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.

NYSCLA Meeting Highlights:PAMA, Pandemic Response, Shortages & AI

NYSCLA Meeting Highlights:
PAMA, Pandemic Response, Shortages & AI

NYSCLA Meeting Highlights:
PAMA, Pandemic Response, Shortages & AI

Following cancellation last year due to the pandemic, the New York State Clinical Laboratory Association (NYSCLA) held this year’s annual meeting in a well-spaced conference room in Albany, October 6-7. Approximately 125 lab directors, managers, pathologists and vendors were in attendance—down from the average 200+ at pre-pandemic NYSCLA meetings. Key topics discussed included the outlook for the Medicare CLFS under PAMA, the New York clinical lab response to the pandemic, workforce shortages, and the risks and ethical challenges of using artificial intelligence in healthcare. Below are brief summaries of several speaker presentations.

Alan Mertz, Director of Government Relations at NeoGenomics (Fort Myers, FL), said the lab industry, led by the American Clinical Laboratory Assn. (ACLA), is lobbying to have Medicare CLFS rates frozen for another year in 2022. This would delay scheduled Medicare rate cuts of up
to 15% for most high-volume clinical lab tests, but would not change the second PAMA private payer data reporting period for labs of January to March 2022.

Another one-year delay would give the lab industry time to try to get legislative changes to PAMA that ensure that all lab providers (independents, hospitals and POLs) are accurately represented through statistical sampling when CMS calculates new CLFS rates for 2023-2025. Other changes sought by ACLA included limiting annual CLFS rate changes to between +5% and -5% per test, increasing the length of time between each data collection period from three years to four years, and excluding Medicaid managed care rates from future surveys.

Mertz noted that ACLA’s PAMA lawsuit against HHS/CMS, initially filed in December 2017, has been going on for nearly four years. Most recently, a federal district court dismissed the lawsuit in March, ACLA filed a notice of appeal in May, and hearings are expected to begin later this year.

Separately, Mertz noted that the lab industry has been trying to get clarity from the Department of Justice on the scope of the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) for the past two years. A provision in the EKRA outlaws most traditional volume-based commissions paid to lab sales reps. EKRA was initially intended to target abusive kickback relationships between toxicology labs and addiction treatment centers. It doesn’t look like this will be enforced against legitimate labs, but a formal DOJ opinion is needed, according to Mertz.

Finally, Mertz said that ACLA is supporting the VALID Act, which would grandfather in existing laboratory-developed tests (LDTs), but require FDA regulation of new LDTs. This would be preferable to any potential FDA regulations that might be developed under the notice- and-comment
rulemaking process. Mertz believes the VALID Act has a chance to pass into law as an attachment to either a drug or medical device user fee reauthorization bill in 2022.

Brian Jackson, MD, Medical Director of Support Services, IT, and Business Development at ARUP Laboratories (Salt Lake City, UT), discussed the potential risks and ethical issues associated with using big data and AI in healthcare. Jackson noted how machine learning programs in
the past had developed biases as a result of being trained on non-diverse datasets. 

Violation of patient privacy is another risk. Jackson noted that Target and other retailers have developed algorithms so sophisticated that they can identify personal medical information based on an individual’s purchasing patterns. He cited a study that found that 99.98% of Americans could be correctly re-identified in any de-identified dataset by cross-referencing 15 demographic attributes (Nature, July 23, 2019).

Jackson warned that current FDA regulations of medical AI algorithms are too lax and require very little to achieve clearance. According to a study of 130 medical AI algorithms approved by the FDA between 2015 and 2020: 1) most were based on retrospective data only; 2) 93 out of the 130 devices had only single-site evaluation; and 3) only 17 reported that demographic subgroups were analyzed. [see Wu et al. Nature Medicine 2021;27:576-54]

Jackson urged labs to perform their own validation and quality control studies on new AI applications they deploy, just as they would when adding a new chemistry assay.

On the question of AI algorithms someday replacing pathologist interpretations, Jackson said pathologists may find themselves signing out more cases per day, but “I don’t see pathologists being
out of work any time in the near future.”

James M Crawford, MD, PhD, Senior Vice President of Laboratory Services at Northwell Health, noted that Northwell Health Laboratories (system-wide, inclusive of hospital lab-based and Core Lab-based testing, but not including rapid tests performed at Urgent Care Centers) is in the range of 5,000 to 8,000 Covid-19 PCR tests per day. Current positivity rates are hovering between 3% to 4%, according to Crawford.

Positivity rates had averaged more than 70% at Northwell Health at the peak of the pandemic in the New York City area in early April 2020. “We’ve probably never seen that high of a percentage positivity rate for any other pathogen,” noted Crawford.

He said that serological tests ordered by physicians and resulted by Northwell Health Laboratories are currently averaging about 90% positive for antibody tests for “Ig-S” (presumably a reflection of vaccination-related testing) and about 40% for antibody tests for “Ig-N” (presumably tests ordered to see whether a patient had recovered from natural infection). Crawford noted that this testing is from a population in which physicians wanted to know the test results and cannot be viewed as a “serosurvey” of the general population.

