Laboratory Copayment Waivers: When the Waived Bill Buys the Referral

Laboratory copay waiver kickbacks can use commercial patients’ waived bills to win Medicare referrals, even though covered assigned Medicare clinical laboratory tests generally have no deductible or coinsurance. The commercial patient gets the discount. The referring practice gets to offer testing without a patient bill. The laboratory gets the testing business, including the Medicare patients. If you work in laboratory sales, billing or a referring practice, the connection between that promise and those referrals is the part you may know firsthand.

Medicare Laboratory Tests Generally Have No Patient Cost Share

Medicare generally pays for covered tests on the Clinical Laboratory Fee Schedule without a patient deductible or coinsurance. In its clinical laboratory payment explanation, MedPAC distinguishes these services from most other Medicare services.

The ordering practitioner, performing laboratory and payer have different jobs. The practitioner orders the test and holds the medical-necessity documentation. The laboratory performs it and generally submits the claim. Those roles explain why the person choosing the laboratory can be the person its sales force wants to reward.

The Justice Department’s laboratory kickback cases show the connection to the Anti-Kickback Statute: it prohibits paying for referrals of services covered by federal health care programs. Claims arising from those kickbacks can support a False Claims Act case. In the government’s account, taxpayers pay for the unnecessary testing, while competing laboratories lose business to the inducement.

Commercial Patient Waivers and Free Managed-Care Testing

An out-of-network waiver calls for a review of the payer’s terms and what the laboratory offered for referrals. We assess the patient’s cost-share obligation, the laboratory’s collection practice and what the referring office was promised together.

Commercial healthcare coverage can leave the patient responsible for a deductible or a share of testing costs. A laboratory’s promise to absorb that amount can become part of the sales pitch to a practice. The question reaches beyond what appears on the patient’s final statement: what did the insurer agree to pay, what did the laboratory say it would collect, and what business did the waiver bring back?

The Office of Inspector General described a related arrangement in its laboratory fraud alert published in 1994. A laboratory without a managed-care contract could offer to perform the practice’s managed-care testing free to retain its other business. Where the practice benefited financially and referred federal program business in return, the arrangement raised a kickback issue.

That example makes the commercial-to-federal connection concrete. The benefit can be delivered on one set of patients while the laboratory earns its return on another.

When Financial Hardship Becomes a Sales Policy

Routine promotional noncollection makes the waiver part of the offer before anyone considers that patient’s financial circumstances.

The OIG’s routine-waiver alert for charge-based Medicare services, republished with its laboratory guidance, described advertisements promising insurance payment in full or no out-of-pocket expense. It also identified routine hardship forms completed without a good-faith effort to determine the patient’s financial condition. A form can call the transaction hardship while the sales team promises the same result to everyone.

The alert also identified waivers for patients from a particular referral source for reasons unrelated to financial need. That points to a decision about winning a practice’s business, made before the laboratory knows whether an individual patient can pay.

The question for a laboratory waiver is who decided to forgive an actual payment obligation, and why. A billing employee may see repeated write-offs. A sales representative may know that the practice was promised those write-offs in return for its testing business. Together, those accounts can explain a policy that a hardship form alone conceals.

HDL and Berkeley Waiver Allegations Included Physician Payments

Health Diagnostic Laboratory and Berkeley HeartLab illustrate how a waived patient bill can sit beside a payment to the referring physician. In its 2015 settlement announcement, the Justice Department alleged that HDL and Berkeley induced blood-test referrals through processing and handling fees of $10 to $17 per referral and routine waivers of patient copayments and deductibles.

Those small per-referral payments and patient waivers were part of allegations HDL agreed to pay $47 million to resolve. The government alleged that physicians referred medically unnecessary tests that the laboratories billed to federal health care programs. The cases began with whistleblowers, and the government joined them.

The whistleblower’s complaint against HDL described the commercial-patient promise:

The alleged bargain was to give up a private bill to win the federal business. When a laboratory forgives copay to obtain insured patient testing, the benefit can reach the physician through the practice’s ability to attract and retain patients. The waived private bill and the resulting Medicare claim belong in the same account of the referral relationship.

