Blue Cross Blue Shield Minnesota suing COVID-19 lab for alleged price inflation

Photo: Pichsakul Promrungsee Eyeem/Getty Images

Blue Cross and Blue Shield of Minnesota is taking legal action against COVID-19 testing laboratory GS Labs to recover more than $10 million in alleged overpayments made since the start of the pandemic.

The complaint, filed last week in the U.S. District Court of Minnesota, alleges that GS Labs committed fraud against Blue Cross by submitting tens of thousands of claims using inflated cash prices over the past year.

According to the Coronavirus Aid, Relief and Economic Security Act, in the absence of a contractual payment agreement, each COVID-19 testing provider is required to post specific cash prices on their public website, which insurers are then required to pay. 

Blue Cross alleges that GS Labs consistently and intentionally posted inflated cash prices on their public website in order to charge significantly larger amounts to Blue Cross than what it was willing to accept from individual cash-paying customers.

WHAT'S THE IMPACT?

Blue Cross billing data suggests that GS Labs consistently charged more than five times the median market rate for its most commonly administered COVID-19 diagnostic test. The insurer also claims that GS Labs showed a pattern of administering additional tests for the sole purpose of increasing the total amount charged to Blue Cross.

"It is our claim that GS Labs intentionally disregarded and misinterpreted federal guidelines for the sole purpose of maximizing profits during a public health emergency," said Scott Lynch, senior vice president of pharmacy and chief legal officer at Blue Cross and Blue Shield of Minnesota. "After months of attempts at good-faith negotiations, we were unable to reach an agreement with GS Labs that would put in place appropriate COVID-19 testing practices at a fair price. It's egregious price-gouging like this that ultimately drives up the cost of healthcare for everyone."

A request for comment was not immediately returned by GS Labs, and no statement or press release was available on its website. But GS Labs spokesperson David Leibowitz told the Twin Cities Pioneer Press that the lawsuit amounted to "strong-arm gamesmanship," and he claimed Blue Cross actually owes GS Labs more than $1 million for thousands of tests it is required to pay for under federal law.

Leibowitz added that GS Labs "followed federal law to the letter" and said the company's posted cash prices for COVID-19 tests are consistent with those found in the U.S. marketplace.

"We have been paid that price or a negotiated rate by numerous insurers across the country," he said. 

GS Labs has said its advertised cash price for a rapid COVID-19 antigen test was $179.

THE LARGER TREND

Blue Cross said that medically necessary and appropriate FDA-authorized COVID-19 tests will continue to be covered at no cost to the member when ordered or administered by a licensed healthcare professional. At-home rapid tests are also covered at no cost for members who have health insurance either through their employer or the individual market.

Since the start of the pandemic, Blue Cross has paid and processed claims for more than 3.5 million COVID-19 tests administered by numerous providers in Minnesota and across the country.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com