Equipo Nizkor - This Lab Charges $380 for a Covid Test. Is That What Congress Had in Mind?.

At the drugstore, a rapid Covid test usually costs less than $20.

Across the country, over a dozen testing sites owned by the start-up company GS Labs regularly bill $380.

There’s a reason they can. When Congress tried to ensure that Americans wouldn’t have to pay for coronavirus testing, it required insurers to pay certain laboratories whatever “cash price” they listed online for the tests, with no limit on what that might be.

GS Labs’s high prices and growing presence — it has performed a half-million rapid tests since the pandemic’s start, and still runs thousands daily — show how the government’s longstanding reluctance to play a role in health prices has hampered its attempt to protect consumers. As a result, Americans could ultimately pay some of the cost of expensive coronavirus tests in the form of higher insurance premiums.

Many health insurers have refused to pay GS Labs’ fees, some contending that the laboratory is price-gouging during a public health crisis. A Blue Cross plan in Missouri has sued GS Labs over its prices, seeking a ruling that would void $10.9 million in outstanding claims.

In court last month, the insurer claimed that the fees were “disaster profiteering,” and in violation of public policy.

Omaha-based GS Labs contends the exact opposite: that it has public policy on its side, pointing to the CARES Act passed in 2020. “Insurers are obligated to pay cash price, unless we come to a negotiated rate,” said Christopher Erickson, a partner at GS Labs.

The requirement that insurers pay the cash price applies only to out-of-network laboratories, meaning those that have not negotiated a price with the insurer. There are signs other laboratories may be acting like GS Labs: A study published this summer by America’s Health Insurance Plans, the trade association that represents insurers, found that the share of coronavirus tests conducted at out-of-network facilities rose to 27 percent from 21 percent between April 2020 and March 2021.

It found that the average price for a coronavirus test at an in-network facility was $130, a figure that includes both rapid tests and the more widely used, and more expensive, PCR tests. About half of out-of-network providers are charging at least $50 more than that.

The $380 cash price is posted on the GS Labs website. In legal documents, it has said that it pays “approximately $20” for the rapid test itself. Mr. Erickson says the high price reflects the “premium service” they provide patients, as well as the $37 million in start-up costs associated with building their laboratory network in less than a year.

“You can book 15 minutes out with us on any given day, and get your results in 15 to 20 minutes,” Mr. Erickson said, pointing to the scarcity of testing at many drugstores. “We have a nursing hotline where you can get your results interpreted. Our pricing is one of the most expensive in the nation because we have the best service in the nation.”

Health policy experts who reviewed the GS Labs prices said that, even with the company’s investment in its service, it was hard to understand why their tests should cost eight times the Medicare rate of $41.

“This is not like neurosurgery where you might want to pay a premium for someone to have years of experience,” said Sabrina Corlette, a research professor at Georgetown who has studied coronavirus testing prices.

Even though she felt its price was exceptionally high, Ms. Corlette and other experts said GS Labs had strong legal grounds to continue charging it because of how Congress wrote the CARES Act. “Whatever price the lab puts on their public-facing website, that is what has to be paid,” she said. “I don’t read a whole lot of wiggle room in it.”

GS Labs is owned by City+Ventures, a real estate and investment firm. It started its first testing site last October and, at its peak, operated 30 locations across the country.

As it began increasing testing last year, it inquired about becoming an in-network provider, offering what it described as “substantial discounts” in return for reliable and prompt payments. The company declined to specify the exact size of its discount, but said that insurers generally rejected its proposals.

GS Labs said it felt insurers were hostile to its new operation. Some sent their members explanation-of-benefit documents, showing that the claim had been denied and that the patient might have to pay the full amount.

GS Labs says it does not pursue fees directly from patients, which would violate federal law, and says those mailings were a tactic to turn customers against its business.

“They try to paint us in a bad light when they’re the ones not following federal law,” said Kirk Thompson, another GS Labs partner. “Insurers have made a decision to ignore their obligations or justify not following the CARES Act.”

