IDTF Regulations: Avoid Penalties & Ensure Compliance

Independent Diagnostic Testing Facility Regulations: Penalties, Risks, and Path to Compliance

In recent times, there has been an increase in the number of cases where non-compliance with Independent Diagnostic Testing Facility (IDTF) regulations has resulted in significant penalties from regulatory bodies. It causes financial harm and undermines patient and partner trust in the laboratory. 

Let’s discuss the main aspects of the legislation governing IDTF operations, analyze the potential risks of non-compliance, and provide practical recommendations for ensuring compliance and minimizing penalties. 

The purpose of this article is to: 

• Raise awareness among IDTFs about legal requirements. 

• Help IDTFs avoid mistakes that lead to penalties. 

• Provide practical recommendations for ensuring compliance. 

• Promote continued trust in IDTFs from patients and partners. 

ATTENTION: 

This article is not intended to be legal advice. For individualized recommendations on compliance matters, IDTFs are advised to consult with qualified legal professionals. 

Understanding the Law: Independent Diagnostic Testing Facilities (IDTFs) 

Regulations and Requirements 

The Centers for Medicare & Medicaid Services (CMS) guidelines (§ 410.33) outline the regulations for IDTFs, detailing the requirements they must meet to operate and receive payment for diagnostic procedures performed on Medicare beneficiaries. 

Who Can Perform Diagnostic Procedures? 

Before March 15, 1999, only a limited group of healthcare professionals could perform and bill for diagnostic procedures. With § 410.33, the IDTF category was introduced, allowing fixed locations, mobile units, or individual non-physician practitioners to perform these procedures, provided they are independent of a physician’s office or hospital. 

Exceptions to IDTF Criteria 

Certain diagnostic tests are exempt from IDTF criteria, including: 

• FDA-regulated procedures like diagnostic mammography. 

• Tests furnished by qualified audiologists or clinical psychologists. 

• Procedures performed by certified physical therapists specializing in electrophysiologic clinical services. 

Key Standards for IDTFs 

To operate and receive payments, IDTFs must meet several standards ensuring patient safety and service quality: 

• Supervising Physician: Each IDTF must have a designated supervising physician, limited to overseeing a maximum of three IDTF sites. This physician must be proficient in interpreting and performing the offered tests and ensure adequate physician resources during operation hours. 

• Non-Physician Personnel: Personnel must possess necessary qualifications and training, typically state licensure or certification. The IDTF must maintain documentation verifying these qualifications. 

• Ordering of Tests: All procedures require a written order from the beneficiary’s treating physician, who must use the test results for managing the patient’s medical condition. The supervising physician cannot order tests unless they are also the treating physician. 

• Multi-State Operations: IDTFs operating across state lines must ensure compliance with licensing and certification requirements in each state and adhere to all relevant federal, state, and local regulations. 

• State Law Compliance: IDTFs must comply with applicable state laws. 

• Enrollment Application and Certification: The IDTF must certify compliance with several standards in its enrollment application, including: 
  • Adhering to licensing and regulatory requirements for patient health and safety. 
  • Providing accurate and complete information on the enrollment application. 
  • Maintaining a physical facility (excluding P.O. boxes) with all necessary equipment. 
  • Holding liability insurance of at least $300,000 per location. 
  • Refraining from direct patient solicitation. 
  • Documenting beneficiary complaints. 
  • Disclosing ownership and financial interests. 
  • Calibrating and maintaining equipment as per manufacturer instructions. 
  • Employing qualified technical staff. 
  • Maintaining proper medical record storage. 
  • Allowing on-site inspections by CMS or contractors. 
  • Enrolling in all diagnostic testing services for Medicare beneficiaries. 
  • Billing for mobile diagnostic services unless part of a specific service arrangement. 

Consequences of Non-Compliance 

Non-compliance with these standards can result in denial of enrollment or revocation of billing privileges by CMS. 

Million-Dollar Mistake: A Cautionary Tale for Healthcare Providers 

The Downfall of Balance Diagnostics  

Balance Diagnostics USA, LLC, an independent diagnostic testing facility, learned a hard lesson about the consequences of prioritizing profits over patient care. Their deceptive rent agreements with physicians to boost patient referrals resulted in significant legal and financial repercussions. 

