THE HEAT IS ON:
REIMBURSEMENT CHALLENGES
ASSOCIATED WITH PHYSICIAN
OFFICE LABORATORIES
Jennifer Bolen, JD
D
self-audit education to facilitate laboratory
compliance and a sustainable billing and
reimbursement platform.
rug testing and medication
monitoring play an important
role in clinical practice,
specifically for providers
engaged in chronic pain
management and the office-based treatment
of opioid addiction. Increasingly, physicians
are considering the establishment of in-office
laboratories (commonly referred to as
Physician Office Laboratories or POLS) as
additional revenue centers. More significantly,
some physicians are facing the daunting task
of restructuring their POL and completely
revamping the POL billing and coding charge
master, test panels, and testing protocols and
documentation because of the inept handling
of the same by third party laboratory
management companies - some of which were
paid for testing on a per analyte basis.
Physicians in a lab restructure situation are
truly facing the heat because they have come
under a Medicare Zone Program Integrity
Contractor (ZPIC) audit, and are facing a high
percentage of claims denials, recoupment
action, and prepayment review. This can
ultimately result in the need to shut down the
POL and forego any billing so that a team of
experts could come in and untangle the
significant mess and mismanagement caused
by third-party vendors who lack expertise on
laboratory billing, coding, compliance, and
reimbursement matters. POL laboratory
owners and associated providers would serve
themselves well by gathering information
about these payor investigations , billing,
coding, and coverage changes, , and
engaging true experts to facilitate an updated
POL testing platform, billing check-up and
OIG Activity
In 2014, the US Department of Health and
Human Services, Office of the Inspector
General (HHS-OIG) has announced two
significant OIG settlements with clinical
laboratories and their physician-owners,
capturing collectively more than $20 million
to settle fraud and abuse cases associated
with testing for drugs of abuse, including the
inappropriate use of modifier 59 with qualitative
screening code G0431, and medically
unnecessary claims for reimbursement
associated with specimen validity testing.
In July 2014, the OIG issued (1) a Special
Fraud Alert governing aspects of clinical
laboratory and specimen collection and
patient database and registry arrangements,
and (2) a report on Questionable Billing for
Medicare Part B Clinical Laboratory Services.
This report calls for stronger oversight of labs
and identification of specific issues with
Medicare payments for lab services that need
to be addressed to more effectively safeguard
Medicare. The report contains three main
recommendations, all gaining the concurrence
of CMS and a guarantee that there will be more
action in the near future. The OIG specifically
calls for (1) a review of those laboratories
already identified as having questionable
billing; (2) a reevaluation of existing program
integrity strategies to determine whether they
are working and whether changes must be
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