Insurers describe the interactions differently. They say they are doing their best, within the bounds of federal law, to protect patients from unnecessary high fees that will ultimately drive up premiums.

UPMC Health Plan in Pittsburgh first became aware of GS Labs when it saw an unusual pattern on its claims: The vast majority included a rapid antigen test alongside a Covid antibody test. Of all claims the health plan received from any laboratory with this combination of billing codes, it said 91 percent came from GS Labs.

“There is very little reason to order both of those tests on the same day,” said Stephen Perkins, the health plan’s chief medical officer. “They serve very different purposes, and they would not be systematically ordered as a result of suspected Covid exposure.”

The health plan saw this as evidence that GS Labs was gaming the CARES Act: Insurers are required to fully cover antigen and antibody tests. “The CARES Act governs what we can and can’t do, and we can’t refuse to pay for the double billing,” he said.

GS Labs says that it offers patients a “menu of tests,” and that the patient chooses which ones to get.

The UPMC health plan has decided, however, to challenge GS Labs pricing in other ways. At one point, the plan’s legal staff noticed the laboratory advertised a 70 percent coupon available to cash-pay patients, which would bring the price down to $114. The coupon has since been removed from the GS Labs website.

“We told GS Labs that we believed that was their cash price, and that is what we are now paying them,” said Sheryl Kashuba, the plan’s chief legal officer.

Evan White, general counsel at City+Ventures, said his company was still evaluating “next steps” with the health plan. “We are by no means content with what they have self-imposed as their rate,” he said.

What actually counts as the GS Labs cash price — and whether insurers will ultimately have to pay it — may be settled in Congress or the courts.

In July, Blue Cross Blue Shield Kansas City argued in a lawsuit against GS Labs that the discounted price sometimes offered to patients who cover the test themselves — the $114 fee that UPMC Health Plan also discovered — is the company’s actual cash price.

“GS Labs knowingly and willfully executed a scheme or artifice to defraud health insurers and plans by posting a sham cash price,” the health plan said in its legal brief, “and then demanding that group health plans and insurers pay those same sham cash prices.”

GS Labs has responded that just because it gave discounts to some patients, that does not mean insurers are “entitled to pay only a small fraction of the published cash price.” It has countersued the Blue Cross plan, contending the plan must pay nearly $10 million for 34,621 outstanding claims.

Congress, legislating quickly amid a health crisis in 2020 and settling on policies that would be easy to roll out, did not use the formula it recently adopted to pass legislation against surprise billing: mandate that insurers and medical providers settle price differences via an outside arbitrator.

Senator Tina Smith, Democrat of Minnesota, proposed a bill in July that would cap coronavirus test reimbursement to twice the Medicare reimbursement rate. For rapid tests, that would be about $80.

In introducing her legislation, Senator Smith cited The Times’s reporting on high-priced tests as evidence for why such a change was needed.

“If these labs are going to take advantage of this situation, and charge whatever the market will bear, that pushes us into putting a limit on the cash price to stop the price gouging that is hurting consumers,” she said in an interview.

It’s unclear whether that legislation could become part of the reconciliation package that Congress is debating. There may be a hesitance to act: Legislators are tackling larger health care proposals, and they may expect the issue of testing fees to resolve on its own when the pandemic ends.

“Everyone keeps thinking we’re almost done, and this provision of the CARES Act only lasts as long as the public health emergency,” said Loren Adler, associate director of the U.S.C.-Brookings Schaeffer Initiative for Health Policy.

GS Labs plans to continue expanding, as demand for rapid testing remains robust. It does not see the Biden administration’s plan of widespread in-home rapid testing as an obstacle to its growth. It now operates 16 testing sites, and has plans to open two more soon. When those open, its cash price will remain the same.

“We’re very reasonable people, but our cash price is a true cash price for any insurer that does not want to negotiate,” Mr. Thompson of GS Labs said.

26Sep21

This Lab Charges $380 for a Covid Test. Is That What Congress Had in Mind?

[Source: By Sarah Kliff, The New York Times, 26Sep21]

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