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Investigations 101- Laboratory Services Fraud and Abuse

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Laboratory testing is a service that every healthcare fraud investigator will come across in the course of their work. In fact, over a third of all patient encounters involve one or more laboratory tests. 1 While the average cost per test tends to be quite low, the volume of services billed results in a total cost that is significant. In 2015, in one of the largest laboratory services billing fraud cases to date, Millennium Health agreed to pay $256 million to settle allegations by the U.S. government of improper billing and violations of the False Claims Act. 2 Millennium Health was alleged to have caused physicians to order excessive and unnecessary urine drug testing in exchange for illegal kickbacks. Millennium was the largest case of this type, but many other laboratories have been charged or convicted for similar schemes. Defining Clinical Laboratory Services Laboratory testing (also referred to as clinical pathology) is considered a diagnostic service. Medical practitioners use laboratory tests to diagnose, prevent and monitor diseases. They also use laboratory testing to detect the presence of substances such as illicit drugs. These tests can be performed on different kinds of human specimens, including blood, urine, tissues and other fluids. Laboratory testing involves four main components as shown in Figure 1. Laboratory Services Fraud and Abuse Investigations 101 Figure 1 Order Collection Testing Report

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