Clinical lab marketing to physicians: what OIG warns about

A clinical laboratory sells to people who do not pay for the test and are not the patient. The ordering physician picks the lab and the tests, the patient gives the specimen, and Medicare, Medicaid or a private plan pays. OIG put the problem this way in its 1994 Special Fraud Alert on clinical lab arrangements: “Since the physician, not the patient, generally selects the clinical laboratory, it is essential that the physician’s decision regarding where to refer specimens is based only on the best interests of the patient.” OIG has issued fraud alerts and compliance guidance aimed at labs for that reason.

This guide is for lab owners, sales leaders and marketing staff, and for practices deciding what to accept from a lab. It covers what OIG has said about free items, staff and payments from labs to referring physicians, how the Stark law and EKRA reach labs, and how to write sales material that physicians can trust. The general rules on referral payments are in our guide to patient and physician referrals, so this one stays on the lab side. If your lab sells tests to consumers, see our guide to direct-to-consumer lab testing marketing; for genetic tests, see genetic testing marketing. If your lab works with home draw services, see mobile phlebotomy marketing. Before you fax offers to referring offices, read junk fax rules for healthcare.

Why OIG watches lab marketing

The anti-kickback statute, 42 U.S.C. 1320a-7b(b), makes it a crime to knowingly and willfully offer, pay, solicit or receive remuneration to induce or reward referrals of items or services payable by a federal health care program. Both sides of the deal are covered. In the 2014 Special Fraud Alert, OIG explains why it pays close attention to labs: “the choice of laboratory, as well as the decision to order laboratory tests, typically is made or strongly influenced by the physician, with little or no input from patients.”

OIG names four harms it ties to kickbacks in this setting: corruption of medical judgment, overutilization, increased costs to the federal health care programs and beneficiaries, and unfair competition. It also states a test that runs through all of its lab guidance, first written in 1994 and repeated in 2014: “[w]henever a laboratory offers or gives to a source of referrals anything of value not paid for at fair market value, the inference may be made that the thing of value is offered to induce the referral of business.” The 1994 alert adds that the same is true when a referral source solicits or receives anything of value from the lab.

The 2014 alert also points out that claims resulting from a kickback violation are not payable by Medicare and may be false claims under the False Claims Act, “even if the items or services are medically necessary.” A test can be clinically sound and still be a problem if the way the lab won the order was not.

Free staff, equipment and services

The 1994 Special Fraud Alert lists lab arrangements that may violate the anti-kickback statute. The first is phlebotomy. Where state law permits, a lab may place a phlebotomist in a physician’s office to collect specimens for that lab. OIG says the mere placement “would not necessarily serve as an inducement,” but the statute is implicated when the phlebotomist performs tasks that are the office’s own job, such as taking vital signs or other nursing functions, testing for the physician’s office laboratory, or clerical work. A contract that forbids those tasks does not end the concern if the phlebotomist is not closely monitored or the rule is not rigorously enforced.

The same alert lists other inducements that may implicate the statute:

• Free pick-up and disposal of biohazardous waste, such as sharps, unrelated to collecting specimens for the lab.
• Computers or fax machines, unless the equipment is integral to, and used only for, the lab’s own work.
• Free lab testing for health care providers, their families and their employees.
• Performing a managed care plan’s tests free of charge to keep a physician’s other business, where the free work benefits the physician.

In a 1997 letter on free services, OIG applied the same reasoning to chart review and infection control work that labs were asked to do for nursing homes at no charge. It said that providing services the recipient would otherwise have to provide itself “confers a benefit on the recipient,” and called the arrangements it described “highly suspect.” For a sales team, the practical test is simple to say: if the office would otherwise pay for it or do it with its own staff, giving it away is a benefit to a referral source. Drug and device manufacturers that give clinicians anything of value also report it to CMS for publication; see our guide to Open Payments and the Sunshine Act.

Specimen collection and processing payments

The 2014 alert addresses labs that pay physicians, directly or through a marketing or other agent, to collect, process and package patients’ blood specimens. OIG notes that Medicare already allows a specimen collection fee in certain circumstances and pays for processing and packaging through a bundled payment, so a separate lab payment for the same work may be double payment and “evidence of unlawful intent.” OIG lists characteristics that may be evidence of an unlawful purpose, including:

• Payment above fair market value for services actually rendered.
• Payment for services that a third party, such as Medicare, also pays for.
• Payment made to the ordering physician rather than to the group practice that bears the cost.
• Payment per specimen for more than one specimen in a single encounter, or per test, per patient or on another basis that takes into account the volume or value of referrals.
• Payment conditioned on ordering a set volume or type of tests or a panel, especially one with duplicative tests.
• Payment to the physician even though a phlebotomist placed by the lab or a third party does the work.

