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Clinical Laboratories and Pathology Groups

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Former FDA Commissioner Scott Gottlieb to Headline Artificial Intelligence in Healthcare and Diagnostics Conference

Gottlieb will speak about the state of AI in healthcare at the event May 11-12

Medical technicians in clinical laboratories and pathology groups may worry that artificial intelligence (AI) will eventually put them out of their jobs.

However, that’s not likely to be the case, according to former Food and Drug Administration (FDA) Commissioner Scott Gottlieb. He was just announced as a top speaker at the Artificial Intelligence in Healthcare and Diagnostics (AIHD) Conference, which takes place May 10-11 in San Jose, Calif.

Instead, expect AI in healthcare to help labs better aggregate and analyze an ever-growing repository of clinical data.

“As we start to digitize more of this information, build out bigger repositories, and correlate more of this information with experimental evidence that’s also captured digitally, it’s going to become an immensely powerful tool,” Gottlieb said during a 2021 webinar hosted by Proscia, which develops pathology software embedded with AI.

Scott Gottlieb, former FDA commissioner
Former FDA Commissioner Scott Gottlieb said AI in healthcare will “become an immensely powerful tool.” (Photo courtesy of: Worldwide Speakers Group)

“[AI is] going to be a predictive tool,” he continued. “So, now you start to think about digital data from traditional pathology, digital data from characterizing tumors to sequencing, alongside digital data capture through electronic health records. And you start to have a really powerful, robust set of information.”

Writing for MobiHealthNews last year, Liz Kwo, MD, also noted the potential of AI to deal with unstructured data—in other words, information that is not in a pre-set data model and thus difficult to analyze.

“In many cases, health data and medical records of patients are stored as complicated unstructured data, which makes it difficult to interpret and access,” wrote Kwo, who is Deputy Chief Clinical Officer at insurer Anthem and Faculty Lecturer at Harvard Medical School.

AI can seek, collect, store, and standardize medical data regardless of the format, assisting repetitive tasks and supporting clinicians with fast, accurate, tailored treatment plans and medicine for their patients instead of being buried under the weight of searching, identifying, collecting and transcribing the solutions they need from piles of paper formatted EHRs,” she added.

AIHD conference to explore the state of artificial intelligence in healthcare

At AIHD, Gottlieb will take part in a fireside chat and also contribute to a panel discussion with other keynote speakers.

“There’s no better individual than Dr. Gottlieb to address AIHD participants about the state of artificial intelligence, where it’s going, how it’s regulatory oversight will unfold, and what’s likely to be the most surprising contribution of AI in patient care,” said Robert Michel, founder of AIHD, Executive Director of the Precision Medicine Institute, and Editor-in-Chief of clinical lab intelligence publication The Dark Report.

The event will bring together senior-level representatives from AI companies, hospitals, physician offices, and diagnostic providers.

Gottlieb promoted greater use of digital tools for clinicians

Gottlieb is a well-known advocate for digital tools in healthcare, including AI. In 2019, he outlined a framework the FDA would start using to promote the development of safe medical devices that use advanced AI algorithms.

“I can envision a world where, one day, artificial intelligence can help detect and treat challenging health problems, for example by recognizing the signs of disease well in advance of what we can do today,” Gottlieb stated at the time. “These tools can provide more time for intervention, identifying effective therapies and ultimately saving lives.”

During and after his tenure at the FDA, he has been a prolific commentator about the SARS-CoV-2 pandemic and steps public health agencies have taken to curb COVID-19.

As Dark Daily previously reported, Gottlieb has also shown interest in technologies used to combat COVID-19, such as laboratory-developed tests created under emergency use authorizations.

Gottlieb is currently a Senior Fellow at the American Enterprise Institute, a public policy think tank. He is also partner at venture capital firm New Enterprise Associates and serves on the boards of Pfizer and Illumina.

—Scott Wallask

Related Resources:

Artificial Intelligence in Healthcare and Diagnostics Conference

Future Ready Pathology by Proscia

What is unstructured data?

