California Lab Owners Indicted For $214 Million Medicare Test Fraud

California Lab Owners Indicted For $214 Million Medicare Test Fraud

California Lab Owners Indicted For $214 Million Medicare Test Fraud

The U.S. Department of Justice has indicted Imran Shams and Lourdes Navarro, both 63 and owners of Matias Clinical Laboratory (Baldwin Park, CA), for their alleged roles in a $214 million Medicare billing fraud scheme.

The DOJ says that the married couple arranged for Matias to pay kickbacks to third-party marketers in exchange for specimens and test orders. Matias would then perform testing and pay the marketers a percentage of the reimbursements it received, including from the Medicare program.

Matias (dba Health Care Providers Lab) billed the Medicare program for $214 million of lab test claims between August 2018 and March 2022. This amount included $143 million of fraudulent claims for Covid-19 and respiratory pathogen tests that were submitted without regard to medical necessity, according to the DOJ. As a result of these alleged fraudulent claims, Matias received total Medicare payments of $29 million, including $18 million for Covid-19 and respiratory pathogen tests.

The DOJ alleges that Shams and Navarro used the Pandemic for their own financial gain by bundling Covid-19 tests with more expensive respiratory testing, irrespective of whether the testing was medically necessary.

DOJ says that Shams and Navarro transferred money from Matias to shell companies, Nurse Plus and Proworx, to launder money. The pair then withdrew this money to fund real estate transactions and to purchase luxury items and goods and services for their personal use.

Furthermore, the DOJ says that Shams fraudulently concealed his role at Matias and his prior criminal convictions. Shams had been excluded from all participation in Medicare since being convicted in 2000 for felony grand theft related to Medicare and Medi-Cal billing fraud.

Separately, Laboratory Economics notes that the HRSA uninsured program has paid Matias/Health Care Providers Lab $2 million for Covid-19 testing plus another $15.9 million for treating Covid-19 patients.

MT Salaries Skyrocket As Labs Struggle To Find MTs

MT Salaries Skyrocket As Labs Struggle To Find MTs

MT Salaries Skyrocket As Labs Struggle To Find MTs

Today, laboratories are offering salaries and sign-on bonuses to medical technologists (MTs) that have never been seen before. In the San Francisco Bay Area and San Diego, lab clients are paying salaries as high as $150,000 and $180,000 to attract staff MTs with sign-on bonuses of more than $25,000, according to Ed Dooling, Chief Executive of Vanguard Healthcare Staffing (Sparta, NJ). He says MT salaries offered by independent labs in some markets have roughly doubled since the start of the pandemic.

PCR analyzers and Covid-19 test reagents were the bottleneck in the early months of the pandemic, but staffing shortages have proven to be a bigger and more persistent challenge. The pipeline of new MTs was disrupted as many labs temporarily shut down their clinical training rotations during the pandemic. In addition, older MTs retired to avoid exposure or got burned out due to extraordinary overtime demands. A huge increase in the number of new lab formations resulted in an intense competition for MTs, according to Dooling.

For example, independent labs in Toledo, Ohio are offering MT sign-on bonuses of $20,000 to $30,000 with salaries in the range of $80,000 to $90,000, according to Mason Shaw, Scientific Talent Recruiter at Vanguard. He notes that pre-pandemic salaries had ranged between $50,000 and $75,000 in this market.

Shaw notes that the length of time a new MT hire must stay before a sign-on bonus is paid varies by the lab company. “I have heard of a full year, 6 months, or 3 months, it depends on the offer and the negotiation.”

In addition, Shaw says that traveling MTs filling 3- to 12-month temporary positions are now being paid as much as $90 per hour. Pre-pandemic rates had averaged roughly $50-65 per hour for traveling MTs.

“Lab employees had always been treated like the red-headed stepchildren of healthcare. But the pandemic has raised their recognition and pay,” says Shaw.

Separately, Kevin Hunter, President of Colaborate (Tampa, FL), says his consulting firm helped set up 83 new Covid-19 PCR testing labs during the past two years. “We have seen $35,000 sign-on bonuses, significant relocation packages and starting salaries in the $125,000 range.”

