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Lab Arrangements

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at October 27, 2014

I perhaps should not be surprised to find treatment providers continuing to try to find that last drop of profit that may come from UA testing. What started as a treatment necessity to confirm the presence and, in some instances, quantity, of a banned substance within a patient’s system, has itself become a “golden shower” if you will of separate income.

No so coincidentally, the Wall Street Journal reporter yesterday on what they deem to be a loophole in the Stark Law that allows urologists to submit their samples to a lab in which they generate revenue.

Read the full article here.

Here is a clip from that article:

“In a letter to a friend, the manager of a Florida urology practice worried in 2010 that her company would attract federal scrutiny for its frequent use of an expensive bladder-cancer test.”

“The manager’s concern involved a program at 21st Century Oncology Holdings Inc.—a national chain of cancer practices—that gives its urologists a financial incentive to order the test from a central in-house lab. A federal law since the 1990s has prohibited “self-referral,” in which doctors can profit from Medicare-reimbursed procedures they order. But 21st Century Oncology and many physician groups around the country have found ways to do it anyway, exploiting an exception to the law in ways its writers didn’t anticipate.”

“The manager attached an email from a 21st Century Oncology executive who touted an increase in the number of tests ordered through the central lab, and encouraged doctors in her office to direct business to the lab and share in the revenue. The surge in orders for the bladder-cancer test was so sharp, she wrote to her friend, that it would ‘surely bring the [Office of Inspector General] to our door!’ “

While I make no comment or give an opinion on the legality or propriety of such arrangements, I simply suggest that clients pay attention to the arrangements they enter into to make sure they are not “putting their head in the sand” about how the deal works. If you are not a getting sufficient explanation of the arrangement that you can understand, your best bet is to seek the advice of legal counsel with experience in such transactions.

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