At the pharmacy, a quick Covid test usually costs less than $ 20.
Across the country, more than a dozen test sites owned by start-up GS Labs regularly charge $ 380.
There is a reason they can. When Congress tried to guarantee that Americans wouldn’t have to pay for coronavirus tests, it forced insurers to pay certain labs regardless of the “spot price” they listed online for the tests, no limit to what it could be.
The high prices and growing presence of GS Labs – it has performed half a million rapid tests since the start of the pandemic and still performs thousands a day – show how the government’s long-standing reluctance to play a role in health care prices hampered its attempt to protect consumers. As a result, Americans could ultimately pay part of the cost of expensive coronavirus tests in the form of higher insurance premiums.
Many health insurers have refused to pay GS Labs fees, with some claiming the lab is raising prices during a public health crisis. A Blue Cross plan in Missouri has sued GS Labs over its awards, asking for a ruling that would overturn $ 10.9 million in outstanding claims.
In court last month, the insurer claimed the charges were “disaster profiteers” and violated public order.
GS Labs, based in Omaha, argues the exact opposite: that it has public policy on its side, highlighting the CARES law passed in 2020. “Insurers are forced to pay the price in cash, unless we get there. at a negotiated rate, ”said Christopher Erickson, a partner at GS Labs.
The requirement that insurers pay the cash price only applies to off-grid labs, that is, those that have not negotiated a price with the insurer. There are signs that other labs may act like GS Labs: A study released this summer by America’s Health Insurance Plans, the trade association that represents insurers, found that the share of coronavirus testing performed at facilities outside network increased to 27% compared to 21% between April 2020 and March 2021.
He revealed that the average price for a coronavirus test at a network facility was $ 130, a figure that includes both the most widely used and expensive rapid tests and PCR tests. About half of the off-grid providers charge at least $ 50 more than that.
The cash price of $ 380 is posted on the GS Labs website. In legal documents, he said he was paying “around $ 20” for the rapid test himself. Erickson says the high price reflects the “premium service” they provide to patients, as well as the $ 37 million in start-up costs associated with building their lab network in less than a year.
“You can book 15 minutes with us any day and get your results in 15 to 20 minutes,” Erickson said, noting the scarcity of testing at many pharmacies. “We have a nursing hotline where you can have your results interpreted. Our pricing is one of the most expensive in the country because we have the best service in the country. “
Health policy experts who examined GS Labs’ pricing said that, even with the company’s investment in its service, it was difficult to see why their tests should cost eight times Medicare’s rate of $ 41. .
“It’s not like neurosurgery where you might want to pay a premium so that someone has years of experience,” said Sabrina Corlette, a research professor at Georgetown who has studied the prices of coronavirus tests.
Although she felt its price was unusually high, Ms Corlette and other experts said GS Labs had strong legal grounds for continuing to charge it due to the way Congress drafted the CARES Act. “Whatever price the lab puts on its public website, that’s what has to be paid,” she said. “I don’t read a lot of leeway there.”
GS Labs is owned by City + Ventures, a real estate and investment company. It launched its first test site last October and, at its peak, operated 30 sites across the country.
As he began ramping up testing last year, he inquired about the possibility of becoming a network provider, offering what he described as “substantial discounts” in return for reliable and prompt payments. The company declined to specify the exact amount of its rebate, but said insurers generally rejected its proposals.
GS Labs said it believes insurers are hostile to its new operation. Some have sent their members explanation of benefits documents, showing that the claim has been denied and that the patient may have to pay the full amount.
GS Labs says it’s not claiming fees directly from patients, which would violate federal law, and says those mailings were a back-to-back tactic clients against his business.
“They’re trying to portray us in a bad light when they’re the ones breaking federal law,” said Kirk Thompson, another GS Labs partner. “Insurers have made the decision to ignore their obligations or to justify non-compliance with the CARES law.
Insurers describe interactions differently. They say they are doing their best, within federal law, to protect patients from unnecessary high fees that will eventually drive up premiums.
The UPMC Pittsburgh Health Plan first took notice of GS Labs when it saw an unusual pattern in its claims: the vast majority included a rapid antigen test alongside a test for Covid antibody. Of all the complaints the health plan has received from any lab with this combination of billing codes, it said 91% were from GS Labs.
“There is very little reason to order these two tests on the same day,” said Stephen Perkins, chief medical officer of the Health Plan. “They serve very different purposes, and they would not routinely be ordered due to suspected exposure to Covid. “
The health plan saw this as proof that GS Labs was playing with the CARES law: insurers are required to fully cover antigen and antibody tests.. “The CARES law governs what we can and cannot do, and we cannot refuse to pay for double billing,” he said.
GS Labs says it offers patients a “menu of tests” and the patient chooses which ones they want.
The UPMC health plan has, however, decided to question the pricing of GS Labs by other means. At one point, the plan’s legal staff noticed that the lab had announced a 70% coupon available to patients paying cash, which would drop the price to $ 114. The coupon has since been removed from the GS Labs website.
“We told GS Labs that we thought it was their cash price, and that’s what we’re paying them now,” said Sheryl Kashuba, legal lead for the plan.
Evan White, general counsel for City + Ventures, said his company is still evaluating “next steps” with the health plan. “We are by no means satisfied with what they have self-imposed as a rate,” he said.
What actually counts as GS Labs’ cash price – and whether insurers will ultimately have to pay it – can be settled by Congress or the courts.
In July, Blue Cross Blue Shield Kansas City argued in a lawsuit against GS Labs that the reduced price sometimes offered to patients who cover the test themselves – the $ 114 fee that the UPMC Health Plan also discovered – is the price. real cash of the business.
“GS Labs knowingly and willfully performed a scheme or contrivance to defraud insurers and plans by posting a fictitious cash prize,” the health plan said in its legal file, “and then requiring that health plans to group and insurers pay these same prices in fictitious cash. . “
GS Labs replied that just because it offered discounts to certain patients, insurers “are only allowed to pay a small fraction of the published spot price.” He counterattacked the Blue Cross plan, saying the plan must pay nearly $ 10 million for 34,621 outstanding claims.
Congress, legislating quickly in the midst of a health crisis in 2020 and stopping on policies that would be easy to deploy, did not use the formula it recently adopted to pass legislation against surprise billing: mandate that insurers and medical providers settle price differences through an external arbitrator.
Senator Tina Smith, a Democrat from Minnesota, proposed a bill in July that would cap reimbursement for coronavirus tests at twice the Medicare reimbursement rate. For quick tests, it would cost around $ 80.
In introducing her bill, Senator Smith cited the Times report on costly testing as evidence of the need for such a change.
“If these labs are going to take advantage of this situation and charge what the market will bear, it pushes us to put a limit on the spot price to stop the price increase that is hurting consumers,” she said in an interview. .
It is not clear whether this legislation could be part of the reconciliation agenda being debated by Congress. There may be a reluctance to act: Lawmakers grapple with larger healthcare proposals, and they can expect the issue of testing fees to resolve itself by the end of the trial. pandemic.
“Everyone continues to think we’re almost done, and this provision of the CARES Act only lasts for the time of the public health emergency,” said Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy.
GS Labs plans to continue expanding as demand for rapid testing remains robust. He doesn’t view the Biden administration’s plan to make rapid home testing a barrier to his growth. It now operates 16 test sites and plans to open two more soon. When these open, its spot price will remain the same.
“We’re very reasonable people, but our spot price is a real spot price for any insurer that doesn’t want to negotiate,” said Mr. Thompson of GS Labs.