Posts tagged Business Law
Screening and Stark Law


The health care business of drug screening in rehabilitation centers and pain clinics has increased the costs to the insurance companies and the out of pocket costs for the patients.

Why have these costs increased by such an alarming rate and how do they costs relate to Stark Law?

Kaiser Health News, with assistance from researchers at the Mayo Clinic, analyzed available billing data from Medicare and private insurance billing nationwide, and found that spending on urine screens and related genetic tests quadrupled from 2011 to 2014 to an estimated $8.5 billion a year -- more than the entire budget of the Environmental Protection Agency. The federal government paid providers more to conduct urine drug tests in 2014 than it spent on the four most recommended cancer screenings combined.

Why have these costs quadrupled? The underlying reason would be the systemic opiate crisis in the United States and its widespread affects. Not only has this crisis affected patients and their families, but it has also influenced our health care providers and how many conduct their business.

Doctors frequently order patients to take urine drug tests to safeguard against prescription pain-pill abuse.  But federal investigators and Medicare say these routine tests, designed to ensure patients properly use opioid drugs, have led to questionable billing practices by some for-profit labs, doctors, and addiction-treatment centers.

Physicians who prescribed the pills are scrambling for ways to prevent further abuse and fend off future liability. For example, to mitigate this liability, some health care providers who did not test urine for urine routinely, are now testing patients over and over again, with large and expensive panels and come at a considerable cost to the patient.

 The concern is that doctors, pain clinics and rehabilitation centers have a financial relationship with these labs. These providers who have long used inexpensive testing cups, are now sending patients urine tests to expensive labs when the doctors could accomplish the testing needed with the less costly drug screening testing cups.

The practice of self-referral, physicians sending patients to facilities they have a financial relationship with or fractional ownership of were found to be bad for health care and bad for health care costs.  With the passage of the Ethics in Patient Referrals Act (Stark Law), Physicians are prohibited from referring patients for certain designated health services paid for by Medicare to any entity in which they have a financial relationship with.  However, Stark Law has many exceptions and health care professionals maybe able to tip-toe through the minefields of ambiguity in the way certain terms are defined under the law.

In 2017, the federal government reduced reimbursement rates for drug testing, That same year, Bloomberg reported that 31 pain practitioners received 80 percent of their Medicare income just from urine testing alone. According to Donald White, a spokesman for the Department of Health and Human Services’ Office of the Inspector General.  “Doctors who receive the lion’s share of their Medicare funds from urine drug testing would certainly raise a red flag.”  In a report released last fall, the watchdog office said some uptick in testing might be justified by the drug-abuse epidemic but noted that the situation also “could provide cover for labs that might seek to fraudulently bill Medicare for unnecessary drug testing.”

Medicare pays only for services it considers “medically necessary.” While that sometimes can be a judgment call, pain clinics that adopt a “one-size-fits-all” approach to urine testing may find themselves under suspicion, said Mehta, the assistant U.S. attorney in Florida. 

According to American Addiction Centers some labs charge as much as 25 times the government reimbursement rate for urine screens, of course, private insurers may reimburse at higher rates, and when these carriers are willing to pay out, the cost continues to climb. The profit margins for these tests is being passed to not only the insurance companies but also to the patients.

 According to the New York Times, one father was shocked to receive a bill for $260,000 to cover dozens of drug tests performed by his son’s clinic and sober home.  If claims are submitted to government payers through an arrangement that violates Stark Law, the claims are rendered false or fraudulent, creating liability under the False Claims Act.

These issues are being echoed now by legislators and hospital leaders involving Stark Law. During Senate Finance Committee hearing Chairman Orrin Hatch (R-Utah) referred to Stark Law as becoming too complex, creating obstacles in the transition from the fee-for-service model. This model gives an incentive for physicians to provide more treatments because payment is dependent on the quantity of care, rather than the quality of care.

The substantive issue with inappropriate self-referrals in the health care profession is the rules could change for everyone. The insurance companies are bleeding from these unanticipated sky rocketing costs. Yet, there are virtually no national standards regarding who gets tested, for which drugs and how often.

Business arrangements among physicians in the health care marketplace have the potential to benefit patients by enhancing quality of care and access to health care services. Stark Law does provide exceptions to ensure that patient healthcare is not compromised due to its provisions. However, health care organizations often stumble across Stark Law requirements by accident, and many times their encounter is an undesirable one.

Drug screening is just one of the myriads of matters arising for health care professionals and the uncertainties regarding Stark Law. Seeking a qualified healthcare attorney to review all business and referral arrangements may eliminate or drastically reduce the chances of a Stark Law violation happening.