This case involved no admission of error by Genomic Health.
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Before 2018, Medicare had a rule known as the “14-day rule” that governed billing for laboratory tests associated with hospital encounters. If a test was ordered within 14 days of a patient’s hospital discharge, the test was considered part of the hospital service bundle, meaning the hospital—not the outside laboratory—had to bill Medicare and use its reimbursement to pay the genomic test laboratory. For expensive genomic tests performed by outside reference laboratories, this created operational and financial tension because hospitals were often reluctant to assume financial responsibility for these tests.
Genomic Health, the company that developed the Oncotype DX cancer genomic assay (later acquired by Exact Sciences in 2019), became the subject of a federal investigation over how it handled this rule. According to the U.S. Department of Justice, between roughly 2008 and 2020 the company engaged in practices designed to bypass the 14-day rule. Prosecutors alleged that Genomic Health billed Medicare directly for tests that should have been billed to hospitals, and that the company encouraged providers to cancel and reorder tests after the 14-day window so that the laboratory could bill Medicare directly. The government also alleged that the company sometimes did not pursue payment from hospitals for tests ordered within the 14-day window, which prosecutors characterized as potentially providing improper financial benefits to hospitals.
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