MedNet to Pay $1.35MM for Billing Accusations
Big news hit the ambulatory cardiac monitoring airwaves with recent news that BioTelemetry subsidiary MedNet Healthcare Technologies agreed to pay $1.35 million dollars for accusations that the had violated several federal regulations such as the False Claims Act, anti-kick / anti-mark up statues from a period spanning from March of 2006 to January 2014.
The allegations come from the Whistle-blower Provisions of the False Claims Act which is a method to expose or accuse wrong doing on behalf of the federal government. In this sort of civil case, the identities of the whistle blower(s) remain confidential.
As the report explains, MedNet allegedly created agreements with medical facilities where MedNet would perform the ‘technical analysis’ of cardiac event monitoring & mobile cardiac telemetry studies for a fee and then allow the medical facility to bill for the full amount. According to the report, this service fee for the technical analysis was ‘significantly less’ than the fee paid by Medicare thus raising concern that difference creates an inducement or financial incentive for physicians to refer more patients for these monitoring studies as well as a financial incentive to use MedNet over other cardiac monitoring companies.
It is unclear as to the details of how MedNet structured these agreements but the most likely scenario is they had them set up in some significantly unbalanced & illegal manner whereby creating an incentive for the physician to order more tests and choose MedNet over other monitoring companies. In today’s US market, there are a variety of reimbursement structures used for the various forms of ambulatory cardiac monitoring. The ‘traditional service model’ is the most common where the service companies assume the majority of the cost associated with the equipment, supply cost, technician & labor costs. However, there are other traditional reimbursement structures that exist where separate components exist to off-set costs for each party performing each component. For example for Holter monitoring there are 3 components:
- Patient Set Up (hook up)
- Technical Component (ECG analysis)
- Professional Component (physician interpretation)
With these traditional reimbursement structures, the medical facility has two options when choosing to offer these diagnostic ECG tests.
- The cardiac monitoring service company provides the equipment at no or little cost to the medical facility and the each party (the medical facility & service company) bills for their respective codes (depending on which party is performing what component).
- The medical facility purchases the equipment & provides all or nearly all of duties listed for each billing component.
In recent days, we have seen an emerging reimbursement model (common with Mobile Cardiac Telemetry) where the medical facilities invest in the equipment, maintenance costs, education costs, supply costs, labor costs etc but contracts with a ECG service laboratory for providing the 24/7/365 coverage, ECG rhythm analysis & report generation for an established fair market cost (per study) for these services. This is becoming known in the industry as the ‘contract’ service model compared to the ‘traditional’ service model.
The alleged claims settled in the MedNet case are said to be allegations only with no determination or conviction of any liability. MedNet agreed to pay the money to settle the allegations of violating the False Claims Act and a federal anti-kickback statute. The alleged scheme purportedly occurred before the acquisition of MedNet by BioTelemetry Inc., according to the announcement.
The investigation of these allegations was performed by agents within the FBI & the Office of the Inspector General within the Department of Health & Human Service.