COVID-19 Task Force E-lert: Navigating Concerns About Fraud and Abuse Liability Exposure for Clinical Laboratories Who Perform COVID-19 Antibody Tests

By: Rupa S. Lloyd, Shareholder and Jordan A. Ross, Associate

In response to the COVID-19 pandemic, many clinical laboratories have proposed offering free COVID-19 antibody tests to individuals already using their services. While an altruistic concept, offering any type of healthcare service for free or at a discount raises the risk of potential fraud and abuse violations and associated liabilities. For example: 

  • Under the Anti-Kickback Statute (AKS), codified at  42 U.S.C. § 1320a-7b, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program. "Remuneration" includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.
  • Under the Beneficiary Inducements CMP (§ 1128A(a)(5) of the Social Security Act), civil penalties are imposed when remuneration is offered to a Federal health care program beneficiary for the purpose of influencing the beneficiary's selection of a particular provider, practitioner or supplier.

On August 4th, 2020, HHS’s Office of Inspector General (OIG) updated its FAQs–Application of OIG's Administrative Enforcement Authorities to Arrangements Directly Connected to the Coronavirus Disease 2019 (COVID-19) Public Health Emergency to state that clinical laboratories will not be violating these fraud and abuse laws when offering free antibody testing to Federal health care program beneficiaries who are already receiving "medically necessary" blood tests.

In evaluating the fraud and abuse implications, the OIG determined such an arrangement offered "substantial public health benefits" through the "identification of additional potential convalescent plasma donors and valuable public health information and data." Therefore, the arrangement would be low risk as long as the following safeguards are adhered to:

  1. The physicians ordering the laboratory tests, including the free COVID-19 antibody tests, would not receive any payments or anything else of value from the clinical laboratory in connection with the free antibody testing program;
  2. The patients receiving the laboratory tests would not receive any payments or anything of value, other than the free COVID-19 antibody test, from the clinical laboratory in connection with the free antibody testing program;
  3. The tests would be offered only to patients receiving other medically necessary blood tests as part of a medically necessary exam or treatment;
  4. No payor, including the patient, a commercial insurance company, or a Federal health care program, would be billed for or pay any costs in connection with the COVID-19 antibody tests; and
  5. The antibody tests are cleared or approved by the U.S. Food and Drug Administration (FDA) or are subject to an FDA-issued Emergency Use Authorization.

Under existing law, clinical laboratories offering free testing to Federal health care program beneficiaries would implicate both the AKS and the Beneficiary Inducements CMP. For the AKS, the clinical laboratory is offering remuneration (the COVID-19 antibody test being something of value) to beneficiaries who could self-refer to the laboratory for items/services reimbursable by a Federal health care program. Comparatively, the free COVID-19 antibody test could reasonably influence a health care program beneficiary to choose the clinical laboratory for other medically necessary blood testing that are inevitably reimbursable.

Despite these concerns, the OIG has determined the risk of fraud and abuse remains low. It may be further relevant that OIG reviewed a scenario in which the clinical laboratory has a stated purpose "to increase patient awareness of antibodies to promote donations of COVID-19 blood plasma, which could be used for certain experimental convalescent plasma therapy treatments for COVID-19." It is unclear whether this added benefit from permitting the practice weighed in as a factor in the OIG’s decision not to enforce AKS and Beneficiary Inducements CMP.