Crawford believes the New York City region will continue to see a steady rate of Covid-19 positivity, but that societal function and healthcare delivery will be relatively sturdy through the coming winter months. “Covid-19 will be with us for the foreseeable future. The key is staying committed
to our careful ways in co-existence with Covid-19.”

Carlos Cordon-Cardo, MD, PhD, Chairman, Department of Pathology, Molecular and Cell Based Medicine at Mount Sinai Health System (MSHS-New York City), described Mount Sinai’s transition to digital pathology. The timeline included the initial purchase order for Philips IntelliSite Pathology Solution in June 2019, integration of Philips-Sunquest and the MSHS LIS barcode system in late 2019, and going live for clinical diagnostics in early 2020. Labcorp, which acquired the MSHS clinical lab outreach business in 2017, helped with the digital pathology implementation. Cordon-Cardo says that MSHS pathologists are now using a combination of traditional microscope and digital pathology to interpret cases.

“Staffing has become the number one thing on everybody’s mind,” noted NYSCLA President Eloise Aita, PhD. She noted that approximately 50% of lab workforce is over the age of 55. Last year, the number of new NYS licensed clinical laboratory technologists fell by 17% to 304, while the number of new clinical lab technicians fell by 8% to 73. Challenges to attracting new workers include poor visibility of the specific occupations in the laboratory and limited job advancement opportunities, according to Aita. “The pandemic has shone a light on the importance of our industry, let’s take advantage of that.”

Cancer Diagnoses Declined Sharply During First Year of Pandemic

Cancer Diagnoses Declined Sharply During First Year of Pandemic

Cancer Diagnoses Declined Sharply During First Year of Pandemic

New diagnoses of eight common cancers (prostate, breast, colorectal, lung, pancreatic, cervical, gastric and esophageal) significantly declined during most of the first 13 months of the pandemic (March 2020-March 2021), according to a study by Quest Diagnostics published August 31 in JAMA Network Open, Oncology. It is believed to be the largest and most comprehensive analysis of cancer diagnosis rates during the pandemic.

Lockdown measures and fear of going to doctor’s offices and hospitals are believed to have led many people to put off preventative care like routine screenings that could have resulted in diagnosis of cancer during the first year of the pandemic, the study suggests.

The Quest study included 799,496 patients (45% women/55% men) with an average age of 68. Data over four time periods was analyzed: prepandemic, March to May 2020, June to October 2020, and November 2020 to March 2021.

Prepandemic, January 2019 to February 2020, the average monthly number of new diagnoses for the eight cancers was 32,407. During March to May 2020, the monthly average fell by 30% to 22,748 cases. It fell by 10% to 29,304 cases in the next period, June to October 2020. Finally, new cancer diagnoses fell 19% to an average 26,204 cases in the last period, November 2020 to March 2021.

Delayed cancer diagnosis can lead to more advanced disease, more aggressive and costly treatment, and worse outcomes, noted the Quest study.

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ACLA Study Cites Emerging Crisis of Undiagnosed Diseases and Delayed Treatment
A separate study of Medicare claims data found that clinical lab test utilization overall fell by 18% from 2019 to 2020, even when taking into account the large volume of Covid-19 testing conducted in 2020. The study was sponsored by the American Clinical Laboratory Association and performed by Braid Forbes Research (Silver Spring, MD). The analysis compared the volume of CLFS tests for Medicare beneficiaries in the first nine months of 2020 to the volume of tests performed in the same period of 2019. Key findings included:

Cancer testing decreased by 31% on average across key tests, including:

EGFR test volume for non-small cell lung cancer fell by 47%
BRCA test volume for breast and ovarian cancer fell by 35%
Prostate specific antigen (PSA) test volume fell by 16%

Diabetes testing decreased by 29% on average across key tests, including:

A1c test volume fell by 20%
Glucose test volume fell by 36%

Other tests seeing substantial volume declines included chronic kidney disease (-31%), liver disease (-23%), lipid panel (-22%) and drug testing (-21%).

The Pandemic Intensified Chronic Lab Worker Shortage

The Pandemic Intensified Chronic Lab Worker Shortage

The Pandemic Intensified Chronic Lab Worker Shortage

There are approximately 338,000 clinical laboratory technologist and technician jobs in the U.S., according to the U.S. Bureau of Labor Statistics. Hospitals account for 47% of these jobs; independent labs, 20%; physician offices, 9%; schools and universities, 6%; and other settings, 18%. While the Covid-19 pandemic has increased the visibility of the clinical lab industry, it has also intensified the chronic shortage of lab workers. A new report (The Clinical Laboratory Workforce: Understanding the Challenges to Meeting Current and Future Needs) published by the American Society for Clinical Pathology (ASCP) and the Center for Health Workforce Studies at the University of Washington, provides an in-depth look at the lab worker shortage and strategies to increase the pool of qualified personnel. For more insight, Laboratory Economics spoke with the study’s lead author Edna Garcia, MPH, Director, Scientific Engagement and Research at ASCP.

