June 18, 2019

June 18, 2019

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June 17, 2019

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Genetic Testing Company Agrees to Pay $1.99 Million to Resolve Allegations that it Violated the False Claims Act By Billing for Tests Not Covered Under Local Coverage Determinations

GenomeDx Biosciences Corp., which markets a genomic test (Decipher®) intended to assess the aggressiveness of prostate cancer, has agreed to pay $1.99 million to the U.S. Department of Justice to resolve allegations that it violated the False Claims Act (31 U.S.C. §§ 3729 et seq.)(“FCA”) by submitting claims to Medicare for tests conducted to evaluate treatment options for men after prostate surgery.

The government and a whistleblower alleged that between September 2015 and June 2017, GenomeDx knowingly submitted Medicare reimbursement claims for the Decipher® test that did not meet the six clinical prerequisites in the Local Coverage Determinations (“LCDs”) published by each of the Medicare Administrative Contractors (MACs). LCDs are published by MACs when they make a determination that an item or service meets (or does not meet) the “reasonable and necessary” test in Section 1862(a)(1)(A) of the Social Security Act and under what circumstances. The prerequisites for a prostate cancer classifier assay to be deemed medically necessary include (1) evaluation for postoperative secondary therapy due to one or more risk factors for a recurrence within 60 months after a radical prostatectomy surgery, (2) no evidence of any distant metastasis, and (3) pathological stage T2 disease with a positive surgical margin or pathological stage T3 disease, or rising prostate-specific antigen levels after an initial test result of 0.2 ng/ml or less.

Therefore, for each claim, the government and the whistleblower alleged that GenomeDx had certified that the test was reasonable and necessary as defined in the LCD  even though the clinical criteria or documentation requirements had not been met because the patients did not have risk factors necessitating the test.

The issue of medical necessity for diagnostic services continues to be a primary issue in many health care-related cases filed pursuant to the FCA.  The federal courts have confirmed that a laboratory may rely on the ordering physician’s determination of medical necessity because laboratories do not and cannot treat patients or make medical necessity determinations; however, laboratories may still be liable under the FCA if the laboratory knowingly presents claims for reimbursement that are not medically necessary.

Moreover, Medicare will still require documentation that demonstrates medical necessity to support payment for the test services. Thus, if adequate documentation is not provided, even when the ordering provider failed to maintain the appropriate diagnostic or other medical information for his or her patient, it is the laboratory that will suffer the consequences of the denial or recovery of reimbursement for the claim.

This settlement highlights the need for clinical laboratories, and all Medicare providers and suppliers, to determine if any national or local coverage policies apply to their services and the prerequisites prior to submission of claims, and to file those claims only where there is a good faith belief that any relevant prerequisites have been met.  Jurisdiction of claims for laboratory services furnished by an independent laboratory normally lies with the MAC serving the area in which the laboratory test is performed.  If there is a disagreement with the national or local coverage determination, there are procedures to either challenge the policy or to request that the policies be revised and updated.

©2019 Epstein Becker & Green, P.C. All rights reserved.

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About this Author

Robert E. Wanerman, Epstein Becker Green, Health Lawyer
Member

ROBERT E. WANERMAN is a Member of the Firm in the Health Care and Life Sciences practice, in the Washington, DC, office of Epstein Becker Green. His practice concentrates on regulatory, reimbursement, and compliance matters affecting health care manufacturers, service providers, and investors in health care organizations. He has extensive experience counseling clients in matters arising under the Medicare and Medicaid programs, administrative law and procedure, the False Claims Act, clinical research rules, grant administration rules, the Anti-Kickback and Stark laws,...

202-861-1885
Member of the Firm

CHARLES C. DUNHAM, IV, is a Member of the Firm in the Health Care and Life Sciences practice, in the Houston and New York offices of Epstein Becker Green. He provides general counsel and representation to health care providers and health-related entities in a range of matters involving corporate formation and governance, business transactions and acquisitions, and health regulatory compliance. His national health law practice focuses on clinical and anatomic laboratories, hospitals and health systems, physician group practices and networks, long-term care facilities, telehealth practitioners and providers, and health IT companies.

Mr. Dunham’s experience includes the following:

  • Fraud and Abuse Counseling and Defense—advising and preparing legal opinions on matters involving federal and state anti-kickback laws, physician self-referral laws, and the False Claims Act and state insurance fraud laws; counseling on voluntary refund and self-disclosure protocols; and providing representation in civil and criminal government investigations and whistleblower (qui tam) actions
  • Business Transactions and Contracts—conducting due diligence and compliance reviews; advising on mergers, acquisitions, and joint ventures; advising on legal risk and achieving regulatory compliance consistent with business goals; and negotiating and drafting various transactional contracts related to professional and management services, employment and independent contractor services, equipment and space leases, marketing and sales arrangements, laboratory services, and software licensing and service arrangements  
  • Provider Billing and Collections—advising on Medicare and Medicaid enrollment; advising on private network and managed care contracting and out-of-network provider billing; counseling on reimbursement and overpayments; and providing representation in RAC, ZPIC, MAC, CMS, Medicaid, and private payor audits
  • Patient Privacy and Cyber-Security—advising on HIPAA Privacy and Security standards; conducting risk assessments; developing compliance policy and employee training programs; providing representation in complaint investigations and government audits; and counseling in privacy breach and remediation
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