Laboratories May be Liable under the False Claims Act for Submitting Claims for Screening Tests to Medicare
By Russell Paul
Laboratory tests are not medically necessary when they do not “determine a disease or illness. . . or medically or surgically manage an illness.” Strand Analytical Labs., LLC v. Burwell, 2015 WL 4603258, at *17 (S.D. Ind. July 30, 2015) (“The plain meaning of the words diagnose and treat do not include the broader concept of ‘contribute meaningfully.’ Rather, the terms ‘diagnose’ or ‘treat’ convey that the service must determine a disease or illness, which the . . . test admittedly does not; or medically or surgically manage an illness, which the Secretary concluded the . . . test did not do.”).
Screening Tests and Medicare Reimbursement
Screening, in medicine, is a strategy used to identify an unrecognized disease in individuals without signs or symptoms, and Medicare generally does not pay for screening tests. As the Medicare Claims Process Manual clearly provides, “[t]ests that are performed in the absence of signs, symptoms, complaints, personal history of disease, or injury are not covered except when there is a statutory provision that explicitly covers tests for screening as described.” Other Medicare guidance reinforces that screening tests are generally not covered:
Screening tests, examinations, and therapies for which the beneficiary has no symptoms or documented conditions, with the exception of certain screening tests, examinations, and therapies as described below under Exceptions (Items and Services That May Be Covered)[.]
Local Coverage Determination (“LCD”) L35000 (effective October 1, 2015 for various jurisdictions), which governs molecular pathology laboratory procedures, succinctly states the Medicare standard:
Screening services such as presymptomatic genetic tests and services used to detect an undiagnosed disease or disease predisposition are not a Medicare benefit and are not covered. Similarly, Medicare may not reimburse the costs of tests/examinations that assess the risk of a condition unless the risk assessment clearly and directly effects the management of the patient.
Thus, whenever the lab test at issue is not related to any existing symptom or complaint, it might be used to screen for existing disease or to predict the likelihood of future disease. Such a test would not be considered medically necessary and would not covered by Medicare, and a lab submitting a claim for such a test may be liable under the False Claims Act (“FCA”).
“Reasonable and Necessary” Medical Service Factors
Chapter 13 of the Medicare Program Integrity Manual (“MPIM”) sets out factors for evaluating whether a specific service is “reasonable and necessary.” MPIM § 13.5.1 provides that for a service to be considered “reasonable and necessary,” it must be “[f]urnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient’s condition or to improve the function of a malformed body member.” MPIM § 13.7.1 states that the strongest evidence of medical necessity is, in order, of strength,
- Published authoritative evidence derived from definitive randomized clinical trials or other definitive studies, and
- General acceptance by the medical community (standard of practice), as supported by sound medical evidence based on:
- Scientific data or research studies published in peer-reviewed medical journals;
- Consensus of expert medical opinion (i.e., recognized authorities in the field); or
- Medical opinion derived from consultations with medical associations or other health care experts.
Furthermore, Section 13.7.1 of the MPIM expressly rejects self-interested research as the basis for concluding that a service is reasonable and necessary:
Acceptance by individual health care providers, or even a limited group of health care providers, normally does not indicate general acceptance by the medical community. Testimonials indicating such limited acceptance, and limited case studies distributed by sponsors with financial interest in the outcome, are not sufficient evidence of general acceptance by the medical community. The broad range of available evidence must be considered and its quality shall be evaluated before a conclusion is reached.
MPIM §13.7.1 (emphasis added).
Thus, one must look to studies, data and recognized authorities in the field to determine whether a lab test is relevant to the diagnosis of a patient’s current condition, to medically or surgically manage an illness or to improve the function of a malformed body member. If it is not, it may be for screening or predictive purposes and as such, is not covered by Medicare. A lab that submits a claim for such a test may be liable under the FCA.
 Medicare Claims Processing Manual, CMS Pub. 100-4, Laboratory Services, Ch. 16, § 10 (Apr. 29, 2016), available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c16.pdf.
 CMS, Items and Services That Are Not Covered Under the Medicare Program, at 5, available at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Items-and-Services-Not-Covered-Under-Medicare-Booklet-ICN906765.pdf (emphasis added).
 Medicare Program Integrity Manual (Mar. 7, 2014), available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/pim83c13.pdf.
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