Harry Nelson

Pigs, Hogs, and Drug Testing

“Pigs get fatter; hogs get slaughtered.” In other words, it may pay off to be a little bit greedy, but let your greed take you too far, and you’re in trouble. This aphorism plays out over and over again in the healthcare industry (as in other fields). New revenue opportunities in healthcare reimbursement routinely start out with promise but eventually devolve into an ugly mess.

Look at any new diagnostic test, procedure, or durable medical equipment (DME) item that is identified as being reimbursed nicely you see an almost self-fulfilling prophesy. At the beginning, a group of healthcare providers start utilizing a new or newly discovered CPT or HCPCS code for a test, procedure, or product. They are pleasantly surprised that good clinical care is also a source of good reimbursement. The enthusiasm of early adopters over a clinically beneficial test gives way to more and more providers pursuing the opportunity, some inevitably driven more by profit opportunity than clinical value. As the volume of claims grow, the insurance companies begin to audit for overutilization, lack of medical necessity, and excessive testing. The payors’ special investigation units investigate fraud, including the pervasive problems of kickbacks, i.e. impermissible marketing inducements. In addition to the heightened scrutiny of claims, providers also find the reimbursement drops as the volume of the testing exapnds. A subset of providers or marketers try grow their claim volume even more aggressively, trying to cash in on a profit opportunity that they perceive to be time-limited. Overaggressive billing practices, in turn, drive more aggressive investigations, higher standard for coverage, and lower reimbursement.

As a healthcare lawyer dealing with reimbursement disputes over the past two decades, I could rattle off dozens examples of this phenomenon:diagnostic tests from nerve conduction studies and electromyography to genetic testing. In the early days of any new diagnostic test or code, we see a group of clients who are trying to understand the landscape and operate in compliance with laws and regulations. These providers have learned from the past that new billing opportunities need to be pursued with caution, that profits will be illusory if the government or insurers have the right to demand repayment because codes are not billed correctly or medical necessity is not well documented.

Later, we inevitably see a different, larger group of clients, who didn’t ask questions on the front end, but need representation when they start running into problems. Something triggers a visit to the lawyer: cessation of payment, an audit or overpayment notice with a demand for repayment, or in the worst cases, discovery of a pending criminal investigation.

Over the last eight years or so, drug testing through urine toxicology screening has been the most pervasive example of this phenomenon. Beginning around 2007, interest began to grow around the use of urine toxicology screening for injured workers being treated for pain by workers compensation providers. Doctors saw “urine drug tests” (UDTs) as a way to protect themselves from drug-seeking patients and diversion of controlled substances, by confirming that their patients were taking the drugs the doctors prescribed and not taking other drugs from other sources. Driven by a handful of high-volume laboratories, claim volume exploded. Earlier this year, Millenium Health, one of the highest-volume labs, settled a False Claims Act case with the federal government for $256m.

More recently, in the past roughly five years, urine tox screening has migrated from workers compensation to the addiction treatment world, as a tool to confirm the continued sobriety of patients in recovery from substance use disorders. Addiction treatment providers have embraced urine tox screening.

So where is the line between pig and hogs in urine tox screening in drug rehabs? Of late, many providers are watching the latest sideshow, Sky Toxicology and several affiliated labs defend a case filed by Cigna. In the Sky Labs case, Cigna has alleged that its payments in excess of $32m for UDT were fraudulent because the labs routinely waived co-pay waivers and also because the labs induced kickbacks, by allocating investment opportunities to drug rehabs based on the volume of urine tox samples referred. According to some reports, Sky Toxicology is closing its doors as the lawsuit has drawn attention to its aggressive investment structure and practices.

Providers would do well to take a cue from the Sky Labs allegations. Complete disregard for patient financial responsibility (i.e. waiver of copays and deductibles) is “hog” territory, as is any financial or investment interest tied to the volume or value of referrals as “hog” territory. In addition, the keys to staying on the right side of the line come from Regulatory Compliance 101: Make sure that utilization decisions are being driven by clinicians, not marketers or unlicensed people. Make sure that documentation meet standards to demonstrate that testing was appropriate, necessary, and of clinical value. Be wary of giving or getting inducements.

Labs, addiction treatment providers, and physicians that manage all three are likely to do just fine. Reimbursement rates are still on a downward slide, as is the case with virtually every healthcare service. But careful compliance and a focus on high quality clinical care will keep trouble at bay.

On the other hand, providers who continue to turn a blind eye to utilization, documentation, and avoidance of illegal business relationships are likely to be the “low hanging fruit” for the next wave of enforcement.

One comment to “Pigs, Hogs, and Drug Testing

  1. Sandra

    Your Pigs, Hogs, and Drug Testing article was right on the money. Thanks for the great insight.


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