Top 10 Use Cases for AI in Healthcare

Statement from FDA Commissioner Scott Gottlieb, M.D. on steps toward a new, tailored review framework for artificial intelligence-based medical devices

FDA Issues its First Emergency Use Authorization for an Antigen-based Diagnostic as Top IVD Manufacturers Race to Supply Medical Laboratories with COVID-19 Tests

EKRA Now Used to Combat Fraudulent COVID-19 Testing, Too

The Department of Justice steps beyond the law’s original focus on opioid-related lab testing fraud

An interesting aspect with enforcement of the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) is the government’s willingness to go after charges tied to fraudulent COVID-19 testing. 

The case U.S. vs. Malena Badon Lepetich provides a good example of this approach. A grand jury indicted Lepetich on various healthcare fraud charges last year, including that she allegedly offered to pay kickbacks for referrals of specimens for COVID-19 testing.

“The government had really only used EKRA in the context of addiction treatment space,” attorney Alexander Porter, a Partner at law firm Davis Wright Tremaine in Los Angeles, said in the latest issue of The Dark Report. “The Lepetich case shows that the government’s going to use EKRA beyond that context and go into other areas where they think that it can be useful—in particular, in the area of COVID-19 testing.” 

Clinical laboratories and pathology groups should take note of this development.

Attorney Alexander Porter said EKRA enforcement now goes after fraudulent COVID-19 testing. (Photo: Davis Wright Tremaine)

Defendant Allegedly Filed $10 Million in Fraudulent Lab Claims

Lepetich was the owner of MedLogic, a clinical laboratory in Baton Rouge, La.

In addition to the fraudulent COVID-19 testing charges, she allegedly solicited and received kickbacks in exchange for referrals of urine specimens for medically unnecessary tests, according to the U.S. Department of Justice (DOJ). 

The DOJ said Lepetich filed more than $10 million in laboratory test claims to Medicare, Medicaid, and Blue Cross Blue Shield of Louisiana for panels of expensive respiratory tests that were medically unnecessary. 

EKRA Provisions Rose from the Opioid Crisis in the U.S.

EKRA is a criminal law that falls under the Communities and Patients Act, which lifted restrictions on medications for opioid treatment and sought to limit overprescribing of opioid painkillers. Originally, EKRA targeted fraudulent practices at sober homes and substance abuse treatment centers. However, the final draft of the bill added clinical laboratories to the list of providers under potential scrutiny.

At the time Congress passed EKRA, the law was primarily aimed at fraudulent activity in opioid treatment centers, including related lab testing.

Thus, the government’s use of EKRA in the COVID-19 charges against Lepetich case is newsworthy and establishes a precedent, noted Porter. He’ll speak about EKRA at the 2022 Executive War College on Laboratory and Pathology Management. The event takes place April 27-28 in New Orleans.

A contentious part of EKRA for clinical laboratories and pathology groups is that certain conduct protected under the federal Anti-Kickback Statute is treated as a criminal offense under EKRA. Some common lab practices come under that confusing designation, such as paying lab sales reps on a commission-based formula based on testing volumes they generate. 

—Scott Wallask

Related Information:

Labs Should Be Cautious About “Surprising” EKRA Ruling

DOJ Announces Coordinated Law Enforcement Action to Combat Healthcare Fraud Related to COVID-19

Executive War College on Laboratory and Pathology Management

6 Impacts of EKRA on Laboratories, Clinics, and Other Treatment Facilities

Large Operator of COVID-19 Collection Sites Suspends Operations and Clinical Laboratory Testing Following State and Federal Probes

COVID lab testing company reportedly was paid up to $124 million for COVID-19 testing

What do an axe-throwing lounge, a donut shop, and a COVID-19 testing company have in common? All three were under the ownership of the same husband and wife. Apparently, though, COVID-19 medical laboratory testing was more lucrative. It’s been reported this married couple’s testing company received as much as $124 million just from federal health programs.

The co-owners are now being sued by multiple state’s attorney generals for allegedly failing to deliver SARS-CoV-2 test results and/or for delivering COVID-19 test results that “were falsified or inaccurate,” according to NBC News.

