tests should have been covered by the hospital’s lump-sum payment.

For outpatient beneficiaries, the government alleged that Genomic Health sought and received direct payment for tests ordered within the window following the outpatient procedure. Those bills should have gone to the hospital.

Canceling and Reordering the Same Test

The government also alleged that Genomic Health conspired with and encouraged hospitals and physicians to cancel and reorder Oncotype DX tests after the 14-day period. It further alleged that the company failed to discourage providers from doing so when the physician’s original order fell inside the window.

That alleged workaround moved the date attached to the physician’s request. The earlier order showed that the test had already been requested. The replacement made the request appear later in the payment sequence.

Federal prosecutors said cancer patients’ tests were delayed so Genomic Health could bill Medicare directly. In their account, the payment arrangement drove when testing moved forward.

The Alleged Referral Benefit Was an Unpaid Hospital Bill

The last allegation concerned hospital charges that Genomic Health did not collect. The government alleged that the company failed to send timely invoices for services covered by the rule and instead wrote off the unpaid fees, violating the Anti-Kickback Statute.

When a genomic laboratory writes off a hospital invoice, the referral kickback question concerns the expense the hospital was spared. In Genomic Health’s case, the alleged benefit was testing the hospital should have paid for. The laboratory could give the referring institution a financial benefit without sending it a check.

That is why the hospital account matters alongside the Medicare claim. A claim shows money the laboratory sought from the government. An invoice and its write-off history show what the laboratory sought from the hospital, what it left unpaid and whether it chose to erase the charge. The alleged referral benefit sits in that second set of records.

What Evidence Is Needed to Prove Fraud?

For this alleged scheme, the useful evidence connects original and replacement test orders to hospital invoices, write-off decisions and Medicare claims. The issue is how those records explain the same testing transaction.

The original order, discharge date and specimen date can explain why the payment route changed. Communications about canceled orders or written-off hospital fees can show who made those decisions and why.

For healthcare billing staff and people handling pathology send-outs, these are familiar records. We examine how they fit the claim and the referral relationship with the insider who knows the work.

What Is the Reward for a Medicare Fraud Whistleblower?

The Justice Department announced that the whistleblower share from the Genomic Health settlement proceeds would be approximately $5.7 million. The health care fraud settlement resolved allegations brought by whistleblowers in two separate qui tam cases under the False Claims Act.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Why the Hospital Charge Mattered

Oncotype DX operates in a market where an individual test carries substantial revenue. In its analysis of 2024 Medicare Part B laboratory spending, the Department of Health and Human Services Office of Inspector General reported $93.9 million for the breast cancer test under code 81519, with a median payment of approximately $3,796 per test.

Agendia and the Alleged MammaPrint Order Delays

The government alleged that Agendia used later order dates to bill Medicare directly for MammaPrint tests originally ordered within the 14-day window. Genomic Health’s settlement also reached the uncollected hospital charge, making the invoice history a separate part of the alleged referral benefit.

You Know Why the Hospital Was Never Billed

If you saw test orders replaced or hospital charges written off to keep referrals coming, talk with our whistleblower experts about what happened. We build the laboratory fraud case with you and bring in whistleblower lawyers who know hospital billing and genomic testing. You bring the view from inside the business; we bring the judgment and partnership to pursue the case with you.