Dialysis Holdings: Splitting Chemistry Panels and Creating Unneeded Referrals

Dialysis Holdings paid $4,102,098 to settle allegations that unnecessary blood draws and split chemistry panels generated false Medicare claims. The government’s fiscal year 2003 health care fraud report describes unneeded testing for Massachusetts dialysis patients and physicians and laboratory employees drawn into the alleged scheme without knowing it.

Unneeded Referrals Fed the Panel-Splitting Allegation

Dialysis Holdings and its predecessors provided dialysis services to thousands of Massachusetts patients with end-stage renal disease. The government alleged that the company knowingly sought Medicare payment for unnecessary laboratory tests and blood draws. Its account describes an arrangement with a clinical laboratory that generated thousands of unneeded referrals and divided automated chemistry panels to get around a Medicare rule intended to contain laboratory costs.

The alleged deception reached the people ordering and performing the work. According to the government, physicians and laboratory employees participated unknowingly. That distinction matters to us: knowing how a test entered the workflow is different from knowing why the company arranged the billing that way.

We see a cost-control rule turned on its head. The alleged arrangement generated unnecessary referrals and then worked around the rule meant to contain their cost.

Comparing physician orders, panel definitions and payment claims connects a clinical decision to a billing decision, even when different people handled them. Someone who knows the order form may see how tests entered the workflow. Someone who knows the billing system may see how the same tests were presented for payment. We work with you to connect those views.

Why Automated Panels Drew Billing Scrutiny

The historical payment system generally paid less for an automated profile than for the same combination of tests submitted separately. In its 1998 report on hospital billing practices, the General Accounting Office explained why: performing multiple tests on one blood sample together reduced labor and blood-handling costs.

In the hospital billing practice the report examined, the laboratory performed a group of tests together but presented the components individually on the bill. Medicare could pay more for the same testing. The difference lived in the claim, even when the laboratory work had not changed.

How Should Laboratory Tests Be Bundled for Medicare?

The August 1998 laboratory compliance guidance said physicians had to order individually the tests that had made up an automated chemistry profile. The HHS Office of Inspector General explained that the American Medical Association had deleted the automated multichannel chemistry codes from that year’s coding handbook. The federal Medicare agency no longer recognized those codes for payment.

For us, the date of the testing belongs beside the order and the claim. It connects the alleged billing choice to the payment rule that applied to it.

What the Ordering Physician Was Shown

The information a laboratory gives the physician can explain the gap between a test order and a payment claim. The June 1997 Laboratory Medicine article Model Plan Helps Laboratories Fight Fraud described the government’s model compliance plan in the language of laboratory operations: standardized offerings, uniform requisition forms and space to document the medical necessity of each test.

The article also described annual notices showing physicians the components of automated profiles, the codes used to bill Medicare and how the laboratory would bill each profile. For customized profiles, the model plan called for a physician acknowledgment. Its concern reached beyond getting an order into the laboratory. The physician needed to understand what the order contained and how it would be billed.

The laboratory’s description of a profile can expose a difference between what the clinician requested and what the billing employee submitted. We examine that difference alongside what the physician actually selected and what the laboratory performed.

Standing orders add a recurring version of the same question. The article described monitoring existing orders for continued validity. The Inspector General’s later guidance specifically addressed end-stage renal disease facilities: laboratories permitting standing orders were to monitor them, give them a fixed term and obtain annual written confirmation that existing orders remained valid.

For a dialysis insider, that makes the standing-order history worth understanding alongside the testing history. It shows what was requested to recur and when that request was confirmed. The physician’s patient record supplies another part of the story: the reason for the testing. The work we do is to connect that clinical account to the laboratory’s account of what it billed.

Other Laboratory Cases Show the Gap Between Order and Bill

The Justice Department’s Meris Laboratories settlement announcement alleged that the laboratory added unnecessary tests to automated panels and billed separately for tests physicians had not specifically ordered. The court’s account of a Damon Clinical Laboratories executive’s criminal trial described ferritin testing presented as free to physicians but billed separately to Medicare. In the separate National Medical Care case, the Justice Department’s January 2000 announcement described a civil False Claims Act resolution involving allegations of false laboratory claims and illegal kickbacks.

What Is the Reward for a Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. If you work in health care and your knowledge concerns dialysis referrals, test selection or laboratory billing, we assess how those pieces fit together.

You Know How the Tests Became the Bill

If you saw a gap between the tests a physician meant to order and what the laboratory billed, speak to our whistleblower experts about how the tests became the bill. We build the case with you around the referrals, the panel definitions and the payment claims, bring in healthcare fraud whistleblower lawyers who know laboratory billing, and stay beside you through its pursuit.