HHS Releases Unfavorable Opinion Against Physician Practices

On September 28, 2023, the Office of the Inspector General for the Department of Health and Human Services (HHS) published a ruling in which it refused to bless an arrangement proposed by a anatomic pathology laboratory company.

Under the proposed arrangement, the company would contract with other laboratories (some of which are physician owned) that would prepare specimens for review by the company’s laboratories. The company would pay those other laboratories for this technical aspect of the pathology process but would then perform the professional aspect of the process (the analysis) themselves. The company would then bill the commercial payer for both the preparation of the specimen and its analysis.

This process is more expensive for the payer; it would be more efficient for the laboratory company to perform both halves of the analysis itself. However, the company indicated that the laboratories that it was contracting with are seeking to use the company’s access for in-network billing to commercial insurers—access that these contracted laboratories do not have on their own.

Additionally, although the contracted laboratories are not required to refer any of their federal insurance covered work to the laboratory company, the company indicates that the agreement would result in a higher volume of referrals to them for federal program work from the contract laboratories.

To read the ruling, see the link here.