Health care company to pay $32.5m for deceptive medicare billing

October 3, 2023 Rob Abruzzese

U.S. Attorney Breon Peace announced a settlement with a health care company that was accused of ripping off Medicare and costing taxpayers millions.
Photo: John Minchillo/AP

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The U.S. Attorney’s Office for the Eastern District of New York announced on Monday that Genomic Health Inc. (GHI), a diagnostic testing subsidiary of Exact Sciences Corporation, will pay a $32.5 million settlement for billing practices that not only defrauded Medicare but led to unnecessary delays in cancer treatment for patients.

U.S. Attorney Breon Peace and Naomi D. Gruchacz, of the Health and Human Services Office of Inspector General’s New York Region (HHS-OIG), confirmed the resolution on Monday.

“This settlement rightly requires the payment of double damages caused by delayed tests for cancer patients for no reason other than to circumvent a Medicare requirement and allow improper payment to GHI,” Peace said. “We will continue to enforce Medicare rules to protect the program and its vital role in our healthcare system, especially for those suffering from the ravages of cancer.”

GHI allegedly found ways to circumvent Medicare’s 14-Day Rule, a regulation meant to streamline costs and services. The rule prevents labs from billing Medicare directly for tests ordered within 14 days of a patient’s hospital discharge. However, GHI sought direct reimbursements for such tests and even encouraged medical providers to manipulate ordering times to sidestep the rule.

The implications go beyond GHI’s bottom line. Taxpayers fund Medicare, and any misuse of the program drains resources that could be better used for patient care. “Health care providers who unnecessarily delay services to evade Medicare requirements put their own profits ahead of patient well-being,” said Gruchacz.

Headquartered in Redwood City, California, GHI specializes in genomic-based diagnostic tests. Its principal test, Oncotype DX, is used to diagnose breast, colon, and prostate cancer. The company became a wholly-owned subsidiary of Exact Sciences in November 2019.

The settlement also settles two whistleblower actions, awarding $5.6875 million to the informants. These cases were essential in bringing GHI’s alleged misconduct to light.

Although the allegations have been settled, they have not been legally proven, meaning no official liability has been established.