For example, Hunter says that an independent lab in Dallas recently offered a salary of $125,000 plus a $25,000 sign-on bonus and six week’s paid vacation to hire an MT. “While some of this can be attributed to the retirement wave, the pandemic has put a tremendous burden on an
overworked staff, and with 50,000 new CLIA labs started since the beginning of Covid, there just aren’t enough workers to go around.”

Finally, Vanguard’s Dooling says that lab staff overtime hours have recently begun to decline as Covid test volumes have fallen. Nonetheless, he does not see the heightened MT salaries reverting to pre-pandemic levels. “It looks like this is the new normal.”

MT Salaries Skyrocket As Labs Struggle To Find MTs
Castle Biosciences To Buy AltheaDx For Up To $140 Million

Castle Biosciences To Buy AltheaDx For Up To $140 Million

Castle Biosciences To Buy AltheaDx For Up To $140 Million

Castle Biosciences (Friendswood, TX) has agreed to acquire AltheaDx (San Diego, CA) for $65 million in initial consideration consisting of $32.5 million in cash plus $32.5 million in stock. In addition, Castle could pay up to $75 million more in cash and stock if AltheaDx hits certain revenue targets over the next three years and gets expanded Medicare coverage for its IDgenetix
test. The deal is expected to close this summer.

AltheaDx markets a laboratory-developed pharmacogenomic test under the brand name IDgenetix. The cheek-swab test analyzes a panel of 15 genes to help doctors make prescription recommendations for patients with depression. The test is performed at AltheaDx’s CAP-accredited laboratory in San Diego. The Medicare program has covered IDgenetix since the fall of 2020 at a rate of $1,569 (CPT 81479: unlisted molecular pathology procedure).

AltheaDx, which has 40 employees, generated revenues of less than $1 million in 2021. Castle anticipates that AltheaDx will record $1-3 million of revenue in 2022.

Privately-held AltheaDx’s largest investors include Alma Life Sciences, Ally Bridge Group and WuXi Healthcare Ventures. AltheaDx filed for an initial public stock offering in December 2014, but shelved the proposed stock sale in early 2015.

Castle, which has 345 employees, is headquartered in Friendswood, Texas (near Houston) and operates CLIA-certified labs in Phoenix and Pittsburgh. Its lead testing product is DecisionDxMelanoma, which analyzes 31 genes to predict metastatic risk in patients diagnosed with cutaneous (skin) melanoma. DecisionDx-Melanoma is an Advanced Diagnostic Laboratory Test (ADLT) that is reimbursed by Medicare at $7,193 (CPT 81529).

For the full year ended December 31, 2021, Castle reported a net loss of $31.3 million versus a net loss of $10.3 million in 2020; revenue increased by 50% to $94.1 million.

High Claims Denials for Pharmacogenomic Testing

To date, pharmacogenomic testing for medication selection has been a tough market for labs providing this service. The volume of allowed Medicare Part B carrier claims for four key codes used to bill for pharmacogenomic testing (aka cytochrome p450; CPT 81225, 81226, 81227 and 81231) declined from a combined total of 959,398 allowed claims in 2014 to 33,706 allowed claims in 2020, according to data from the coding and reimbursement firm CodeMap (Chicago, IL). Furthermore, CodeMap data show that denial rates for these pharmacogenomic testing codes ranged from an average of 26% (2014) to 85% (2019) over the seven-year period. This compares with average claims denials rates of less than 10% for most routine clinical lab tests.

Biopsy Client Database for Pathologists

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Quest Diagnostics Pays $85 Million For Labtech

Quest Diagnostics Pays $85 Million For Labtech

Quest Diagnostics Pays $85 Million For Labtech

The latest 10K annual report from Quest Diagnostics revealed that the company paid $85 million for its acquisition of Labtech Diagnostics (Anderson, SC). The deal, which closed on December 13, 2021, included cash consideration of $80 million and contingent consideration of $5 million dependent upon certain test volume goals. Labtech is an independent clinical lab specializing in allergy testing that serves physicians and patients primarily in South Carolina, North Carolina, Georgia and Florida. Labtech, which has 200 employees, was founded by its CEO/Owner Joseph Labash in 2011.