Midwest Medical Laboratory: Part B Claims During a Covered SNF Stay

In the Midwest Medical Laboratory false claims case, the company agreed to pay more than $711,000 over allegations that it billed Medicare Part B for beneficiaries already in a Part A skilled nursing facility stay. For someone inside a laboratory or nursing facility, the telling detail is the resident’s payment status. A test can move from the facility to an outside laboratory while responsibility for billing Medicare stays with the facility.

The fiscal 2007 resolution also included a five-year exclusion.

The Skilled Nursing Facility Billing Rule Behind the Allegations

Under consolidated billing, the skilled nursing facility bills for laboratory services provided to its Part A inpatients. The outside laboratory bills the facility. The Centers for Medicare & Medicaid Services stated the rule in the October 31, 2003 version of its laboratory claims manual, before the Midwest resolution.

CMS’s manual says that payment for a clinical laboratory test supplied under an arrangement made by a skilled nursing facility goes to the facility.

For the laboratory, the customer on that side of the arrangement is the facility. The facility invoice is how that work reaches the party responsible for it. Sending a separate Part B claim to Medicare moves the charge across the boundary the manual describes.

To us, asking Medicare for a separate laboratory payment here is absurd. The taxpayer should not acquire another bill because the specimen crossed a laboratory’s doorstep.

The Order, the Test and the Bill

A clinician’s order explains what testing the patient needs. The resident’s coverage status helps determine who bills for it. We connect both to the claim that actually went out.

The treating clinician maintains the medical reason for testing in the patient’s record. The laboratory performs the work and holds the information it received with the order. Medicare’s diagnostic-testing documentation rule divides those responsibilities. In a covered skilled nursing facility stay, the facility handles the Medicare bill.

We connect the requisition, facility account and submitted claim for the same resident and service date to determine whether the laboratory billed Part B during a covered Part A stay.

Standing Orders Add Another Documentation Question

For a nursing-facility account, repeated testing raises a clinical question alongside the Part A billing question: does the continuing order still reflect the patient’s needs? We examine the clinical authorization and the payment arrangement together.

The 1997 Laboratory Medicine article Model Plan Helps Laboratories Fight Fraud described the Office of Inspector General’s recommendation that laboratory compliance plans monitor existing standing orders for continued validity. It also described requisition forms with space for the physician to document the medical necessity of each ordered test.

The Office of Inspector General’s 1998 clinical laboratory guidance made the nursing-home connection explicit: annual written confirmation that existing standing orders remained valid. It also said a standing order alone usually did not establish that testing was reasonable and necessary. For us, that is another reason to look beyond the test result when examining health care billing.

Part B Claims and Part B Referrals

Midwest’s allegations concerned Part B claims during covered Part A stays, while the 2020 whistleblower complaint against Vista Clinical Diagnostics alleged discounted Part A services in exchange for Part B referrals billed at full rates.

What Evidence Is Needed to Prove Fraud?

For an allegation about Part B billing during a covered nursing facility stay, the evidence connects the resident’s coverage, the laboratory service, the facility arrangement and the claim. Our work is to establish how those pieces fit and what the people directing billing knew.

We examine orders and results alongside facility invoices, coverage information and Medicare claims. We use billing communications to understand how the company decided which party to charge. These are the connections that make a facility employee’s or laboratory biller’s knowledge useful: the work performed, the account charged and the decision behind it.

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

You Know Which Account Was Billed

If you saw Part B claims going out for residents in covered Part A stays, tell our whistleblower experts how the laboratory handled those accounts. We work beside you to build your strongest laboratory whistleblower case from your knowledge of the facility and its laboratory. We bring in laboratory fraud whistleblower lawyers who understand Medicare billing and stay with you throughout your healthcare fraud case.