Florida Law Better Defines Lab Marketing Violations

New state law bans practice of labs putting employees in doctors’ offices or leasing space

CEO SUMMARY: Despite clear language in Florida’s new state law that bans the placement of laboratory employees in a physicians’ office, some clinical lab companies want to continue the practice of placing specimen collectors in physicians’ offices. These opinions were voiced by lab executives during a meeting on June 28 in Tallahassee, Florida, at the offices of the Agency for Health Care Administration (AHCA). Given the clarity of the language in HB 787, early enforcement by state officials is possible.

NOT ALL CLINICAL LABORATORIES in Florida want the state Agency for Health Care Administration (AHCA) to enforce a new state law banning the placement of lab personnel in physicians’ offices.

These objections were voiced by lab executives at a meeting conducted by AHCA on June 28 in its offices in Tallahassee. The purpose of the meeting was to hear public comment on the new state law that bans labs from placing personnel in physicians’ offices.

“Some Florida lab companies with representatives at the meeting want to be able to place lab personnel in doctors’ offices and have lease-space arrangements with physicians,” noted Timothy M. Cerio, a lawyer with Gray Robinson, PA, a law firm in Tallahassee, Florida.

Cerio attended the June 28 meeting. He represented Millennium Laboratories of San Diego, California, and was one of about a dozen lab industry representatives to attend the meeting. About six or eight labs sent representatives to the meeting. At least one hospital and one health plan sent representatives as well, he said. Representatives of some labs attended via conference call.

House Bill 787 became law on July 1, 2012. Prior to that date, the AHCA had regulations in place to prevent labs from placing personnel in physicians’ offices.

“Some laboratory companies that did not follow these AHCA rules previously, also opposed the passage of HB 787 during the recent legislative session,” commented Cerio.

A Patient Care Benefit?

“Millennium Laboratories believes the law should be enforced because there is no reason for a lab company to have a collector in a physician’s office or to have a lease-space arrangement to allow a collector in a physician’s office as some labs do,” he explained.

House Bill 787, “An Act Relating to Health Care Facilities,” prohibits labs from providing employees, contractors, or any personnel (including those from independent staffing companies), from performing any functions in a physician’s office. The law is intended to stop the practice of having labs collect patients’ specimens in physicians’ offices.

“Some labs claimed there is a patient care benefit and that it is convenient for patients to have lab personnel in physicians’ offices” explained Cerio. “But, in fact, often these arrangements simply allow labs to get all the physician’s referral business in return for the provision of free labor, and that, by definition, is an illegal kickback.

“The new Florida state law requires vigorous enforcement,” he continued. “It also calls for fines of as much as $5,000 per violation.”

New Law Provides Clarity

Molly McKinstry, AHCA’s Deputy Secretary, said, “The law is designed to eliminate any questions about kickbacks between labs and physicians.

“As a result of this law,” stated McKinstry, “when AHCA staff conducts investigations, we will have more clarity about what is and is not acceptable.

“The question about kickbacks is difficult because we do not have many regulatory citations in this area,” she said. “But the issue of kickback is clearly on the minds of some people in the laboratory industry, and so we will monitor the complaints and any compliance issues that we identify.”

On the question of whether the legislation is needed because labs have flouted the rules in the past, McKinstry said, “I would not say they were flouting the rules. But we can say that, because we previously didn’t have this level of detail in a statute, we fielded many questions from labs about what they can do and whether certain activities are permissible. In the past, many questions fell between the lines of the regulations. The language of the new law adds clarity on these points.

“The new law improves the definition of the requirements,” added McKinstry. “It makes clear to providers and to the agency that certain situations are prohibited. Clarity is better because now everyone knows the rules.”

New Law Has “Teeth”

Florida’s new law has very specific language to describe the laboratory marketing and sales practices that are prohibited. It also has specific penalties. It was the intent of law-makers to put “teeth” into this new law. Thus, lab companies operating in the state are now on notice that continuing to use these arrangements in physicians’ offices can subject them to enforcement action.

Florida Governor Wanted Comments

WHEN FLORIDA GOV. RICK SCOTT signed House Bill 787 into law, he sent a letter to Secretary of State Ken Detzner asking that state officials get comments from clinical laboratory industry representatives on the recently-passed anti-kickback law.

“Current interpretation of the anti-kick- back law as it relates to the use of trained specimen collectors and the lease of space in physicians’ offices merits further scrutiny,” he wrote. “To that end, I will direct the Secretary of the Agency for Health Care Administration [AHCA] to work with representatives of the clinical lab industry to examine this issue and develop alternative approaches to regulating this area of health care law.”

On June 28, officials from the AHCA met with lab industry representatives at the AHCA offices in Tallahassee. Among the labs that were represented at the meeting were Aegis Sciences Corporation, Alere, Dominion Diagnostics, Granite Labs, Laboratory Corporation of America, Millennium Labs, Quest Diagnostics Incorporated, and Sarasota Memorial Hospital.

 

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