In the drugstore, a Covid rapid test usually costs less than $ 20.
Across the country, over a dozen test sites run by start-up GS Labs regularly charge $ 380.
There’s a reason they can. When Congress tried to make sure Americans didn’t have to pay for coronavirus testing, insurers had to pay certain laboratories whatever “cash” they listed online for testing, with no way of capping it.
The high prices and growing presence of GS Labs – it has performed half a million rapid tests since the beginning of the pandemic and still does thousands every day – shows how the government’s longstanding reluctance to play a role in health prices has begun its attempt at Consumer protection. As a result, Americans could ultimately pay some of the cost of expensive coronavirus testing in the form of higher insurance premiums.
Many health insurers have refused to pay GS Labs’ fees, some claim the lab is throttling prices during a public health crisis. Has a blue cross plan in Missouri sued GS Labs on its pricing and is seeking a decision that will nullify outstanding claims of $ 10.9 million.
Last month, the insurer claimed in court that the charges were “disaster profiteers” and contrary to public order.
Omaha-based GS Labs claims the exact opposite: that it has public order on its side and on it CARES law adopted in 2020. “Insurers are required to pay the price in cash unless we come to a negotiated rate,” said Christopher Erickson, partner at GS Labs.
The obligation for insurers to pay the cash price only applies to laboratories outside the network, that is, laboratories that have not negotiated a price with the insurer. There are indications that other labs may behave like GS Labs: A. to learn published this summer by America’s Health Insurance Plans, the trade association that represents insurers, that the percentage of coronavirus testing done in facilities outside the network increased from 21 percent to 27 percent between April 2020 and March 2021.
It found that the average price of a coronavirus test at an on-network facility was $ 130, a figure that includes both rapid tests and the widely used and more expensive PCR tests. About half of the out-of-network providers charge at least $ 50 more.
The cash price of $ 380 is sent on the GS Labs website. Legal documents say that you pay “about $ 20” for the rapid test itself. According to Erickson, the high price reflects the “premium service” they provide to patients and the $ 37 million start-up costs associated with building their laboratory network in less than a year.
“You can book 15 minutes with us every day and get your results in 15 to 20 minutes,” said Mr. Erickson, pointing out the shortage of tests in many drug stores. “We have a care hotline where you can interpret your results. Our prices are among the most expensive in the whole country because we have the best service in the country. “
Health policy experts who reviewed GS Labs’ prices said that despite the company’s investments in its service, it was difficult to understand why their tests should cost eight times the Medicare price of $ 41.
“This is not like neurosurgery where you may want to pay a premium so someone has years of experience,” said Sabrina Corlette, a Georgetown research professor who has researched coronavirus testing prices.
Although she thought the price was exceptionally high, Ms. Corlette and other experts said that because of the way Congress drafted the CARES bill, GS Labs had strong legal reasons to keep charging it. “Whatever the lab claims for its publicly accessible website, it has to be paid for,” she said. “I don’t read a lot of leeway in it.”
GS Labs is owned by City + Ventures, a real estate and investment company. It launched its first test site last October and operated 30 sites across the country at peak times.
When it began stepping up testing last year, it asked if it could become an in-network provider offering so-called “significant discounts” in return for reliable, timely payments. The company declined to provide the exact amount of its rebate, but said insurers generally rejected its proposals.
GS Labs said it believes insurers are hostile to its new business. Some sent letters of performance to their members stating that the application was denied and the patient may have to pay the full amount.
GS Labs says it doesn’t collect fees directly from patients, which would violate federal law, and says these mailings were a tactic to contact Customer against his business.
“They’re trying to put us in a bad light if they don’t follow federal law,” said Kirk Thompson, another GS Labs partner. “Insurers have chosen to ignore or justify their obligations, not to obey the CARES law.”
Insurers describe the interactions differently. They claim to do their best under federal law to protect patients from unnecessarily high fees that ultimately drive up premiums.
The UPMC Health Plan in Pittsburgh first became aware of GS Labs when it saw an unusual pattern in its claims: the vast majority contained a rapid antigen test in addition to a Covid antibody test. Of all the claims the health plan received from a lab with this combination of billing codes, 91 percent came from GS Labs.
“There’s little reason to order these two tests on the same day,” said Stephen Perkins, health plan’s chief medical officer. “They serve completely different purposes, and they would not be systematically ordered due to suspected Covid exposure.”
The health plan saw this as evidence that GS Labs was exercising the CARES law: insurers must fully cover antigen and antibody testing. “The CARES Act regulates what we can and can’t do, and we can’t refuse to pay double billing,” he said.
GS Labs says that it offers patients a “menu of tests” and that the patient chooses which ones to get.
However, the UPMC health plan has decided to challenge GS Labs’ pricing in other ways. At some point, the plan’s legal department noticed that the lab had advertised a 70 percent coupon for cash-paying 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 believe this is their cash price and we are paying them now,” said Sheryl Kaschuba, chief legal officer of the plan.
Evan White, general counsel at City + Ventures, said his company is still reviewing “next steps” with the health plan. “We are by no means satisfied with what they have imposed on themselves,” he said.
What actually counts as the cash price of GS Labs – and whether insurers ultimately have to pay it – can be decided in Congress or in court.
In July, Blue Cross argued against Blue Shield Kansas City in a lawsuit against GS Labs that the discounted price sometimes offered to patients who do the test themselves – the $ 114 fee that UPMC Health Plan also discovered – was the actual cash price of the Company is.
“GS Labs knowingly and deliberately executed a scheme or contrivance to defraud health insurers and plans by publishing a bogus cash price,” read the legal description of the health plan, “and then demand that group health insurers and insurers do the same Pay bogus cash prices. “
GS Labs responded that just because they gave discounts to some patients, insurers are not entitled to “pay a small fraction of the published cash price”. It has refuted the Blue Cross plan, claiming that the plan will have to pay nearly $ 10 million for 34,621 outstanding claims.
In the midst of a health crisis in 2020, Congress, which is quick to legislate and lay down guidelines that can be easily put in place, hasn’t used the formula it recently passed to pass surprising billing laws: insurers and medical providers need to price differentials across compensate for an external referee.
Senator Tina Smith, a Democrat of Minnesota, proposed a bill in July that limits the reimbursement of coronavirus tests to twice the Medicare reimbursement rate. For quick tests, that would be around $ 80.
In introducing her law, Senator Smith cited Times coverage of high-priced tests as evidence of why such a change was necessary.
“If these laboratories take advantage of this situation and ask for everything the market has to offer, it forces us to limit the cash price in order to stop the price gouging that harms consumers,” she said in an interview.
It is unclear whether this bill could become part of the reconciliation package that Congress is debating. They may be reluctant to act: lawmakers are addressing larger health care proposals and may expect the testing fee issue to resolve on its own after the pandemic ends.
“Everyone always thinks we’re almost done, and this provision of the CARES Act only lasts as long as the public health emergency,” said Loren Adler, USC-Brookings Schaeffer’s associate director for health policy.
GS Labs plans to continue expanding as the demand for rapid tests remains robust. She doesn’t see the Biden government’s plan for widespread rapid home testing as an obstacle to her growth. It now operates 16 test sites and plans to open two more soon. When these are open, the cash price remains the same.
“We’re very reasonable people, but our cash price is real cash price for any insurer who doesn’t want to negotiate,” said Mr. Thompson of GS Labs.