A Scheme Disguised as Rent 

Balance Diagnostics’ rent agreements with physicians in the New York City area seemed like standard office rentals. However, instead of basing rent on the fair market value, they tied it to the number of patient referrals a doctor could send. The more referrals, the higher the rent, effectively bribing doctors. 

Violating the Anti-Kickback Statute 

This scheme violated the Anti-Kickback Statute (AKS), which ensures medical decisions are made for patient benefit, not financial gain. Balance’s practice of inflating rent payments in exchange for patient referrals undermined patient care and violated federal law. 

Consequences of Unethical Practices 

Balance Diagnostics admitted to their wrongdoing and agreed to pay $1.725 million to the federal government and $774,150 to the State of New York. This case highlights the importance of ethical healthcare practices. Legitimate business arrangements like renting space should not be used to disguise kickbacks, as they compromise patient well-being and integrity. 

A Five-Year Review and Lesson Learned 

As part of the settlement, Balance Diagnostics is subject to a five-year review of its claims by an independent organization. This oversight aims to prevent future misconduct. The takeaway is clear: Prioritizing patient care and adhering to regulations is essential to avoid hefty fines and legal trouble. 

Double Billing and Deception: The Downfall of Diagnostic Imaging Group 

Diagnostic Imaging Group (DIG), a chain of diagnostic testing facilities, faced a major scandal, accused of defrauding federal and state healthcare programs. DIG agreed to pay $15.5 million to settle these allegations. 

A Two-Pronged Scheme 

DIG allegedly submitted claims for services never performed, including billing Medicare and Medicaid for 3D reconstructions of CT scans that didn’t happen. They also influenced doctors with kickbacks disguised as supervisory fees for nuclear stress testing, far above market value, to incentivize patient referrals. 

Consequences and Oversight 

The hefty settlement included $13.65 million for the federal government and $1.85 million for New York and New Jersey. To ensure future transparency, DIG agreed to a five-year oversight by an independent organization to monitor their claims and prevent future misconduct. 

Cardiologist Dinesh Shah Pays $2 Million to Settle False Claims Act Allegations 

On March 18, 2021, Dr. Dinesh M. Shah and his practice, Michigan Physicians Group, P.C. (MPG), paid $2 million to resolve allegations of violating the False Claims Act by billing federal healthcare programs for unnecessary or unperformed diagnostic tests. 

Background and Allegations 

Dr. Shah, owner of MPG with offices in Berkley and Livonia, Michigan, was accused of submitting false claims to Medicare, Medicaid, and TRICARE from 2006 to 2017. The investigation focused on improper use of Ankle Brachial Index (ABI) and Toe Brachial Index (TBI) tests, as well as unnecessary Nuclear Stress Tests. 

Investigation and Resolution 

The settlement followed a years-long investigation by the Office of Inspector General for the U.S. Department of Health and Human Services (HHS) and the Defense Health Agency, with participation from the State of Michigan Attorney General’s Office. Acting U.S. Attorney Saima Mohsin condemned unnecessary testing for profit, emphasizing patient safety and proper use of taxpayer funds. HHS Special Agent in Charge Lamont Pugh III highlighted the importance of billing only for medically necessary services. 

Whistleblower Lawsuits 

The allegations were brought forward by former MPG employees Arlene Klinke and Khrystyna Mala under the False Claims Act’s qui tam provisions, allowing them to share in the recovery. 

Integrity Agreement 

In addition to the financial settlement, Dr. Shah and MPG entered into an Integrity Agreement with the HHS Office of Inspector General, which includes a three-year oversight period to monitor their billing practices. 

Virginia Diagnostic Lab Paid $1.4 Million to Settle False Claims Act Allegations 

NEWARK, N.J. – Genetworx Laboratories, a Virginia-based diagnostic lab, paid $1.4 million to settle allegations of violating the False Claims Act by submitting claims for genetic tests to Medicare without valid physician oversight. 

