Warning Ahead: Investigation And Litigation

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NEWS THAT PRIVATE INSURERS FILED A MAJOR LAWSUIT against SmithKline Beecham last Thursday confirms something I’ve wondered about for several years. What would be the private insurer’s perspective on the same laboratory billing and reimbursement practices which triggered federal settlements with major laboratories?

Now we know. The opinion of private insurance companies is that they were ripped off, just like the Medicare program. It is highly significant that huge insurance companies such as Aetna, Prudential, New York Life Insurance, Blue Cross of California and Humana joined together to sue SmithKline. They must believe they have a strong legal case.

This lawsuit marks the start of another phase of laboratory industry compliance. Federal prosecutors are applying the lessons learned from the Ohio hospital laboratory billing probe by launching similar probes in Georgia, Maine, Mississippi, Rhode Island, Vermont, Virginia and the District of Columbia. Private insurance companies have targeted one national laboratory for their first case. Taken together, these events mean that ever-smaller laboratories should not be surprised to find themselves involved in some type of settlement discussions in coming years.

THE DARK REPORT covers these these events because it is important for laboratory executives to understand what is really taking place behind the headlines. Compliance is now a major element of clinical laboratory management. Failure to properly comply with the law may now mean more than just paying money back to Medicare for alleged over-reimbursement. It may mean criminal charges against individual executives.

That is one reason the Columbia/HCA case bears close scrutiny. Even as federal prosecutors become wiser about how the healthcare reimbursement system traditionally operated, they are becoming emotionally involved. Prosecutors are increasingly angry about healthcare executives they believe consciously “gamed” the reimbursement system to “steal” millions from government health programs. Such anger motivates prosecutors to bring criminal charges against alleged violators.

Thus, the news that government prosecutors widened the hospital laboratory billing probe to six more states, combined with the announcement of the large insurance companies’ lawsuit against SmithKline means at least one thing: laboratories will be dealing with the alleged reimbursement sins of 1989-1995 for several more year.


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