COVID-19 Testing – New Opportunities for Laboratory Services Fraud and Abuse

July 14, 2020 HMS

The COVID-19 pandemic has generated new opportunities for fraud in connection with clinical laboratory services. Many people are seeking diagnostic tests to confirm whether or not they have contracted the novel coronavirus. Demand for these tests is skyrocketing, especially in states where new outbreaks are occurring. In addition, consumer interest in antibody testing is growing as individuals return to offices and schools consider whether to re-open.

New Types of Tests Mean New Types of Fraud

COVID-19 related tests may be associated with different types of fraud. For example, providers may accept kickbacks from laboratories in exchange for bundling COVID-19 tests with costly Respiratory Pathogen Panel tests. Double billing for tests is also a concern. Before April 1, 2020, there were no codes for COVID-19 testing. As a result, claims that include both an “unlisted laboratory test” and a COVID-19 test on the same date may be a red flag that the provider is submitting a duplicate test.

Both federal and state authorities continue to focus on laboratory scams even as the pandemic is changing how fraudsters go about their business. Unnecessary genetic testing scams, kickbacks and related fraud schemes have persisted in spite of the pandemic.

What Can Health Plans Do?

Health plans must also keep an eye open for potential fraud related to COVID-19 lab tests. Three best practices for preventing lab services fraud include:

  1. Screening providers. Before paying for tests, plans may want to screen lab providers. As part of this screening process, you may want to verify the lab’s licenses, review its inspection history, conduct a background review which includes a search for past criminal and civil allegations, and view the CMS 116 application form within the CLIA records to determine whether the lab director is associated with other labs.
  2. Running analytics. Data analysis can shed light on fraudulent lab tests. Examples analytics that may be helpful include the frequency of test administration, the frequency of Modifier 91 and Modifier 59, verification of the ordering provider’s relationship to the lab, and reviewing the specialty of ordering providers.
  3. Conducting desk audits. This makes sense once a plan has identified suspicious lab claims. When requesting records for lab services, it’s a good idea to ask for the order from the treating physician, requisition forms, lab test results, and documentation showing that results were sent to the treating physician. During a thorough desk audit, plans often ask for many other types of information.

COVID-19 is just one new avenue for bad actors to engage in fraudulent activity. Prior to the pandemic, HMS helped many organizations to address laboratory services fraud and abuse. Experience has shown that implementing these strategies can reduce payments for unnecessary tests and procedures.


To learn more about this opportunity area, download our white paper – Investigations 101: Laboratory Services Fraud and Abuse.

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