State Comptroller audit report finds that Truetox Laboratories, LLC overcharged New Jersey’s Medicaid program by more than $24 million

Truetox charged $3 per test when Medicaid was not paying but charged Medicaid many times more – all for processing the same drug tests

TRENTON – The Office of the State Comptroller (OSC) today issued an audit report finding that Truetox Laboratories, LLC (Truetox) overcharged New Jersey’s Medicaid program by $24,089,938 for drug testing services between 2015 and 2018.

Truetox performs urine sample drug tests and is one of the New Jersey Medicaid program’s highest-paid providers of independent laboratory services.

OSC found that Truetox charged some payers $3 for drug tests while it charged Medicaid between $1,300 and $1,500 for the same exact tests. Truetox received up to $250 from Medicaid for those tests.

“Laboratories are prohibited from charging Medicaid one price and others a cheaper price in order to keep taxpayers from getting fleeced when others are getting a more favorable rate,” Acting State Comptroller Kevin D. Walsh said. “By allowing non-Medicaid payers to pay significantly less than what Medicaid paid for the same drug tests, Truetox violated Medicaid’s rules and state law.

“Adherence to this rule is especially important given New Jersey’s ongoing opioid crisis. 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 charged Medicaid higher rates for the identical drug test or service in 85.4 percent of the instances OSC sampled.

OSC’s report also found that Truetox and the drug treatment providers that referred patients to them used “blanket” or one-size-fits-all drug testing requests that ordered the same drug tests for patients, regardless of their individual medical needs. OSC found that this practice increased the volume of high-cost definitive tests, even when presumptive tests were negative, which led to unnecessary drug testing and wasteful Medicaid spending. (A presumptive drug test determines the presence or absence of drugs; a definitive drug test determines the specific drugs used and is reimbursed at a higher rate than a presumptive drug test.)

OSC also found that 81.7 percent of Truetox’s supporting documentation contained deficiencies, including a complete lack of supporting documentation, billing for a higher level of tests than ordered, and electronic orders under the names of physicians or practitioners who were no longer employed by the referring provider.

In addition to overcharging Medicaid, Truetox also sponsored a referring provider’s employee to attend a four-day conference in Las Vegas. Truetox also donated $6,000 to a referring provider’s mini golf fundraising event.

State law prohibits laboratories from giving “refunds, discounts or kickbacks, whether in the form of money, supplies, equipment, or other things of value” and prohibits laboratories from providing “other considerations to a physician or other practitioner, whether or not a rebate is involved.” 

“Not only did Truetox charge certain providers pennies on the dollar compared to what they charged Medicaid, but Truetox also gave incentives to these providers,” said Walsh. “Laboratories are free to make donations to organizations that do good work, but they are not permitted to make donations or give gifts to entities that send them Medicaid business. New Jersey protects taxpayer funds by eliminating the possibility of pay to play and graft.”

OSC’s audit report concludes with 10 recommendations, including that Truetox reimburse the Medicaid program $24,089,938 and ensure it does not charge Medicaid more than other payers for identical services. Truetox’s responses can be read in full here. Truetox may request a hearing before an administrative law judge to challenge the findings in OSC’s audit.

The Office of the State Comptroller (OSC) is an independent State agency that works to make government in New Jersey more efficient, transparent and accountable. OSC is tasked with examining all aspects of government expenditures, conducts audits and investigations of government agencies throughout New Jersey, reviews government contracts, and works to detect and prevent fraud, waste and abuse in Medicaid.

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