GS Labs sues Minnetonka-based Medica alleging lack of payment for COVID-19 testing

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A private lab that has opened multiple sites in the Twin Cities to meet growing demand for COVID-19 tests says Medica has not fully reimbursed thousands of tests.

GS Labs, based in Omaha, said in a lawsuit filed late last month that more than 16,000 Medica registrants have obtained testing from the company, which decided in early 2020 to invest and open approximately 50 test sites across the United States.

At that time, a shortage of COVID-19 testing capacity was hampering a national effort to minimize the spread of the pandemic virus.

GS Labs tries to make testing easy for patients with convenient schedules, a drive-in format and fast results, said Kirk Thompson, one of the private company’s partners.

“It’s a very quick turnaround time,” said Thompson. “Our testing process has resulted in substantial accessibility, where each of our sites has the capacity to accommodate up to 1,000 patients per day.”

A spokesperson for Minnetonka-based Medica said the company would not comment on the pending litigation. GS Labs has been sued twice this year by health insurers who allege the company charges unreasonably high prices.

Last month, a Washington state health insurer called Premera Blue Cross filed a complaint claiming the posted fees of $ 380 to $ 979 per test at GS Labs are “extraordinarily high.” In July, Kansas City’s Blue Cross and Blue Shield filed a lawsuit alleging the lab’s payment demands “amounted to illegal price hikes and catastrophic profits.”

“The Medicare program typically reimburses providers $ 41.38 to administer this type of test,” the insurer said in its lawsuit. “Other providers charge as little as $ 35. However, the cash price displayed by GS Labs for the same test is $ 380, which is about ten times the reasonable rates and twenty times the wholesale price. “

In August, GS Labs counterclaimed for damages against Kansas City Blue Cross, claiming the health insurer only paid about $ 108,496 of the $ 9.6 million owed for more than 12 000 tests. Supplies for a COVID-19 test run to around $ 20, the lab said in its counterclaim, but such references to wholesale prices show the insurer’s “underlying disregard for the valuable services provided by GS Labs “.

GS Labs says it has invested substantial resources in a “custom technology platform” that allows large numbers of patients to safely schedule tests and receive results quickly. And, Thompson said, the lab has successfully negotiated with some insurers to offer discounts on the prices listed on the company’s website.

“We are very reasonable people,” he said.

One fact that was “conspicuously absent” from the insurer’s trial, the lab said, is that GS Labs “does not and will not attempt” to collect unpaid monies for COVID-19 tests directly from patients. .

At the back of all lawsuits is the CARES law, the federal stimulus law passed in the spring of 2020.

Congress has legislated a requirement for health insurers to provide access to medically necessary tests without cost sharing for patients. The law required health insurance providers to pay the quoted cash price for tests when they did not have contracts for discounts with laboratories, a provision that eliminated the ability of insurers to negotiate prices of. more affordable test, according to America’s Health Insurance Plans, a trade group for insurers.

This summer, the trade group released a report showing that networked labs were charging an average of $ 130 for COVID-19 testing, compared to off-grid lab fees of more than $ 185 per test.

The trade group said the proportion of tests billed at the “most egregious” rate of more than $ 390 per test rose from 12% to 7% in the first year of the pandemic. Still, the share of tests billed 50% to 100% above average doubled over the period, the trade group said.

“Taking action to eliminate any potential for COVID-19 price hikes is essential to ensure testing continues to be ubiquitous and affordable for Americans,” America’s Health Insurance Plans said in its report.

This summer, U.S. Senator Tina Smith, D-Minn., Introduced legislation to ensure the costs of testing are not passed on to patients. Among other things, the bill would set a cap on the cash prices of COVID-19 tests at twice the reimbursement rate under the federal Medicare program.

Meanwhile, the litigation between the labs and health insurers continues.

This summer, a New Jersey-based lab sued Minnetonka-based UnitedHealthcare over unpaid bills for COVID-19 testing. United, which is the nation’s largest health insurer, hit back with a court case that Genesis Laboratory Management LLC was trying to capitalize on the public health crisis “by doubling the price of COVID-19 diagnostic tests at its peak – setting unilaterally its charge for COVID-19 tests at more than five times what Medicare paid for the same test. “

In its lawsuit against Medica, GS Labs cites wording from the CARES Act that says that if a health plan has a negotiated rate with a lab provider, the reduced rate must be applied throughout the public health emergency. If the health plan does not have a negotiated rate, the insurer “reimburses the provider an amount equal to the spot price for that service as listed by the provider on a public website.”

“Medica and GS Labs have not agreed on a different negotiated cash price, and their talks have failed and are at an impasse,” the lab said in its lawsuit. “GS Labs has now been forced to file this claim for reimbursement and other damages resulting from Medica’s brazen refusal to reimburse GS Labs in violation of federal CARES law.”

In Premera’s lawsuit, the insurer claims that the plain language of the CARES Act has been supplemented by federal regulations calling the “spot price” that health insurers should pay is analogous to the “discounted cash price” – a lower price which is generally similar or lower than the rates negotiated with network health care providers.

“Premera tried to negotiate with GS Labs,” the health insurer said in a court file, “but GS Labs will not accept payment at reasonable rates.”

Without commenting on Premera’s lawsuit, Thompson of GS Labs said his company regularly negotiates in good faith with insurers.

“We’re the furthest thing from a profiteer or a price thief,” Thompson said. He added, “We’ve been intimidated and pushed around. And it’s an industry that – they’ve been doing it for a long time.”


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