Chicago-based Center for COVID Control (CCC)—an operator of 300 pop-up COVID testing sites nationwide—faces investigations from state and federal authorities amid allegations of improper procedures and business practices. The company voluntarily suspended operations in January, when the allegations first surfaced, according to a company press release.

The founders, who had no prior clinical laboratory experience, now say they have turned their attention from running the sites to handling the investigations, USA Today reported. The newspaper was the first to publicly report problems with the company and its associated lab, Doctors Clinical Laboratory (DCL), both of which have the same address in suburban Chicago.

According to USA Today, “The Center for COVID Control was incorporated in December 2020, according to Illinois state filings. The business, which describes itself as a ‘test collection marketing and management firm,’ worked closely with Doctors Clinical Lab. Regulators didn’t visit the lab for an on-site inspection until the end of September of the following year, according to the Centers for Medicare and Medicaid Services. Regulators found the lab was not reporting coronavirus test results to public health officials.”

Questionable Collection Procedures for COVID-19 Testing

An earlier USA Today story by reporter Grace Hauck described an outdoor COVID-19 collection site in Chicago run by a man operating from a small shack powered by a generator.

“As he opens the door, piles of plastic bags, apparently grouped by test type, can be seen in crates on the ground,” Hauck reported. “He encourages test-takers to scan a QR code with their phones, fill out an online form with identifying information, and write a digitally-generated string of numbers on a paper sheet inside the plastic test kit bag.”

Hauck’s story noted complaints from readers about shoddy specimen collection procedures, conflicting or errant clinical laboratory test results, and failure to receive COVID-19 results in a timely manner.

Block Club Chicago, a non-profit news site, reported on Jan. 13 that inspectors from the Centers for Medicare and Medicaid Services (CMS) had uncovered numerous instances of “non-compliance” and “deficiencies” at DCL.

CMS lab inspectors found that DCL “could not process or store PCR test samples appropriately—while it was being inundated with tests,” the news site reported. “Over an 11-day period in November, the lab received 84,436 PCR test samples; over that period, it processed and reported 43,240 test results, according to the [CMS] report.”

Specific problems included:

  • Inadequate staffing, training, and quality controls at the clinical laboratory.
  • A lack of freezers needed to store test samples.
  • Failure to maintain confidentiality of patient information.
  • Failure to label samples with identifying information.
  • Failure to log complaints from test recipients.

USA Today reported that the FBI executed a search warrant at the companies’ suburban Chicago offices on Jan. 22.

State Actions against Doctors Clinical Laboratory and CCC

In addition to the federal actions, state attorneys general in Minnesota and Washington State both filed lawsuits against Center for COVID Control (CCC) and Doctors Clinical Laboratory (DCL).

Minnesota Attorney General Keith Ellison

“When Minnesotans and people from around the country tested with these companies to keep themselves and their families safe, they trusted they would get correct [COVID-19 test] results on time,” said Minnesota Attorney General Keith Ellison in a statement announcing a lawsuit against the two companies. “I’m holding these companies accountable that sent back false or inaccurate [COVID-19 test] results, when they sent them back at all, for deceiving Minnesotans and undermining the public’s trust in testing.” (Photo copyright: Office of Minnesota Attorney General.)

Washington Attorney General Bob Ferguson filed suit in King County Superior Court on Jan. 31. “Center for COVID Control contributed to the spread of COVID-19 when it provided false negative results,” he stated in a news release. “These sham testing centers threatened the health and safety of our communities.”

On Feb. 17, Ferguson announced that the court had granted a preliminary injunction that prohibited CCC from providing testing services in the state.

NBC News reported that authorities in other states have also taken actions against the company. Oregon and Illinois launched civil investigations, while “Massachusetts and Rhode Island have issued cease and desist letters to the company, and local regulators in Washington and California shut down several of its sites for operating without a license,” the newspaper reported.

Big Money in COVID-19 Testing

USA Today reported that CCC was launched in December 2020 by Akbar Syed, 35, and Aleya Siyaj, 29, a married couple. Siyaj is listed as being CEO of CCC since June 2021, according to her LinkedIn profile.