A footnote applies the same principles to similar arrangements, including payments to collect buccal swabs or urine specimens and free or below-market point of care urine testing cups. OIG also says its concern is not reduced when an arrangement carves out federal program patients, because a physician who sends one lab its private business may send it federal business too. And because both sides of a kickback can be liable, physicians who enter these arrangements “also may be at risk under the statute.”

Registry and data payments

The second trend in the 2014 alert is registry arrangements: labs that set up databases, sometimes called observational outcomes databases, and pay physicians to submit patient data, answer patient questions about the registry or review registry reports. OIG accepts that payments for data collection “may be reasonable in certain limited circumstances,” and that the statute does not bar legitimate research. It also says that claims of a research purpose are “not sufficient to disprove unlawful intent,” and that even an independent Institutional Review Board will not protect an arrangement if one purpose is to induce referrals.

Warning signs OIG lists include requiring or recommending a test frequency to earn or keep payment, paying per patient, paying more than fair market value or without documentation of the physician’s work, offering registries only for tests the lab has patented or performs exclusively, and choosing participating physicians by referral volume rather than specialty. If a registry is part of your lab’s pitch to physicians, the pitch itself can become evidence, so marketing should never connect registry payments to test orders.

Prices, panels and requisition forms

The OIG Compliance Program Guidance for Clinical Laboratories, published in 1998, covers how labs sell and bill. On pricing, it says compliance policies should ensure labs are not charging physicians “a price below fair market value for their non-Federal health care program tests” to induce referrals of federal program business, and warns that doing so may risk anti-kickback enforcement and false claims actions. A discount offered to a physician who bills a patient or plan directly is a sales tool to put in front of counsel, not one to advertise on a rate card.

On requisition forms, the guidance says a lab should design the form “to promote the conscious ordering of tests” and to ensure the ordering physician “has made an independent medical necessity decision with regard to each test the laboratory will bill.” It recommends that labs give physician clients annual written notices about Medicare coverage policy, that organ or disease panels are billed only when every component is medically necessary, and the phone number of the lab’s clinical consultant. Labs that offer customized profiles should send added notices and have physicians sign an acknowledgment. The 2014 alert lists, as a registry warning sign, tests presented on a requisition in a way that makes an independent decision on each test harder.

For marketing, that turns the requisition form, the online order screen and the test menu into regulated sales material. Group tests for convenience if you like, but let the physician choose each one, and do not present a large panel as the default. Medicare also requires that diagnostic lab tests be ordered by the physician who is treating the beneficiary and uses the results in managing the beneficiary’s specific medical problem (42 CFR 410.32(a)). Marketing aimed at people who are not treating the patient, or promises that the lab will “take care of” ordering, works against that rule.

The Stark law and EKRA

Clinical laboratory services are the first item on the Stark law’s list of designated health services (42 U.S.C. 1395nn(h)(6)(A)). If a physician or an immediate family member has a financial relationship with a lab, through ownership, investment or a compensation arrangement, the physician may not refer Medicare patients to that lab for those services, and the lab may not bill for them, unless an exception applies (42 U.S.C. 1395nn(a)). For a lab, that puts every paid medical director role, speaking fee, lease and ownership offer to a referring physician on the list for legal review. Our referrals guide explains how Stark differs from the anti-kickback statute.

EKRA, 18 U.S.C. 220, makes it a crime to pay or receive remuneration to induce a referral to a laboratory, or in exchange for an individual using the lab’s services, for services covered by a health care benefit program. That term comes from 18 U.S.C. 24(b) and is not limited to federal programs. A laboratory under EKRA means a lab as defined in the CLIA statute, 42 U.S.C. 263a. EKRA does not apply to conduct prohibited under the anti-kickback statute (18 U.S.C. 220(d)(1)).

For a lab’s own sales force, the key provision is an exception. The exception for payments to employees and independent contractors in 18 U.S.C. 220(b)(2) applies only if the payment is not determined by and does not vary by the number of individuals referred to the lab, the number of tests or procedures performed, or the amount billed to or received from the health care benefit program. A commission plan built on tests, specimens or collections needs counsel’s review before it is offered, and the job posting and recruiting pitch should not promise one.

