ABNs, Client Billing, “Free Testing? & Medicare Rules

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BY ANY MEASURE, ENFORCEMENT ACTIONS by the Office of the Investigator General (OIG) for Medicare fraud and abuse within the laboratory testing industry was a big story during the 1990s. I wonder if we might not be at a crossroads that could take our profession down a similar path in this decade.

There are interesting developments which lead me to this speculation. First, compared to the final years of the 1990s, there are a growing number of whispered complaints about the compliance practices of some laboratories competing for lab testing business from physicians’ offices. The noise level from grumbling about different compliance policies is noticeably louder today than it was two or three years ago. That’s a sign that something is changing across the laboratory services marketplace.

Second, there seems to be more examples where some laboratories are relatively lax about requiring ABNs (Advanced Beneficiary Notices) and back-charging client-bill accounts (whenever the client has failed to provide diagnostic codes and other information required to file a proper claim with Medicare). In the absence of more detailed guidance and enforcement action from federal healthcare regulators, labs willing to push these types of compliance boundaries are gaining competitive advantage over those laboratories which operate from more conservative policies of Medicare compliance.

Third, the willingness of certain laboratories to use the “free testing” strategy in more geographical locations and on a wider scale has the potential to trigger a host of negative financial consequences on the entire industry. At some point, it is likely that Medicare will notice and begin to factor the “free testing” characteristic into their reimbursement policies. In selected markets, there are signs that private payers have noticed and are using “free testing” examples to justify different reimbursement arrangements.

With federal healthcare regulators generally silent on a host of laboratory testing compliance issues, it is not surprising that a growing concern for laboratory directors and pathologists is uneven Medicare compliance practices. They are disturbed about how this puts them at a short- term competitive disadvantages. But they are also concerned that, if these practices continue to become more common, the sleeping regulatory giant may awake and slap the entire lab industry with onerous compliance requirements and possibly even penalties.


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