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DOJ Investigating Genomic Health for Compliance Issues With Medicare Billing Regulations

NEW YORK (GenomeWeb) – In a filing with US Securities and Exchange Commission last week, Genomic Health disclosed that it is being investigated by the United States Department of Justice related to its compliance with the Medicare Date of Service billing regulation. 

According to the firm's 10-Q report, Genomic Health received a civil investigative demand in connection with the matter, and said it "has produced specific documents in response to the CID."

Under Medicare billing rules, payment for laboratory tests performed on Medicare beneficiaries who were hospital patients at the time that a sample was obtained, and whose tests were ordered less than 14 days from discharge, must be bundled into the payment that the hospital receives for all services provided. In other words, if a doctor takes a sample from a Medicare patient who is in the hospital, and then sends that sample to Genomic Health for an OncotypeDx test more than two weeks after the patient is discharged, the company can bill Medicare directly.  If the test is ordered before then, the hospital is paid by Medicare, and Genomic Health must seek payment from the hospital.

"Such hospitals have generally been unwilling to enter into written agreements with us to assume the financial responsibility for these tests ordered for Medicare beneficiaries and consequently we generally cancel such orders when received within the 14-day timeframe when written agreements from such hospitals are not in place," Genomic Health wrote in its filing.  

Medicare billing rules have also changed recently. Genomic Health wrote that the switch, effective January 1, means that it may now bill Medicare directly for tests performed on beneficiaries who were hospital outpatients at the time the tumor tissue samples were obtained.  But the rule remains unchanged with respect to payment for tests performed on Medicare beneficiaries who were inpatients.

Genomic Health declined to comment further on whether the DOJ investigation relates at all to this shift, or to its practices regarding cancelling test orders as described above. In an email to GenomeWeb, however, a spokesperson said that the company stands by the belief that its billing practices "have always been appropriate and compliant" with Medicare regulations, including the date of service rule that is the focus of this investigation.

"Orders initially submitted within the Medicare date of service rule period and subject to the rule have historically represented less than 3 percent of total Oncotype DX test volume," and following the changes to the rule that went into effect on January 1, "we anticipate that the percentage of orders impacted will shrink to less than 1 percent of total business for Oncotype DX," the spokesperson added.