How has the pandemic worsened the lab worker shortage?
It’s made it difficult for students studying medical laboratory science to get onsite at clinical rotation sites. Many sites didn’t want students due to Covid-19, and some programs turned away students weeks before they were scheduled to start rotations. As a result, the pipeline of new histotechnicians, medical laboratory technicians and phlebotomists entering the workforce has been disrupted.

There were steep declines in the number of new histotechnicians, histotechnologists, medical lab technicians and especially phlebotomists last year [see table].

At the same time, labs have experienced higher-than-average staff departures mainly due to early retirement taken by employees with health concerns. Some lab employees in the age range of 55-64 have retired early because of burnout and/or fear of catching Covid.

Finally, there has been increased demand for lab workers due to the high volume of Covid-19 testing, demand for rapid turnaround time, and the thousands of new Covid-19 testing labs that have

What’s your take on the high sign-on bonuses being used to attract lab workers?

For more than 20 years, labs have competed for workers by offering sign-on bonuses. What’s new is the size of the bonuses, which have increased from roughly $1,000 to $5,000 in the past, to as much as $10,000 to $20,000 currently. Labs are also now frequently tying sign-on bonus payouts to required employment of two years or more to prevent “lab jumping.” We’ve also seen institutions that offer to pay for licensure fees, discounts on car/homeowners insurance and cellphones.

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Which positions are in highest demand?
Medical lab technicians, histotechnicians, and phlebotomists have the highest vacancy rates. We also see many opportunities in molecular pathology departments, and the need for technologists with molecular biology (MB) and molecular pathology (MP) certifications.

The long-term trend in new clinical laboratory science program graduates is flat.
Yes, the total number of new graduates for all lab degrees (HT, HTL, MLS/MT, MLT, etc.) has been stable for the past 10 years (see chart). But stable isn’t good enough to keep up with the growing demand.

Will increasing technology and automation alleviate the worker shortage in the lab?
From our data and conversations with lab staff and managers, the role of lab professionals is going to change with automation, but it’s not going to reduce the number of techs required. There will be a need for staff who are knowledgeable in using and operating these machines in the near future.

What can be done to increase the pool of qualified personnel?
Our report outlined three strategies. Number one, we’ve got to raise awareness of lab career opportunities at an earlier age. Specific activities and program content geared toward elementary and middle school students are needed. Incentives should be offered to encourage lab employees to participate in educational and awareness-building activities at elementary schools.

We’ve also got to do more to improve workforce retention. Too many lab employees leave the field to pursue new careers by enrolling in nursing or medical school. We need to keep existing employees by providing more opportunities for career growth through tier levels, increases in pay, and
elevated titles.

Finally, we’ve got to encourage diversity in academic recruitment by partnering with STEM programs to recruit students from underrepresented groups, developing more scholarships, and recruiting more men, the non-dominant gender in this field.

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New Lab Formations Continue To Boom

New Lab Formations Continue To Boom

New Lab Formations Continue To Boom

The extraordinary demand for Covid-19 PCR, antigen and antibody testing continues to fuel a record number of new CLIA-certified lab formations, according to the latest CMS data analyzed by Laboratory Economics. More than 7,000 new CLIA lab certificates were issued in the second quarter (April 1-June 30, 2021). The all-time high (12,000+ new CLIA labs) occurred in the fourth quarter of 2020. The boom has created a huge demand for lab workers that had already been in short supply before the pandemic. 

Volume Surge Expected For High-Priced Covid-19 Test Panels

Volume Surge Expected For High-Priced Covid-19 Test Panels

Volume Surge Expected For High-Priced Covid-19 Test Panels

With the flu season underway, more test panels are becoming available that test for Covid-19 plus other respiratory viruses, including influenza A/B and respiratory syncytial virus (RSV). Labs have begun to submit the combo PCR tests codes for Covid-19, although volume is nominal at this stage, notes Lale White, Chief Executive at XIFIN Inc. (San Diego, CA).

The AMA has issued new CPT codes for Covid-19 PCR-based test panels (87636 & 87637) and Medicare contractors have set rates for both of these codes at $142.63 by crosswalking to the existing code 87631 (respiratory virus detection, 3-5 targets).

In addition, several Proprietary Laboratory Analyses (PLA) codes (e.g., 0223U, 0202U and 0225U) have been issued for larger Covid-19 test panels that include up to 22 pathogen targets. Medicare contractors have set rates for these codes at $416.78 by crosswalking to the existing code
87507 (infectious agent detection, 12-25 targets).

There are currently an average of 1.5 million Covid-19 PCR tests being performed each day in the United States at cost of roughly $150 million per day, or $50+ billion annualized. A transition toward combo test panels reimbursed at $142-$417 per panel could potentially push the annualized market to more than $100 billion. That would exceed the total U.S. market for all non-Covid clinical lab and pathology testing.

In June 2020, the Office of Inspector General (OIG) communicated its fear that many labs are performing medically unnecessary add-on tests when responding to orders for Covid-19. The OIG has added an analysis for potential fraud and abuse with Covid-19 add-on testing to its work plan,
notes Charles Root, PhD, President of CodeMap LLC.

Top 25 Fastest-Growing Labs by Medicare Part B Volume of Services