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In an opinion likely to be lauded by many laboratory and pathology providers, the Office of the Inspector General (OIG) issued OIG Advisory Opinion 14-03 on April 8, 2014. This advisory opinion addresses a laboratory’s arrangement with an electronic health records services vendor under which the “in network” laboratory pays a per-order fee for each test order that the vendor transmits to the laboratory. In the arrangement considered by the OIG, the laboratory pays a transmission fee of up to $1 for each time a referring physician uses the vendor’s service to order tests from the laboratory. If the referring physician does not order laboratory tests from a laboratory that contracted with the vendor for the per test fee, then the referring physician is charged the same $1 transmission fee.

 Click here to view the advisory opinion.

The OIG determined that because the referring physicians would not incur the transmission fees when they referred to “in-network” laboratories (those who have a contract with the vendor), the arrangement would implicate the Medicare and Medicaid anti-kickback law. The OIG reasoned that because the referring physicians are relieved of a financial obligation when they refer laboratory tests to the in-network contracted laboratory, the arrangement poses more than a minimal risk of fraud and abuse under the anti-kickback law.

The OIG wrote that charging the referring physicians a small per referral transmission fee may be unlikely to influence the referring physician’s referral decisions in a meaningful way when the overall number of referrals is relatively low, but the risk that such a fee could influence a referring physician’s decision-making increases as the number of referrals increases. The OIG reasoned that physicians typically order laboratory tests with considerable frequency, concluding that in the scenario addressed by the opinion, the payment of the per-order fees by the laboratory implicated the Medicare and Medicaid anti-kickback law. The OIG concluded there was no reason for the referring laboratory to pay the per-order fees other than to secure referrals.

This advisory opinion follows an earlier advisory opinion from 2011 in which substantially the same arrangement was reviewed by the OIG. In OIG Advisory Opinion 11-18, the OIG determined the $1 would not present a risk under the anti-kickback law. It appears as though the OIG failed to understand in the original advisory opinion the volume of $1 transmission fees, and now understands the significant aggregate financial benefit to the referring physicians in this new advisory opinion. On April 8, 2014, the OIG issued final notice of its termination of OIG Advisory Opinion 11-18, explaining the OIG now concludes the financial incentive could induce the referring professionals to select in-network laboratories rather than other laboratories, particularly for frequently ordered tests.

Click here to view the termination notice.