Allegations and Settlement 

From July 2014 to September 2015, Genetworx employed Seth Rehfuss as a sales representative. Rehfuss persuaded senior citizens in housing complexes to undergo genetic testing, bypassing Medicare rules that required physician orders. Genetworx then submitted claims to Medicare for these unauthorized tests. Rehfuss had previously pleaded guilty to conspiracy to commit healthcare fraud and was sentenced in May 2019 to 50 months in prison. 

Expert Commentary by Our Billing Specialist Lizaveta Bannova 

To avoid penalties, it’s crucial to adhere to all key aspects: correctly filling out documentation and ensuring that all providers are under contract. Keep in mind that a doctor’s financial interest always attracts attention. This means a doctor cannot refer patients to an Independent Diagnostic Testing Facility (IDTF) in which they have investments. Extravagant payments from an IDTF for renting spaces on a doctor’s premises also raise red flags and indicate potential kickbacks. Services provided without medical necessity are also a part of legal violations. 

Key Recommendations 

1. Independent Auditor: It’s important to have an independent auditor periodically check the documentation and billing accuracy. 

2. IDTF Responsibilities: 

• Verify all necessary documents. 

• Ensure documents are signed by treating physicians, not just any doctors. The patient must be under the active care of the provider referring them. 

• Confirm the medical necessity of tests and maintain supporting documents, including not just the referral but also the doctor’s detailed chart notes. 

• Avoid adding additional services and performing them without a doctor’s orders and referrals. 

• Conduct regular internal audits and training to ensure billing accuracy. 

Compliance with State Policies 

All services must comply with the policies and requirements of the state in which they are performed. The technical equipment must meet the necessary standards for conducting specific tests. Interpreting physicians should be qualified to read the particular tests they are handling, and supervision requirements must be met. 

Claims Management 

Submitted claims should be clean, as corrected claims can raise questions with insurance companies. IDTFs should establish communication with providers to ensure all necessary documentation is obtained and request additional documents if needed, such as daily notes to confirm the necessity of tests. 

Addressing Insurance Queries 

Standard sets of tests, regardless of age and diagnosis, can raise additional questions with insurance companies. In such cases, the provider and IDTF should ensure that diagnoses match and analyze any discrepancies. They may also need to request information from patients regarding the tests conducted. 

By following these guidelines and maintaining rigorous documentation and billing practices, IDTFs and providers can minimize legal risks and ensure compliance with regulatory standards. 

Expert Commentary by Our Credentialing Specialist Olga Khabinskay 

The Medicare standards for Independent Diagnostic Testing Facilities (IDTFs) are comprehensive and apply to all providers, whether they operate a mobile or stationary IDTF. It is crucial for anyone starting an IDTF business to fully understand and adhere to these federal regulations to ensure compliance and smooth operation. 

Key Aspects to Consider: 

Understanding IDTF Regulations: The regulations set forth by the federal government provide clear guidelines that must be followed by all IDTFs. These guidelines are essential for maintaining compliance and avoiding potential penalties. 

Mobile IDTF Operations: Physicians performing diagnostic tests at patients’ homes or other non-stationary locations can qualify as IDTFs. This allows for a more flexible and simplified method of delivering diagnostic services without the need to register multiple locations or offices. 

Technician and Facility Requirements: IDTFs can employ technicians who are not licensed physicians to perform certain tasks, as long as they meet state-specific requirements for technical or professional billing. It is important to ensure that all technicians are properly certified and that their credentials are kept up-to-date within the IDTF system. 

Supervision Rules: The supervising physician for an IDTF must be board-certified, accept Medicare, and cannot supervise more than three IDTF sites. This supervision must be verified at the time of application, not during the credentialing process. Ensuring that all supervising physicians are aware of their responsibilities and the sites they oversee is critical for maintaining compliance. 

Credentialing and Compliance: Proper credentialing is vital for IDTFs. It includes verifying the licenses and certifications of non-physician personnel and ensuring that all necessary equipment and compliance documents are in order. Working with a credentialing team, such as WCH, can assist in maintaining these standards and ensuring all aspects of the IDTF operations are compliant with Medicare regulations. 

Adherence to Medicare’s IDTF standards is essential for the successful operation of both mobile and stationary diagnostic testing facilities. By thoroughly understanding and implementing these regulations, healthcare providers can ensure they deliver high-quality, compliant diagnostic services.