According to the The Pathology Blawg this matter I first talked about in October 2010 has been settled by Mayo Clinic for $1.26 million.

Suit Alleges Mayo Overbilled for Pathology Services, Justice Department Joins Suit (Originally posted October 2010)

The below news item has been circulating for a couple of weeks following a suit originally filed about 3 years ago.  Several folks have asked me what I know about this.  

Did Mayo intentionally defraud the government of potentially millions of dollars for frozen sections not performed?

It is a difficult question to answer and I really do not know how strong the lawsuit claim is. 

I do not think Mayo intentionally would do this but it is a complicated issue.

The story actually begins about 100 years ago when Dr. Louis B. Wilson, credited with being the Father of Research at Mayo Clinic, developed the first techniques to rapidly fix tissue for sectioning during surgery at the request of Dr. William Mayo or what we recognize in pathology as the "frozen section". His techniques live on at Mayo today much like they did over 100 years ago.  The history of the procedure has recently been reviewed with reference to the original article by Dr. Wilson.

• Gal AA. The centennial anniversary of the frozen section technique at the Mayo Clinic. Arch Pathol Lab Med. 2005 Dec;129(12):1532-5.
• Gal AA, Cagle PT. The 100-year anniversary of the description of the frozen section procedure. JAMA 2005;294:3135-7.
• Wilson LB. A method for the rapid preparation of fresh tissues for the microscope. J Am Med Assoc 1905;45:1737.

Enough history.  Fast forward about 100 years and according to Mayo's GME FAQ's on the frozen section practice it mentions: "The frozen section rotation is probably best thought of as neither a frozen section rotation nor a general surgical pathology rotation, and perhaps that is why residents have come to refer to it as the “sink” rotation. The volume and variety of specimen material seen by residents while on the sink is comparable to what would be seen during a general surgical pathology rotation at a large medical center, yet the workflow is that of a frozen section laboratory. " The site goes on to mention " In the Mayo frozen section labs, a single-color toluidine stain is used because it produces a fast and easily readable stain. The toluidine blue stain produces a slightly different staining pattern compared to H&E, but the morphologic features are inherent to the tissue."

I never understood "morphologic features are inherent to the tissue".  Histology is artifact.  We create it with dyes - a chemical process creates purple nuclei and pink cytoplasm.  In the case of toluidine blue stain, as above, it is largely monochromatic with less contrast than traditional H&E stains, whether frozen or fixed.  

Until recently, with increasing pressure from CAP inspectors, slides reviewed at frozen may not have had a corresponding H&E permanent slide to review for frozen-final correlation.  The tissue used in the frozen section was "blocked" without making an H&E slide.  Again, the practice is unique and would be difficult to validate in many other labs if one takes an objective view.

It also turns out that given the water based nature of the stain and the stain itself it was difficult to make a "permanent" slide for later review as the stain may continue to permeate the tissue.

Given the unique practice, essentially a general surgical pathology practice with final diagnosis made on frozens at the time of surgery rather than "permanent" sections,  issues related to frozen section slides, blocks and permanent slides could all potentially complicate billing algorithms as the suit alleges.  

While the parties bringing forth the suit and the Justice Department are looking at the letter of the law, a persistent question will remain whether whatever may have happened here in regards to billing was justifiable (i.e. cost effective) given potential lack of need for second surgeries, immediate intraoperative staging and overall costs to the system for additional laboratory technical and professional resources to generate additional slides, reviews and reports as compared to outcomes in a "frozen section = final diagnosis" practice alone.  This practice is highlighted on Mayo's breast cancer website:

"Mayo Clinic physicians may use frozen section evaluation of tissue during breast cancer surgery to determine whether all of the cancer has been removed. Mayo Clinic's unique frozen section pathology laboratory provides rapid, accurate microscopic analysis of tissue while the patient is in surgery. Mayo surgeons know if they have achieved negative margins (removed all the cancer) while the patient is still in the operating room. Frozen section analysis may prevent the need for patients to undergo additional surgery."

It should be noted from a similar story out of Minneapolis -- "The Justice Departmentindicated in a September 21 court filing that it intends to intervene in the allegation that the Mayo Clinic billed for services that were not performed. The department will not become involved, however, in the claims that the Mayo Clinic improperly obtained laboratory accreditation and failed to retain histopathology slides for the appropriate time period.

Courtesy of genomeweb.com:

The Justice Department has joined a lawsuit against the Mayo Clinic alleging it submitted fraudulent claims to Medicare and Medicaid for thousands of surgical pathology tests over 10 years that its labs never performed.

The government's position, filed this week under the federal False Claims Act in a US District Court in Minneapolis, said that "over the course of the last 10 years, Mayo has routinely billed Medicare, Medicaid and other federally sponsored health care programs for surgical pathology services that have not been performed," according to the Pittsburgh Tribune-Review.

The suit, which was originally filed in November 2007 by attorney and neurologist David Ketroser, accuses Mayo of billing Medicare for permanent specimen slides and for examining the slides, "even though no slides were prepared or examined," the paper says. "Instead, the suit charges, Mayo routinely prepared only frozen section slides, which were not retained."

The suit also claims Mayo failed to comply with federal regulations that require clinical lab to retain pathology slides for 10 years.

The plaintiffs in the suit include former Mayo patients, survivors of deceased Mayo patients, and Minnesota attorney David Ketroser.

Mayo officials did not respond to a request for comment, according to the Tribune-Review.

A few days after its original report, the paper wrote that Mayo officials said the Clinic reimbursed the government for what the paper called "billing errors" on the pathology tests.

Mayo spokesman Bryan Anderson said Minnesota-based Mayo discovered the errors three years ago — "long before Mayo became aware that the sealed complaint [against it] had been filed" — and "voluntarily" refunded $242,711, the paper said.

The total amount of Mayo's alleged fraudulent billing was not immediately clear.