In the Berkeley resolution announced in 2017, Quest Diagnostics agreed to pay $6 million to settle allegations that Berkeley used physician fees and patient waivers to win testing business and charged for unnecessary tests. The government alleged payments disguised as processing and handling fees and routine waivers for patients who actually owed part of their testing costs. Both allegedly encouraged choosing Berkeley over competing laboratories.

The Patient Invoice Can Hide the Same Promise

Sending an invoice can coexist with a sales promise to collect little or nothing. The details of the invoice and the collection policy matter together.

A whistleblower’s amended complaint against Boston Heart Diagnostics alleged that the laboratory promised to waive privately insured patients’ copayments and deductibles in exchange for physicians sending all their lipid-testing business, including Medicare patients. The complaint described the waiver as valuable to physicians who could attract patients with testing that generated no patient bill.

It then alleged that Boston Heart replaced full waivers with a nominal patient fee schedule in 2016. The laboratory billed those fees instead of the patient’s usual deductible or copayment. According to the complaint, Boston Heart agreed with physicians in advance that it would send two invoices but would not send patients to collections.

The alleged sales promise survived the introduction of an invoice. We compare the payer’s stated patient responsibility, the fee actually invoiced, the collection activity and what sales told the practice would happen. Your knowledge of that promise can connect the billing policy to the effort to secure the practice’s referrals.

True Health’s Waiver Allegations Reached Beyond Patient Bills

The True Health allegations put patient waivers beside several other ways of rewarding referral sources. In its account of the government’s 2022 complaint, the Justice Department described processing and handling fees paid to draw-site companies and monthly consulting payments to a top-referring physician for an advisory board that allegedly did not exist. Patient copayment and deductible waivers were another alleged inducement.

The same government complaint described recruiters using management service organizations to pay physicians. Payments presented as investment returns allegedly depended on referrals. Laboratory executives and sales employees allegedly used those payments to increase referrals and their own bonuses and commissions.

In a 2025 civil settlement, True Health’s former chief executive agreed to pay $4.25 million to resolve allegations that he used management service organization payments, consulting and processing fees, and patient waivers to induce testing referrals.

For an insider, the waiver policy belongs beside the draw-site invoices, consulting arrangements and referral-linked distributions. Looking at each as an isolated expense can miss what the laboratory offered the practice as a whole.

What the Waiver Policy Leaves in the Business Records

The strongest account connects the patient obligation, the sales promise, the test order and the claim. Collection records show what the laboratory did with patient balances. Sales materials and communications show what it promised. Referral records show which practices supplied the testing business.

The order form matters too. In the HDL complaint, the whistleblower alleged that test panels included duplicative tests physicians could not deselect. A separate whistleblower complaint concerning Berkeley alleged that a test had been added to follow-up panels without the physicians knowing. Those allegations connect the promised financial benefit to what the laboratory actually performed and billed.

The industry’s division of responsibility adds another connection. The ordering practitioner retains the medical-necessity record, while the laboratory can bear the denial when that documentation is missing. We examine the waiver and referral records alongside the requisition, the testing performed and the claim. The billing system and the referring practice may each hold a different part of the same transaction.

Value can also arrive as a service. The OIG’s laboratory alert identified phlebotomists doing a physician’s clerical or other office work, free disposal of unrelated waste, and equipment used beyond the outside laboratory’s work. Those benefits belong in the referral account when the practice receives them in exchange for sending tests.

EKRA Reaches Private-Payer Laboratory Referrals

Commercial laboratory referrals can also raise questions under the Eliminating Kickbacks in Recovery Act. Its laboratory referral provisions use a definition covering public and private health plans. Its laboratory reach extends beyond addiction treatment.

The payer, the compensation formula and the actual waiver practice belong together in our review. We work through those questions with laboratory fraud whistleblower lawyers.

That is why we follow both sides of a laboratory’s offer: the patient balances or practice expenses it gives up, and the testing business it receives. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When You Know What the Practice Was Promised

If you know how a laboratory’s patient write-offs connect to its sales promises, speak with our whistleblower experts about the referral arrangement. We work beside you to build your strongest case around the waived balances, the physician relationship and the claims, and bring in laboratory fraud whistleblower lawyers who know testing and referral cases.