What Clinical Labs Can Expect in Audits of COVID-19 Testing Claims

The COVID-19 pandemic has brought seismic changes to the clinical lab industry. High demand for COVID-19 testing services, tremendous amounts of funding, and rapidly changing government regulations have created opportunity for clinical labs, but also new compliance and audit challenges. As the dust settles and government entities and commercial insurers review lab claims for COVID-19 testing over the past two years, these are some of the audit and compliance challenges labs may face.

Early in the pandemic, Congress required commercial insurers to cover certain claims for COVID-19 testing. However, Congress did not provide the insurers with funds to cover the cost of this mandate and some insurers have pushed back against lab claims for COVID-19 testing. Under the federal coverage mandate, insurers are generally required to cover tests that are for the diagnosis of COVID-19 where there is an “individual clinical assessment” by an authorized provider that testing is appropriate. Testing for travel, return to work/school, and general screening purposes is generally not required to be covered, although insurers may choose to cover it. Insurers that chose to cover only what they are legally required to cover may audit labs for providing testing for an uncovered purpose. Testing for travel is sometimes a contentious issue because, depending on the circumstances, it may constitute uncovered general screening, or, in the case of people who were exposed while travelling or who were unable to social distance per CDC guidelines while traveling, may constitute circumstances where testing would be covered.

Further, insurers may audit labs based on the requirement for an “individualized clinical assessment,” including whether the practitioner was authorized, whether the order for testing was within the scope of state law, whether the assessment was conducted by telemedicine or by a questionnaire, and what rules apply where a state does not or did not require an order for COVID-19 testing.

Also, the federal coverage requirement generally required insurers to reimburse in-network labs for COVID-19 testing at the specified in-network rate, but to reimburse out-of-network labs at the lab’s “cash price” as listed on the lab’s website. This has occasionally led to disputes regarding the cash price, especially where the listed cash price is significantly higher than other charges or reimbursement rates for COVID-19 testing (sometimes leading to accusations of price-gouging) or where the cash price listed on the website is different from the price charged to individual, private, cash-pay patients.

Where an individual has Medicare or Medicaid coverage, these programs each have their own requirements for COVID-19 testing, which they are likely to audit. Where an individual is uninsured, the HRSA Uninsured Program provides some coverage for COVID-19 testing. However, it also requires a provider to make certain certifications, including regarding verification that the individuals tested were uninsured.

Lastly, clinical labs, in forming compensation arrangements, should always be aware of the requirements of the Physician Self-Referral Law (Stark Law), Anti-Kickback Statute (AKS), and the Eliminating Kickbacks in Recovery Act (EKRA). EKRA in particular is a new, criminal statute that applies to referrals for clinical lab services billed to all payors, not just federal payors.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters. If you or your healthcare entity has any questions pertaining to a clinical lab audits or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.