PA Lab Ordered to Pay $7.3M to N.J. Medicaid After Drug Testing Overcharges


Last Updated On: October 14, 2024

A Pennsylvania-based lab, Atlantic Diagnostic Laboratories, has been hit with a $7.3 million penalty following an audit revealing overcharges to New Jersey’s Medicaid program.

The audit, conducted by the State Comptroller’s Office, uncovered that the Bensalem family-owned lab billed Medicaid up to $1,035 for drug tests that were charged to others for just $2.38.

“Medicaid rules are clear: labs must charge the lowest possible rates and bill only for medically necessary tests,” said Acting State Comptroller Kevin Walsh.

He criticized the lab for exploiting taxpayer dollars and diverting resources away from those in need.

Atlantic Diagnostic Laboratories disputed the findings, claiming the state audit lacked “statistical validity” and misunderstood the scope of services provided to Medicaid patients.

The lab contended that the services for Medicaid required more complex procedures compared to other clients. They also blamed some issues on New Jersey Medicaid’s flawed coding system.

The audit reviewed claims from 2015 to 2018, finding that in all 261 cases examined, Medicaid was overcharged.

Additionally, documentation for 34% of those claims didn’t meet legal standards, and 27% of the claims were billed for services beyond what was ordered by physicians.

The company admitted to clerical mistakes but insisted they’ve since tightened their processes.

They also rejected accusations of “unbundling” procedures to inflate charges and defended their participation in charitable golf outings, saying they were unrelated to their business dealings.

In response to these findings, Atlantic Diagnostic Laboratories must now develop a corrective action plan to fix the deficiencies outlined by the State Comptroller’s Office.

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