A tidal wave of fraud has been approaching our shores for quite some time, and it’s finally broken land. The scheme, gaining popularity in clinical labs and pathology groups involves waiving patient fees and copays in order to send payer groups inflated claims fees. While these billing tactics might seem innocuous, they are fraudulent because they are blatant misrepresentations of what the providers are billing patients, and it is a failure to adhere to plan regulations and responsibilities that were agreed upon by both parties. Failing to obligate patients in situations requiring cost-share obligations creates a deficit for health plans while earning extra money for the clinical labs and other knowing fraud scheme participants.

Sky Labs, which operates as a group of related out-of-network diagnostic laboratories, duped Cigna into paying over $20 million in claims. Sky Labs failed to inform Cigna of their patient “fee forgiveness”, thus eliciting payments that were not under obligation by the plan. To worsen the situation, Sky Labs also induced providers and drug treatment centers in order to refer patients. These patients included Cigna members, and other out-of-network labs. Improper patient-referral kickbacks such as these are incredibly lucrative for participating clinicians – if their operations remain undetected.

Once Cigna became informed of the situation, they filed a suit against Sky Labs in order to recover their lost funds and put an end to Sky Labs’ fraudulent operations. Cigna claims that Sky Labs tried to pull the wool over Cigna’s eyes for thousands of claims over the course of 4 years. These offensive tactics are being coupled by the health plan’s bold and proactive defensive implementations. Cigna is now auditing laboratories, including toxicology and pathology labs. Cigna is looking for meticulous medical record documentation and is seeking to ensure proper use of medical necessity and the collection of deductibles and copayment before Cigna makes any pay outs. While this may violate the prompt-payment laws in some states, it is recommended that providers and plans participate in post-payment reviews in order to avoid these sticky legal situations.

United Healthcare is taking a defensive approach to avoiding this fraud scheme as well, by warning out-of-network labs to refrain from waiving patient fees and copays. United intends on requiring authorization for all genetic tests later in the year for commercial members. United didn’t hold back, threatening labs who seek to find ways around these health plan arrangements with the Office of the Inspector General and state government intervention.

Advize Health recommends that healthcare payers and providers engage in post payment reviews. These reviews can keep clinicians and plans from attempting to undermine the system, while avoiding future legal conflict. Post payment reviews require in-depth inquiry and validation, which promotes honesty and proper payouts to all parties involved.