OIG Issues Unfavorable Opinion on Free Laboratory Services

The Department of Health & Human Services, Office of Inspector General (OIG) published an advisory opinion last month regarding a laboratory’s proposed arrangement to provide free services to certain dialysis facilities. The OIG concluded that this arrangement could potentially generate prohibited remuneration under the Anti-Kickback Statute and the OIG could potentially impose administrative sanctions against the proposed laboratory-requestor in connection with the arrangement.

Specifically, the laboratory wanted to provide certain dialysis facilities with complimentary services consisting of the labeling of specimen containers and test tubes used by those facilities. In the absence of the laboratory providing this service, the labeling would be performed by the facility’s staff. The laboratory would retain sole discretion over which facilities received these free services and they would be provided only to those facilities where it was necessary to do so to retain or obtain a particular facility’s business.

The OIG’s position on the provision of free goods or services to actual or potential referral sources has been long-standing and clear: such arrangements are suspect and may violate the Anti-Kickback Statute. In this case, the laboratory’s provision of free services to selected dialysis facilities at no cost would be a tangible benefit to those facilities. As a result, the OIG opined that the free labeling services are intended to influence the dialysis facility’s choice of laboratory. By capturing a dialysis facility’s referral stream, the laboratory would be able to generate substantial revenue. As such, providing the free services could be viewed as remuneration in exchange for a referral in violation of the Anti-Kickback Statute.