APT Foundation: The Outside Lab Inside a Weekly Medicaid Bundle

In the APT Foundation laboratory settlement, the provider and its CEO agreed to pay $883,859 to resolve allegations that Connecticut Medicaid paid twice for urine drug testing, once through APT’s weekly methadone rate and again through an outside laboratory’s claim. For someone who handled the referrals or billing, the revealing detail is what came before those claims: an audit had already identified the same overlap at APT.

APT provided behavioral health and substance use disorder services at clinics in New Haven, North Haven and Bridgeport. It contracted with the Connecticut Department of Social Services to care for Medicaid patients. The government alleged that APT referred the testing, the outside laboratory performed it, and both received Medicaid payment that covered the testing.

What the Weekly Medicaid Rate Covered

Connecticut Medicaid paid methadone clinics a weekly rate for each patient receiving methadone treatment. As the Justice Department’s announcement explains, state regulations issued in 2013 included intake evaluation, the initial physical examination, on-site drug testing and monitoring, and individual, group and family counseling in that rate.

The testing was part of the treatment package Medicaid bought. That payment arrangement matters to anyone reviewing a laboratory claim because the payment for testing could already sit inside the clinic’s weekly claim. Looking only at the laboratory’s bill would miss the other place Medicaid had paid for the service.

The state repeated the point. On September 3, 2014, Medicaid sent all methadone clinics a provider bulletin reminding them that the weekly rate included reimbursement for on-site drug testing and monitoring.

Then the Department of Social Services described how it would deal with overlapping payments. Its February 1, 2015 audit protocol said that when an audit found Medicaid had paid another laboratory provider for drug testing within a week of paying the clinic for methadone treatment, Medicaid would reduce the clinic’s treatment payment by the cost of the laboratory service.

The protocol put the adjustment on the clinic’s payment. An outside laboratory’s bill therefore mattered to the clinic even though someone else submitted it.

How the Outside Laboratory Claim Overlapped

The government alleged that APT and its CEO routinely referred patients’ urine drug tests to an independent laboratory in Massachusetts despite the bundled-rate guidance and the audit finding. The settlement covered conduct from January 1 through November 30, 2016.

In the government’s account, APT’s claim sought the weekly methadone payment, which included on-site drug testing and monitoring. The independent laboratory submitted its own claim for the testing referred to it. Medicaid paid for the claims twice: through the bundled rate paid to APT and through the separate payment to the laboratory.

Two providers. The same testing in both payment paths.

For a billing employee, that is a different comparison from looking for a repeated claim number. We would put the clinic’s weekly payment beside the outside laboratory’s payment for the patient’s testing. The question is where payment for the service appears in each, and how the referral connects them.

The ordinary division of work in independent laboratory testing helps explain why that connection matters. The ordering provider decides that a test is needed and holds the treatment record. The independent laboratory performs the requested work and bills downstream from that decision. The person who knows why the test was ordered and the person who knows how it was billed may work for different organizations.

Testing can cross that boundary when a clinic needs confirmation of a screening result. The Journal of Family Practice’s 2021 review, Urine Drug Screening: A Guide to Monitoring Tx With Controlled Substances, distinguishes rapid immunoassay screening from confirmatory testing using liquid chromatography and mass spectrometry, for which specimens may be sent to a laboratory.

The Audit Had Already Found the Overlap

The Department of Social Services audited APT in 2015 and found that both APT and an independent laboratory had billed Medicaid for drug testing the laboratory performed, contrary to the weekly-rate rule. According to the Justice Department, the audit report warned APT that continued noncompliance would result in financial disallowances in future audits.

We find the allegation hard to excuse: the audit had already spelled out the very overlap the government said continued. The regulation explained the bundle. The bulletin reminded clinics that testing was included. The audit then identified overlapping billing at this particular provider. The government’s allegation was that APT and its CEO continued the referrals anyway.

For someone inside a clinic, the audit report and later claims connect the billing issue to what the organization had already been told. We examine that sequence with you because the decisions after an audit belong in the account of how the payments continued.

The U.S. Attorney’s Office for Connecticut and the Connecticut Attorney General announced the civil settlement on December 8, 2017. APT and its CEO agreed to pay the federal and state governments to resolve the Medicaid overpayment allegations.

The U.S. Department of Health and Human Services, Office of Inspector General investigated.

Pacific Toxicology and Testing Already Inside a Bundle

Pacific Toxicology Laboratories agreed to a $1 million settlement announced on July 10, 2024 over allegations that its separate urine drug testing claims for opioid treatment program patients caused Medicare to pay twice for testing. That case involved Medicare, while APT’s involved Connecticut Medicaid. The common payment problem was testing paid through a treatment bundle and separately through a laboratory claim.

The comparison reaches both sides of the referral: the laboratory in one case, the clinic and its CEO in the other. Seeing only one side leaves half of the payment relationship out of view.

Whistleblowers brought the cases behind the Pacific Toxicology settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What Clinic and Laboratory Insiders Can Recognize

The useful connection in a bundled-testing case is between the patient, the treatment week, the test referral and the payments. A clinic employee may know how outside testing was arranged and what happened after an audit. A laboratory billing employee may know which clinic sent the work and which payer received the claim. Our work is to connect those views to the payment arrangement that governed the service.

For this pattern, we examine the treatment payments, laboratory claims, referral records and earlier audit findings together. Your knowledge of how the clinic and laboratory worked together may be what makes the payment overlap clear.

You Know Where the Testing Went

If you handled outside laboratory referrals or saw testing paid through both a clinic’s treatment rate and a separate claim, speak to one of our Whistleblower Experts about where the testing was billed. We work with you to build the case around the referrals, payments and decisions inside the provider, and bring in laboratory fraud whistleblower lawyers who understand bundled treatment payments. We stay beside you throughout the process, working to turn your knowledge of the billing into your strongest laboratory whistleblower case.