“Doctors Clinical Lab is registered under another person’s name in state records, but federal documents and multiple former employees and business partners claimed Siyaj and Syed run the lab and Center for COVID Control,” Block Club Chicago reported.

USA Today reported that DCL received more than $124 million in federal reimbursement for COVID-19 clinical laboratory testing and treatment. The paper also described a lavish lifestyle for Syed and Siyaj, including recent purchases of a $1.36 million mansion and multiple luxury cars. Asked on social media site TikTok about the source of his wealth, Syed stated, “COVID money,” according to USA Today.

Siyaj and Syed have denied wrongdoing, stating that they are now focused on “responding and cooperating with legal probes, and to clearing our good names,” according to a statement provided to USA Today.

Regulatory Loopholes

One question about CCC and DCL is how they were able to escape regulatory scrutiny. “Some experts said unscrupulous lab operators can take advantage of a regulatory opening that allows labs to register, test, and bill before inspectors finish a CLIA certificate survey,” USA Today reported. “In other cases, investors might purchase or establish management agreements with labs and begin testing before inspectors get in to verify the lab’s reliability.”

Pathologists and clinical laboratory managers will want to continue to watch the news, as other examples of fraud and incompetence by new companies that rushed into the COVID-19 lab testing marketplace are uncovered and investigated by both state and federal regulators.

Further, some of these companies may have generated more than $1 billion in payments from public and private sources after launching testing operations in the months after the arrival of the pandemic.

Stephen Beale

Related Information:

COVID-19 Testing Chain Opened Pop-Ups Across the US. Now, It’s Temporarily Closing Amid Federal Investigation and Mounting Complaints

FBI Serves Search Warrant at Rolling Meadows COVID Testing Company and Lab

COVID Testing Company with 300 Pop-Up Sites across U.S. Faces Multiple Probes

Federal Inspectors Allege COVID Testing Firm Didn’t Put Patients’ Names on Specimens

Pop-Up COVID-19 Test Sites and Labs Capitalize on Lax Regulations, Prey on Vulnerable Americans

Tests in Trash Bags, Lying to Patients: Washington State AG Sues ‘Sham’ Center for COVID Control

Center for COVID Control Shuts Down Headquarters Amid FBI Investigation but Says Testing Sites May Branch Off

FBI Searches Center for COVID Control Headquarters Amid Probes into Multimillion-Dollar Testing Business

Center for COVID Control Under Investigation after USA TODAY Reporter Starts Asking Questions

How a Wedding Photographer and a Donut Shop Owner Got Millions in a COVID Testing Operation Now Under Investigation

Federal Authorities Investigate Lab, Misconduct Claims Tied to Center for COVID Control

Center for COVID Control’s Testing Sites to ‘Pause’ as Authorities in Two States Shut Down Centers

What’s the Center for COVID Control? Questionable Sites Spotlight Nation’s Thirst for Quick Testing

Center for COVID Control Faked Test Results, Minnesota Attorney General Says in New Lawsuit

State of Minnesota Fourth Judicial District Complaint

Attorney General Ellison Files Lawsuit against COVID-19 Testing Sites, Lab for Deceiving Consumers

Transition from Fee-for-Service to Value-Based Reimbursement for Hospitals, Physicians, and Clinical Laboratories Continues, Albeit Slowly, Reports Say 

Medical laboratories and anatomic pathologists may need to squeeze into narrow networks to be paid under value-based schemes, especially where Medicare Advantage is concerned

Pathologists have likely heard the arguments in favor of value-based payment versus fee-for-service (FFS) reimbursement models: FFS encourages providers to order medically unnecessary procedures and lab tests. FFS removes incentives for providers to order patient services more carefully. Fraudsters can generate huge volumes of FFS claims that take payers months/years to recognize and stop.

Studies that favor value-based payment schemes support these claims. But do hospitals and other healthcare providers also accept them? And how is value-based reimbursement really doing?

