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Our Recent Articles

Office of Inspector General: Laboratory Stewardship is Mandatory

Jan 5, 2023, 14:01 PM by Andrew Fletcher

Over the past decade the term “laboratory stewardship” has gained popularity with many hospitals and healthcare systems establishing, or in the early process of creating, laboratory stewardship programs. Although efforts are generally increasing in areas of laboratory stewardship, it is often regarded an optional activity. Some view the extra work of creating a stewardship program as nothing more than adding yet another activity to already overworked personnel for a questionable return on investment despite the benefits of cost reduction and improved patient care.

In some cases, the need for a laboratory stewardship program is clearly recognized and desired by laboratory staff who lack the support or resources from hospital leadership because they do not recognize the need or value. However, there are regulatory requirements to create and maintain a laboratory stewardship program. The absence of a laboratory stewardship program could lead to civil and criminal penalties per Health and Human Services Office of Inspector General (OIG) guidelines.1

Elements of laboratory stewardship have been an OIG mandatory activity for around 25 years and must be performed by all clinical laboratories participating in Medicare or Medicaid programs.1 These stewardship activities could take the form of incorporating stewardship activities into an existing laboratory compliance program, creating a standalone stewardship committee, or providing laboratory stewardship input into an existing overall Hospital Utilization Review program.

In 1976 Congress established the OIG to fight waste, fraud, and abuse to improve the efficiency of federal programs including Medicare and Medicaid.2 As part of an effort to ensure appropriate payment for laboratory services, on March 3, 1997, the OIG issued Compliance Program Guidance for Clinical Laboratories as a notice in the Federal Register.3 This was further updated on August 24, 1998, with refined supplementary information specifically for both the hospital and home health industries.1 This document provides clear guidance to the clinical laboratories on how to reduce fraud and abuse and specifies fundamental elements of a successful compliance program incorporating several principles of laboratory stewardship. Specifically, laboratory stewardship fulfills key components of an effective compliance program such as ensuring medical necessity of ordered laboratory tests, analyzing test ordering patterns to identify potential overuse of testing, and review of existing standing orders.

Medical necessity essential to laboratory stewardship program

Ensuring medical necessity is an essential component of the OIG guidelines and a core function of a laboratory stewardship program. While the OIG recognizes a physician can order any tests believed appropriate, Medicare will only pay for tests which are “covered, reasonable and necessary.”1 Furthermore, the OIG guidelines state “laboratories should take all reasonable steps to ensure that it is not submitting claims for services that are not covered, reasonable and necessary.”1 Most laboratory professionals are only too familiar with many commonly misordered tests and can easily recite a list of problematic tests being ordered by providers when instead more appropriate tests are available. Nonetheless many of these commonly misordered tests are billed to Medicare and therefore should be addressed as part of a laboratory stewardship/compliance program to meet OIG requirements. As part of typical laboratory stewardship program activities, commonly misordered tests such as 1,25 Dihydroxy Vitamin D, Red Blood Cell Folate, and others are tracked with feedback provided to ordering providers. This stewardship activity should be documented by the laboratory compliance program to demonstrate compliance with OIG requirements.

Likewise, expensive genetic testing with extremely low prevalence of clinically significant findings is commonly ordered by only a handful of providers. Not only can overuse of genetic testing lead to excessive cost for a healthcare system but it may also possibly represent unnecessary cost to Medicare. In instances where high volume, questionably necessary tests are identified by a stewardship program, the OIG believes “the laboratory has a duty to…notify the physician(s) or other authorized individual(s) of its concerns and recommend corrective action.”1 By ensuring appropriate test ordering for medical necessity, laboratory stewardship assists in compliance efforts while improving quality and reducing cost.

