Vista Clinical, Access Dermpath and Advanced Clinical: Diagnosis Codes Changed for Payment

In the Vista Clinical Diagnostics settlement, Vista Clinical Diagnostics, Access Dermpath and Advanced Clinical Laboratories agreed to pay $2.45 million over allegations that they added unsupported diagnosis codes to Medicare and Medicaid claims. The government said the laboratories used a computer macro to generate diagnosis codes the patients’ physicians had not supplied. The alleged scheme put payment ahead of the physician’s diagnosis, with taxpayers footing the bill. For a billing employee who saw those additions, the case turns on a familiar place: the gap between the physician’s order and the claim that went out for payment.

The Justice Department announced the settlement on July 11, 2024. It resolved claims by the United States, Florida, North Carolina and Virginia over conduct alleged from January 1, 2017, through December 31, 2021. A former Vista employee brought the qui tam case under the False Claims Act. The complaint describes someone who had worked as a billing representative, billing supervisor and billing office manager.

How the Diagnosis Codes Entered the Claims

The whistleblower alleged that the laboratories turned manual diagnosis-code additions into an automated billing process. The complaint traces the practice back to 2014. As the patient load and the number of codes grew, an operations director allegedly created macros that could add diagnoses to a group of patients at once in an Excel billing report.

In this alleged workflow, the test’s CPT code determined which macro ran, and the macro supplied additional diagnosis codes. The complaint describes the connection between the ordinary test list and the extra diagnoses:

The complaint includes a photograph described as a laminated card used before the macros. It also reproduces billing-report instructions that call for applying macros in a spreadsheet column. Together with the claim examples, those materials give the allegation something a billing employee can recognize: a repeatable task inside the ordinary workflow.

The whistleblower said the added diagnoses had no relation to the patients’ actual medical conditions. She alleged that managers explained the additions as a way to secure payment or a particular reimbursement rate. When the volume became too much for one employee, management allegedly authorized her to train others to use the macros.

According to the complaint, the company’s president praised the macros at a company Christmas party. The alleged shortcut had support from management and a method for spreading it through the billing staff. That matters to an insider who knows both what the software did and who wanted it done.

An Extra Diagnosis After the Test

One Access Dermpath example makes the allegation concrete. The complaint says a patient submitted a specimen on January 7, 2019, for tests the physician had ordered using diagnosis code R35.1. After specimen collection and testing, someone added D64.9 to the Medicare billing submission to secure payment or a higher reimbursement rate.

The complaint describes added diagnoses on claims from all three laboratories.

Can a Coder Change a Physician’s Diagnosis Code?

A diagnosis code on a laboratory’s Medicare claim must rest on diagnostic information from the ordering physician. Guidance from the Centers for Medicare & Medicaid Services allows the laboratory to determine the appropriate code from the physician’s narrative diagnostic statement or obtain diagnostic information from the physician. The clinical basis still comes from the physician.

The distinction matters when a laboratory adds a diagnosis code to get Medicare payment. The lab may know which code gets a claim paid, but the claim must reflect the patient’s diagnostic information. In the Vista complaint, the whistleblower alleged that the added codes were neither physician-approved nor related to the patients’ conditions.

The problem was familiar long before this settlement. The Department of Health and Human Services’ Office of Inspector General, in its 1998 laboratory compliance guidance, specifically addressed computer programs that automatically insert diagnosis codes without diagnostic information from the ordering physician or another authorized person. It also told laboratories to design requisition forms around the physician’s independent decision that each billed test was medically necessary.

An earlier journal article shows how directly the ordering form was meant to connect the test to its clinical reason. Model Plan Helps Laboratories Fight Fraud, published in Laboratory Medicine in 1997, described OIG’s recommendation for uniform requisition forms with space for the physician to document each test’s medical necessity through a diagnosis code. The article also described written notices explaining the components of laboratory profiles and how those profiles would be billed to Medicare. The ordering physician was supposed to understand what the laboratory would bill.

The Complaint Also Alleged Discounts for Referrals

The whistleblower separately alleged that discounted nursing-home services bought referrals for work billed directly to Medicare. Vista’s business included laboratory services for skilled nursing homes and assisted living facilities. The alleged referral arrangement depended on who paid the laboratory’s bill.

In a contract with Fountain Manor & Rehabilitation quoted in the complaint, Vista offered a 30% discount on the prevailing Medicare fee schedule. The contract said Vista would bill the facility for services under Medicare Part A when a per diem rate applied and would bill Medicare Part B directly. The whistleblower alleged that reduced Part A rates induced the facilities to send Part B referrals that the laboratories billed at the full fee-for-service amount.

The employee said she encountered these terms while entering facility contracts into the invoicing system. Her assignment required her to review the contracts and enter each facility’s discount. The referral allegation therefore came from the contracting and invoicing side of the business, while the diagnosis-code allegation came from preparing claims.

The Justice Department’s settlement announcement describes the resolution in terms of manipulated diagnosis codes. The nursing-home discounts are a separate allegation in the complaint. For an insider who works across contracts and billing, they show why the price offered to a facility and the claim sent to a government program can both matter.

What the Integrity Agreement Put Under Review

The laboratories entered a five-year Corporate Integrity Agreement requiring a compliance program and independent review of their Medicare claims. The Justice Department said an independent reviewer would examine whether those claims were medically necessary, appropriately documented and correctly coded. All three laboratories were covered.

The claims review reaches directly into the gap the complaint describes. A code on a paid claim is only the end of the process. Medical necessity and documentation reach back to why the physician ordered the test and what information supported the diagnosis.

What a Billing Insider Can See

The Vista complaint joined knowledge of the billing system to specific claims and management instructions. Its account of the employee’s initial assignment is unusually direct:

That account explains why someone in a health care billing office can know something the final claim does not show. The claim carries the diagnosis. The employee may know the instruction, the spreadsheet and the reason for the addition. We examine those connections with the insider, including the original order, diagnostic information, billing report and claim produced from it.

A separate government complaint against Tomoka Medical Lab alleged a similar use of software. The government said the laboratory’s computer system associated diagnoses with claims for molecular tests that treating physicians had neither ordered nor supported with those diagnoses. It described an operations manager comparing a Medicaid claim with the actual requisition and finding a different test and an added diagnosis. In both complaints, the allegation becomes visible when the information entering the laboratory is compared with the claim leaving it.

What a Laboratory Whistleblower Case Can Pay

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In the Vista case, the Justice Department identified the former employee as the person who brought the case and would share in the settlement proceeds.

You Saw the Codes Go In

If you saw diagnoses added after the physician’s order, we work alongside you to connect the billing system’s behavior to the decisions behind it and build your strongest laboratory fraud whistleblower case. We bring in healthcare fraud whistleblower lawyers who understand laboratory coding and medical necessity, and stay with you through the case. Speak to our whistleblower experts about how the billing process worked.