To find out, Chicago-based thought leadership and advisory company 4Sight Health culled data from various organizations’ reports that suggest value-based reimbursement shows signs of growth as well as signs of stagnation.

Value-Based Payment Has Its Ups and Downs

Healthcare journalist David Burda is News Editor and Columnist at 4Sight Health. In his article, “Is Value-Based Reimbursement Mostly Dead or Slightly Alive?” Burda commented on data from various industry reports that indicated value-based reimbursement shows “signs of life.” For example:

On the other hand, Burda reported that value-based reimbursement also has these declining indicators:

  • 39.3% of provider payments “flowed” through FFS plans in 2020 with no link to cost or quality. This was unchanged since 2019. (HCPLAN report)
  • 19.8% of FFS payments to providers in 2020 were linked to cost or quality, down from 22.5% in 2019. (HCPLAN report)
  • 88% of doctors reported accepting FFS payments in 2019, an increase from 87% in 2018. (AMA report)

Does Today’s Healthcare Industry Support Value-based Care?

A survey of 680 physicians conducted by the Deloitte Center for Health Solutions suggests the answer could be “not yet.” In “Equipping Physicians for Value-Based Care,” Deloitte reported:

  • “Physician compensation continues to emphasize volume more than value.
  • “Availability and use of data-driven tools to support physicians in practicing value-based care continue to lag.
  • “Existing care models do not support value-based care.”

Deloitte analysts wrote, “Physicians increasingly recognize their role in improving the affordability of care. We repeated a question we asked six years ago and saw a large increase in the proportion of physicians who say they have a prominent role in limiting the use of unnecessary treatments and tests: 76% in 2020 vs. 57% in 2014.

“Physicians also recognize that today’s care models are not geared toward value,” Deloitte continued. “They see many untapped opportunities for improving quality and efficiency. They estimate that even today, sizable portions of their work can be performed by nonphysicians (30%) in nontraditional settings (30%) and/or can be automated (18%), creating opportunities for multidisciplinary care teams and clinicians to work at the top of their license.”

Hospital CFOs Also See Opportunities for Value-based Care

In his 4sight Health article, Burda reported on data from a “Guidehouse Center for Health Insights’ analysis of a 2021 Healthcare Financial Management Association (HFMA) survey of more than 100 health systems CFOs that found that most said they are still interested in seeking value-based payment arrangements this year.”

According to the HFMA survey, among the arrangement CFOs indicated, 59% expressed interest in Medicare Advantage value-based payment contracts.

This could be problematic for clinical laboratories, according to Robert Michel, Editor-in-Chief of Dark Daily and our sister publication The Dark Report. According to Guidehouse, “Nearly 60% of health systems plan to advance into risk-based Medicare Advantage models in 2022.”

Medicare Advantage (MA) enrollments have escalated over 10 years: 26.4 million people of the 62.7 million eligible for Medicare chose MA in 2021, noted a Kaiser Family Foundation brief that also noted MA enrollment in 2021 was up by 2.4 million beneficiaries or 10% over 2020.

Graph of Medicare Advantage Enrollment
The graph above is taken from the Kaiser Family Foundation report, “Medicare Advantage in 2021: Enrollment Update and Key Trends.” According to the KFF, “In 2021, more than four in 10 (42%) Medicare beneficiaries—26.4 million people out of 62.7 million Medicare beneficiaries overall—are enrolled in Medicare Advantage plans; this share has steadily increased over time since the early 2000s.” Since MA employs narrow networks for its healthcare providers, it’s likely this trend will continue to affect clinical laboratories that may find it difficult to access these providers. (Graphic copyright: Kaiser Family Foundation.)

“The shift from Medicare Part B—where any lab can bill Medicare on behalf of patients for doctor visits and outpatient care, including lab tests—to Medicare Advantage is a serious financial threat for smaller and regional labs that do a lot of Medicare Part B testing. The Medicare Advantage plans often have networks that exclude all but a handful of clinical laboratories as contracted providers,” Michel cautioned. “Moving into the future, it’s incumbent on regional and smaller clinical laboratories to develop value-added services that solve health plans’ pain points and encourage insurers to include local labs in their networks.”