In addition to issues concerning medical necessity the OIG also requires the monitoring of overall laboratory test volumes and patterns to identify possible fraud or abuse. Specifically, the OIG recommends two possible strategies to determine excessive utilization of laboratory services through analysis of test volumes. The first approach is having an outside consultant “analyze the laboratory’s patterns of utilization and identify any potential problems or aberrancies.”1 The second strategy is to perform utilization analysis by CPT or HCPCS code by year to identify the top 30 tests by volume. If any test demonstrates greater than 10% volume growth year to year “the laboratory should undertake a reasonable inquiry to ascertain the cause of such growth.”1 The OIG points out that often growth in volume is due to benign reasons; however, if the increase in utilization is caused by “misunderstanding or ignorance by the ordering physicians” the laboratory should take steps to address the issue and ensure further misconduct is not occurring.1 Both functions, tracking test volume fluctuations and ascertaining cause, are activities well-suited to any laboratory stewardship program.

Order sets can pose challenges to compliance

Not infrequently laboratory stewardship and compliance challenges arise from the creation of, and reliance on, order sets, protocols or standing orders containing orders for laboratory tests. These electronic documents are ubiquitous within healthcare today and unless carefully constructed can contribute to duplicate, repetitive, and misutilized laboratory tests. Yet in many instances laboratory professionals are not included in the creation or ongoing review of these documents and as a result tests of questionable medical necessity are included in these electronic documents.

This topic is addressed by the OIG in the form of “reliance on standing orders.”1 As previously mentioned, the OIG document was last revised in 1998 prior to the widespread adoption of electronic order systems. One possible reason the OIG only mentions standing orders is because the document predates the widespread use of electronic order sets and physician “favorites” or “preference lists.” Per the OIG, standing orders “too often…have led to abusive practices.”1

It would seem 25 years later with the widespread use of electronic order systems the discussion of standing orders within the 1998 document would also apply to order sets and preference lists to ensure medical necessity. As noted above, it is not always standard practice that laboratory participation is sought in the creation and maintenance of these documents, yet the OIG states a compliance program “should require the laboratory to periodically monitor standing orders” and “standing orders should have a fixed term of validity and must be renewed at their expiration.”1 Given this guidance from the OIG, as previously mentioned, appropriate compliance activities should require laboratory participation in creation and monitoring of standing orders and by extension, order sets, protocols, physician “favorites”, etc., which contain laboratory tests.

Laboratory stewardship vital in compliance programs

In conclusion, the OIG has published Compliance Program Guidance for Clinical Laboratories showing the importance of laboratory stewardship in all compliance programs. Specifically, issues regarding medical necessity, analysis of test volumes and ordering patterns, and review of standing orders and order sets are all topics well suited for a laboratory stewardship program. These are critical elements required by OIG guidelines to ensue only appropriate tests are billed to the federal government. These clear OIG regulatory requirements justify the creation of laboratory stewardship programs by all clinical laboratories.

These stewardship activities can be incorporated into existing laboratory compliance programs, exist within a standalone stewardship committee, or contribute as a subcommittee of an overall hospital Utilization Review Committee also required by Medicare.1 For those wishing to start a laboratory stewardship program, knowledge of the OIG requirements can help support requests for allocation of appropriate resources from hospital leadership and help explain the justification for the creation of a laboratory stewardship program if none already exists. By doing so, clinical laboratories will improve the quality of services, reduce the cost of healthcare, and demonstrate compliance with federal regulations. Laboratory stewardship is not an optional activity. It is an OIG mandatory regulatory requirement, and the absence of stewardship activities can lead to civil and criminal penalties.

References

  1. Federal Register. 1998. Publication of OIG Compliance Program Guidance for Clinical Laboratories. Department of Health and Human Services Office of Inspector General. Accessed October 30, 2022. https://oig.hhs.gov/documents/compliance-guidance/806/cpglab.pdf
  2. Department of Health and Human Services Office of Inspector General. 2007. Protecting Public Health and Human Services Programs: A 30-Year Retrospective. Accessed October 30, 2022. https://oig.hhs.gov/publications/docs/retrospective/AnniversaryPub.pdf
  3. Federal Register. 1997. Model Compliance Program for Clinical Laboratories. Department of Health and Human Services Office of Inspector General. Accessed October 30, 2022. https://www.govinfo.gov/content/pkg/FR-1997-03-03/pdf/97-5192.pdf