Claims in physician-facing marketing

OIG’s lab guidance asks for “honest, straightforward, fully informative and non-deceptive marketing,” and says labs should make sure physicians understand the services offered, what will be done when a test is ordered, and “the financial consequences for Medicare, as well as other payors, when tests are billed.” Section 5 of the FTC Act, 15 U.S.C. 45, also prohibits deceptive acts or practices in commerce, and under the FTC Policy Statement Regarding Advertising Substantiation, objective claims need a reasonable basis before they are made.

For a lab, claims that need that basis include turnaround time, test performance such as sensitivity and specificity, what a test can detect, accreditation and certification, and which plans the lab is in network with. State each one as your evidence supports it, with the study population and date where that matters. If your lab offers laboratory developed tests, describe their regulatory status accurately; our direct-to-consumer lab guide covers the current FDA position. Do not describe a test as covered by Medicare or a plan unless that is confirmed for the indication.

Illustration: a sales plan reviewed against the guidance

Illustration. A regional lab wants to grow orders from primary care offices. The sales lead proposes placing phlebotomists in five offices, paying offices for each specimen they spin and pack, offering a free printer, launching a registry with payments per enrolled patient, paying reps a percentage of collections, and sending a mailer that promises results in one day. Here is how the plan could be reworked:

1. Phlebotomists. Placed only where state law permits, limited in writing to collecting and processing the lab’s specimens, and monitored so they do not take vitals or do front desk work.
2. Specimen payments. Dropped. Medicare already pays for this work, and per-specimen payments are on OIG’s list of warning signs.
3. Printer. Offered only if it is used solely to print the lab’s requisitions and reports, otherwise dropped.
4. Registry. Paused until counsel reviews it against the 2014 alert; no per-patient payments and no link to orders.
5. Rep pay. Rebuilt with counsel so it does not vary by referrals, tests or amounts billed.
6. Mailer. Turnaround stated as the lab’s measured figure for named tests, with the date range it covers, or left out.

Checklist

• Nothing of value goes to a referral source unless counsel has confirmed it is paid for at fair market value or fits an exception.
• Placed phlebotomists limited in writing and in practice to the lab’s own specimens.
• No free waste disposal, office equipment, staff time or testing for office staff and families.
• No payments to physicians for specimen collection, processing, packaging or registry data without counsel’s review.
• Requisitions and online order screens let the physician choose each test; no default panels.
• Annual notices to physician clients on coverage, panels and the clinical consultant contact.
• Sales pay plans reviewed against 18 U.S.C. 220(b)(2) and the anti-kickback statute.
• Every claim about turnaround, accuracy, coverage or accreditation backed by evidence on file.
• No marketing that targets people who are not treating the patient to order tests.

How we help

We build websites, local search and Google Ads for independent health care businesses, with test menus, physician pages and claims checked against the guidance above before anything goes live. See our medical website design work. Our AI front desk is built with HIPAA in mind and can answer questions about hours, locations and how to order from a list you approve. We confirm in writing what a BAA covers before any patient information flows through a tool, and if it is not covered, we do not route patient information through it. We do not sell lead lists, do not pay for referrals and do not give legal advice; your counsel decides how these rules apply to you. See the full list in our healthcare marketing rules guide.

Sources

• HHS OIG: Special Fraud Alert: Laboratory Payments to Referring Physicians (June 25, 2014)
• HHS OIG: Publication of OIG Special Fraud Alerts, including Arrangements for the Provision of Clinical Lab Services (59 FR 65372, December 19, 1994)
• HHS OIG: Free Services Performed by Clinical Laboratories (letter, October 2, 1997)
• HHS OIG: Compliance Program Guidance for Clinical Laboratories (63 FR 45076, August 24, 1998)
• 42 U.S.C. 1320a-7b: Criminal penalties for acts involving federal health care programs (anti-kickback statute, subsection (b))
• 42 U.S.C. 1395nn: Limitation on certain physician referrals (Stark law)
• 18 U.S.C. 220: Illegal remunerations for referrals to recovery homes, clinical treatment facilities, and laboratories (EKRA)
• 42 CFR 410.32: Diagnostic tests: conditions (ordering)
• 15 U.S.C. 45: Section 5 of the FTC Act
• FTC: Policy Statement Regarding Advertising Substantiation (November 23, 1984)

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