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093097 1 (1974-10-21)

handle is hein.gao/gaobacwzf0001 and id is 1 raw text is: 

                                                                    093017-


          o 21,UNITED STATES GENERAL ACCOUNTING OFFICE
                               WASHINGTON,  D.C. 20548


MANPOWER AND WELFARE
     DIVISION                                          OCT  2 1 1974




        Mr. James B. Cardwell
        Commissioner of Social Security                         LM093097
        Department of Health, Education,
          and Welfare

        Dear Mr. Cardwell:

             Our review of the manner in which independent laboratories are
        regulated and reimbursed under federally funded health programs dis-
        closed a situation in Arizona involving Medicare which we are bringing
        to your attention.  We noted that a laboratory facility in Phoenix,
        Arizona, has received two Medicare certifications from the Bureau of
        Health Insurance (BHI) and is currently participating in the program
        under two different names.  Under one of the names, the laboratory
        charges higher fees than under the other name and offers physicians
        who refer work to the laboratory with the higher fees a percentage
        of  the profits earned on the laboratory work.

             In November 1970, Automated Pathology Services, Inc., applied for
        and subsequently received a Medicare participation certificate.  The
        State of Arizona Articles of Incorporation dated September 9, 1970,
        show  that Gerald Marshall and Robert D. Collins were the incorporators
        of Automated.  The current address of Automated is 1120 West Watkins,
        Phoenix, Arizona.  Gerald Marshall is the director of Automated.

              In September 1972, Consolidated Medical Services, 1120 West
        Watkins, Phoenix, Arizona, applied for and received a Medicare par-
        ticipation  certificate. Gerald Marshall  is the director of Consolidated.
        The Articles  of General Partnership of Consolidated Medical Services,
        dated  September 20, 1972, show the following:

              1. The  partners in the agreement are Gerald Marshall; Robert D.
         Collins; and Phoenix Medical Associates, Ltd., a corporation of
         physicians.

              2. Automated  is to furnish Consolidated with space, testing
         equipment and supplies, reagents, utilities, and certain services in
         exchange for a percentage of gross receipts ranging from 26 to 30
         percent, depending on Consolidated's gross receipts.

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