Genetic testing, when medically necessary, can provide physicians with important information for the diagnosis, prevention, and treatment of numerous illnesses. It has become an extremely valuable tool in many fields of medicine and can play a significant role in the overall medical care that a patient receives. In recent years, genetic testing has become heavily regulated and aggressively enforced, seemingly due to the rapid growth in the number of tests ordered through telemedicine services during the COVID-19 pandemic. Numerous marketers, call centers, and telemedicine providers have been prosecuted in recent years through the use of the Federal Anti-Kickback Statute, Eliminating Kickbacks in Recovery Act, and the Commercial Insurance Fraud law for the fraudulent use of genetic testing. While genetic testing can serve as an invaluable health tool if medically necessary, it is also highly scrutinized by law enforcement and therefore crucial that each medical professional in the industry have measures in place to assure that testing is complaint with the applicable state and federal regulations.

One very important measure of compliance involves the establishment of a physician-patient relationship. In other words, there are certain conditions pertaining to the physician-patient relationship before a genetic test is considered medically necessary and properly reimbursable. Said differently, it is not sufficient that a patient curiously wishes to learn if he or she carries a certain cancerous gene. Physicians should make sure their practice has stringent documentation policies in place to ensure they are compliantly ordering such tests for their patients. Laboratories should also be wary of the important role that medical necessity plays with regard to a physician’s order for genetic testing. For example, just because a physician signs an order, does not necessarily mean that the criteria for medical necessity has been met. A common scenario that happens time and time again involves laboratories processing large volumes of physician orders whereby the claims are initially reimbursed in full, only to be notified much later that those same claims were overpaid and must be returned to the payer.

The first major wave of genetic testing enforcement came in September of 2019 whereby laboratory recruiters (otherwise known as marketers) would persuade a Medicare or Medicaid beneficiary to take a genetic test. The recruiter (sometimes on behalf of the lab) would then “compensate” a physician to sign off on the unnecessary genetic tests so that the lab could then process the tests and obtain hefty reimbursement from the government. The lab would oten then share its proceeds of that reimbursement with the recruiter as well as the physician. This scheme resulted in over $2.1 billion worth of claims being fraudulently submitted to the government. As a result of this scheme, charges were brought in five federal districts against 35 defendants associated with dozens of telemedicine companies and cancer genetic testing laboratories for their alleged participation in what has now become known as one of the largest health care fraud schemes ever charged.

A conviction for a single violation of a statute of this nature will likely result in serious criminal and civil monetary penalties, which may include a fine of up to $25,000 and imprisonment for up to five (5) years. In addition, a conviction will lead to a mandatory exclusion from participation in federal health care programs and can carry with it significant negative professional licensure implications. Regardless of whether you or your practice are being investigated for participating in a fraudulent genetic testing scheme or you are merely seeking guidance on ways to stay compliant within the industry, please do not hesitate to contact the highly experienced attorneys at Nicholson & Eastin, LLP for a free consultation.