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Why should my diagnostic lab care about compliance?

Gravity Diagnostics, a CLIA diagnostic and testing laboratory licensed to provide services throughout the country, recently announced the addition of an executive. Although the addition of another executive for this large of an organization on its own is not of note, the job description for this position is: chief compliance officer. The lab's owners moved to hire this executive solely for the purpose of better ensuring the lab is compliant with all applicable regulations - both state and federal.

The move highlights the importance of regulatory compliance in the lab industry.

How important is compliance?

The Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) is clear on its zero-tolerance policy towards fraud and abuse within this industry. Allegations of fraudulent practices are likely to result in an investigation, which could lead to the suspension of payment of Medicare claims as well as criminal charges.

What does compliance look like?

Due to the serious consequences that can come with a failure to comply with applicable regulations, it is wise for diagnostic and testing labs to have a compliance plan. Ideally, lab owners will print this plan and make it available to all who need to abide by the policies. The chief compliance officer or equivalent individual serving this role should regularly update the plan. It should include clear standards of conduct explaining the lab's policies regarding fraud, waste and abuse including the requirement that the lab only submit claims to federally funded health care programs that are medically necessary.

Labs are wise to have uniform requisition forms as well as a regular review of the top tests performed for Medicare beneficiaries to better ensure an effective compliance program. The OIG recommends reviewing any lab diagnostic test that grows in percentage of claims filed by over 10% from the previous year. The agency states this proactive step will help to reduce the risk of fraud and increase the likelihood that the lab can address any issues before they become unmanageable.

Business leaders within the lab must also take steps to better ensure employees are following the plan. Have sessions to education everyone in the lab so they know their roles. Post information so it is easily accessible. These active steps can go a long way towards reducing the risk of allegations of a failure to comply.

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