A Long Island company that performs drug tests for New Jersey’s Medicaid program overcharged the state more than $24 million over a three-and-a-half-year period and should repay the money, the Office of the State Comptroller said in a report released Wednesday.
Truetox Laboratories of Garden City Park performed tests for drugs in urine on more than 140,000 samples between Jan. 1, 2015 and June 30, 2018, the audit said. It is one of Medicaid’s highest paid providers of laboratory services.
While Truetox was charging other payers $3 per test, it billed the New Jersey Medicaid program between $1,300 and $1,500 for the same test, the state’s audit found. Medicaid didn’t pay the full charges, but it paid Truetox $250 for each test.
State law prohibits Medicaid providers from charging Medicaid higher fees than other payers for the same service.
Repayment of the overcharges to the state is “especially important given New Jersey’s ongoing opioid crisis,” said the acting State Comptroller, Kevin D. Walsh. “By our office recouping these funds, more money will go back to the Medicaid program, which will in turn provide more services for this population in suffering.”
Truetox said through its attorney Tuesday that it had “immediately corrected and voluntarily reported” to the state an error in its billing software that was detected during an internal review conducted in 2018.
“Instead of recognizing Truetox’s good faith, the state now seeks to punish Truetox Laboratories for extending discounts to uninsured patients under care in addiction treatment facilities,” said John W. Leardi, the attorney. “This unjustified penalty for providing legal discounts that uninsured patients need to receive treatment is bad policy and an abuse of oversight.”
The comptroller also alleged that Truetox and the drug-treatment providers who referred tests to the laboratory used a “one-test-fits-all” or blanket test request for all patients, regardless of their individual needs.
This increased the costs to Medicaid, because all the requests included more expensive tests for specific drugs in addition to a general screening test for the presence of drugs. Even if the screening test was negative, the test to identify specific drugs was performed — a waste of money, the audit said.
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The audit was based on “a statistically valid random sample” of 82 episodes with 192 paid claims, the report said. The vast majority of the claims contained deficiencies, including some that completely lacked documentation, billed for a higher level of tests than ordered, and were submitted electronically under the names of physicians or practitioners who were no longer employed by the referring provider.
The auditor extrapolated from its analysis of the samples to calculate the total amount of overcharges — $24,089,938.
Truetox’s lawyer, in a letter responding to a draft version of the audit, said the sample was too small to produce a reliable extrapolation.
The report said Truetox also gave incentives to providers to refer tests to the company. These included sending a provider’s employee to a four-day conference in Las Vegas and donating $6,000 to a referring provider’s mini-golf fundraising event.
State law prohibits such practices in order to “protect taxpayer funds by eliminating the possibility of pay to play and graft,” said Walsh.
The report lists 10 recommendations, starting with repayment and including future compliance and a corrective action plan. Truetox can request a hearing before an administrative law judge to contest the findings.
“We look forward to being heard on appeal,” Leardi said Tuesday.
The state comptroller’s office is an independent state agency. Besides reviewing government contracts and investigating and auditing various agencies of state government, its mission includes detecting and preventing fraud, waste and abuse in Medicaid.
Lindy Washburn is a senior health care reporter for NorthJersey.com. To keep up-to-date about how changes in the medical world affect the health of you and your family, please subscribe or activate your digital account today.