OURLab / Prost-Data: The Software Payment Waited for the Referrals

In the OURLab settlement, OPKO Health, OPKO Lab and OURLab’s former owner and CEO agreed to pay $9.35 million over allegations of referral-based EHR subsidies and noncovered FISH billing. The software arrangement had a particularly revealing condition: the government alleged that OURLab sometimes withheld contributions it had already promised a physician practice until the practice sent enough referrals.

OURLab was the business name of Prost-Data, a Nashville drug-testing laboratory whose former CEO-physician was also its owner. The Justice Department’s June 1, 2016 announcement described allegations that began before OPKO Lab bought the business. A former OURLab employee brought the qui tam case, and the government’s investigation corroborated conduct the employee had alleged.

Do Doctors Get Kickbacks for Ordering Tests?

In the OURLab case, the government alleged that doctors received help paying for electronic health records software in exchange for testing referrals. OURLab allegedly tied the benefit to the business each practice supplied.

The practices purchased their systems from EHR vendors. OURLab and its former owner contributed toward those purchases. According to the government, they considered both the volume and value of referrals when deciding whether to contribute and how much to pay. They also considered return on investment and the volume of Medicare business supplied by each practice.

That made the practice’s software expense part of the laboratory’s sales calculation. A practice could receive help buying its system while the laboratory evaluated the testing revenue it expected in return. The government alleged that this financial relationship produced false claims to Medicare Part B under the Anti-Kickback Statute and Stark Law, from about June 2007 through January 2015.

Rules then allowed some companies to pay up to 85% of a practice’s EHR purchase price, but tying the contribution to referrals broke those rules, the Justice Department said. Drug-testing laboratories lost access to those provisions in 2013.

The sharpest detail came after a contribution had been agreed. OURLab allegedly sometimes held the payment until the practice supplied a specified number of referrals. The promised benefit became something the practice still had to earn by sending patients’ tests to the laboratory.

HHS’s Office of Inspector General put the competitive harm plainly:

An honest laboratory competing for that work faced more than a rival’s test offering. It faced a subsidy for the doctor’s software, with taxpayers billed for the resulting tests, according to the government’s allegations.

The Referral Report Beside the Software Payment

Test-volume information also has a place in billing oversight. In its 1997 article Model Plan Helps Laboratories Fight Fraud, Laboratory Medicine described federal guidance recommending that laboratories retain and analyze Medicare test-use data, tracking tests by billing code or other methods. That guidance treated testing data as a way to catch billing problems. In the OURLab allegations, the laboratory instead measured a practice’s business to decide what financial benefit it would receive.

An EHR contribution agreement shows the promised benefit. The referral figures behind a decision to withhold payment can show what the laboratory expected in return. Someone approving the contribution or waiting for it may recognize that exchange from their own work.

FISH Billing After an Adverse Coverage Determination

OURLab and subsequently OPKO Lab allegedly billed Medicare and TRICARE for a particular type of FISH test despite an adverse coverage determination in June 2012. This was a separate allegation from the EHR subsidies, aimed at whether the test could be billed to those programs.

Fluorescence in situ hybridization maps genetic material in human cells. As the Justice Department explained, FISH can detect abnormalities associated with cancer and may help diagnose certain cancers. The allegation concerned the particular type used by these laboratories.

Under the Medicare law on laboratory test fees, coverage and pricing are separate decisions. A test code can have a Medicare fee while a national or local coverage determination leaves the test uncovered.

Here, the government identified a coverage decision and alleged that the laboratory kept billing despite it. For a person working in laboratory billing, the relevant connection is between the coverage notice and the claims submitted afterward.

What Changed When OPKO Lab Bought OURLab?

OPKO Lab purchased OURLab in December 2012, after OURLab and its former owner had begun the alleged conduct. The Justice Department identified OPKO Health as a successor company and included it in the civil resolution.

The FISH coverage decision was already in place when OPKO Lab acquired the business. The government’s allegation followed the billing across that purchase, naming OURLab first and OPKO Lab afterward. For employees who worked through the transition, the billing practices on either side of the sale belong in the same account.

Under the civil healthcare settlement, the former owner and OPKO were each responsible for the full settlement amount. The former owner also agreed to a five-year exclusion from all federal health care programs as part of that agreement.

EHR Subsidies in Other Laboratory Cases

In the Bio-Reference Laboratories software case, the government alleged that donations toward physicians’ electronic medical-record software depended on the volume of business generated.

The Former Employee’s Whistleblower Case

The Justice Department announced that the former employee would receive about $1.7 million as the whistleblower’s share of the settlement.

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

When You Know Why the Payment Waited

If you know how software contributions were tied to referrals, or why FISH claims continued after a coverage notice, speak with our whistleblower experts. We bring in laboratory fraud whistleblower lawyers who understand referral arrangements and Medicare billing, and stay beside you through the case. Your knowledge of why the payment waited or why the billing continued is where we start building your strongest laboratory whistleblower case.