HEALTH NOTES

“LABORATORY TESTS CAN BE VERY PROFITABLE”

PART III

Some states and insurance companies have put a stop to the practice of doctors billing for laboratory work that is not performed on site. Blue Cross and Blue Shield of Georgia began requiring the lab that performs the test to do the billing themselves. This practice is called “direct billing,” according to this Wall Street Journal article; however, the majority of states do not require this practice. Therefore, the potential for questionable ethics and profitability in medical practices is pervasive throughout the majority of the country. Medicare also requires direct billing, however, some doctors still bill Medicare for lab work performed off site. They do this by owning what is called “condo labs”. These are extremely small labs, often just a small room or cubicle within a larger facility. One such lab, located in San Antonio, Texas, is set up like this: The lab is operated by Uropath LLC in a medical office building. On the door of the lab, approximately fifteen practices are listed, some as far away as Missouri, according to this article. Inside the building has a large center hallway with a series of doors off of the hallway. These lead to small rooms. The doors are labeled with titles such as “Lab F Urologic Associates of South Texas.” Individuals with white coats run from room to room conducting tests. Doctors from the named practices on the doors will buy microscopes and other equipment used in its “laboratory.” The doctors pay a monthly cost to Uropath to manage the lab. They pay for its expenses as well, and the pathologists who read the reports. However, the individual doctor groups do all insurance billing, including billing to Medicare.

This condo set-up has been evaluated by the U.S. Department of Health and Human Services Inspector General. According to this Wall Street Journal article, “The Inspector General said the deal could constitute a violation of anti-kickback laws, since the lab company is giving the doctors an opportunity for near certain profits in exchange for the business.”

Another “laboratory” in Hollywood, Florida called PathOptions routinely solicits business from doctors. In their solicitations they will entice the doctor by stating that he or she can bill an insurance company for “. . . four times what the tests cost.” They will tell a small medical practice they can boost its profits by a quarter of a million dollars. Next week I will discuss why the practices began to occur.