Medical laboratories and anatomic pathology groups need to be aware of this trend. Michel says value-based care programs call on clinical laboratories to collaborate with healthcare partners toward goals of closing care gaps.

“Physicians and hospitals in a value-based environment need a different level of service and professional consultation from the lab and pathology group because they are being incented to detect disease earlier and be active in managing patients with chronic conditions to keep them healthy and out of the hospital,” he added.

Value-based reimbursement may eventually replace fee-for-service contracts. The change, however, is slow and clinical laboratories should monitor for opportunities and potential pitfalls the new payment arrangements might bring.

—Donna Marie Pocius

Related Information:

Is Value-Based Reimbursement Mostly Dead or Slightly Alive?

APM Measurement Progress of Alternative Payment Models: 2020-2021 Methodology and Results Report   

Policy Research Perspectives: Payment and Delivery in 2020

Equipping Physicians for Value-Based Care: What Needs to Change in Care Models, Compensation, and Decision-Making Tools

Nearly 60% of Health Systems Pursuing Risk-Based Medicare Advantage Models in 2022, Guidehouse Analysis Shows

Medicare Advantage in 2021: Enrollment Update and Key Trends

CMS’ Latest Value-Based Reimbursement Model Explores Geographic Direct Contracting for Medicare and Focuses on Costs and Quality

Ex-Theranos CEO Elizabeth Holmes Will Be Free on Bail Until September 26 Sentencing Hearing for Criminal Fraud Conviction

Start of ex-Theranos president and COO Sunny Balwani’s federal trial will be pushed to mid-March due to COVID-19 spike in California

Just when most clinical laboratory managers and pathologists thought the guilty verdict in the Elizabeth Holmes fraud case would bring an end to the saga, we learn her chapter in the Theranos story will instead extend another eight months to September when the former Silicon Valley CEO will be sentenced. However, a brand-new chapter will begin in March when the fraud trial of ex-Theranos president and COO Ramesh “Sunny” Balwani begins.

Holmes’ fraud trial concluded on January 3 with the jury convicting her on one count of conspiracy to defraud investors and three counts of wire fraud after seven days of deliberation and nearly four months of trial proceedings.

Holmes remains free on a $500,000 bond while awaiting sentencing.

Elizabeth Holmes

Elizabeth Holmes is seen above arriving at the US District courthouse in San Jose, Calif. On January 3, the former Theranos CEO was convicted on three counts of wire fraud and one count of conspiracy to defraud investors. US District Judge Edward Davila set Holmes’ sentencing date for September 26. Clinical laboratory directors and pathologists who have closely followed the trial will have to wait eight months for the conclusion of this chapter in the Theranos saga. (Photo copyright: The Guardian.)

“I would be utterly shocked if she wasn’t sentenced to some term of imprisonment,” Amanda Kramer, JD, a former federal prosecutor who is now a partner with New York-based Covington & Burling LLP, told NPR.

“What is the sentence that will deter others who have a failing business from making the choice to commit fraud, rather than owning up to the failings and losing their dream?” she added.

Holmes, 37, faces a possible prison sentence of 20 years in prison as well as a $250,000 fine and possible restitution. But some legal experts expect a much shorter prison sentence for the disgraced CEO, who has no prior criminal history and is a first-time mother of a son born last July.

While sentencing typically takes place within a few months of a verdict being reached in a federal criminal trial, US District Judge Edward Davila set 1:30 p.m. September 26, 2022, as the date for Holmes’ sentencing hearing, according to his order dated January 12.

The Mercury News reported the lengthy delay in sentencing may be due to the start of Balwani’s upcoming trial on identical fraud charges. The delay in Holmes’ sentencing will allow for Balwani’s trial to begin in mid-March after being pushed back one month due to a spike in COVID-19 cases in California, The Mercury News reported.

Judge Davila will preside over Balwani’s trial as well.

Jury Acquits Holmes on Patient-related Charges

Holmes was acquitted of conspiracy to defraud patients of the now-defunct blood-testing laboratory and the jury failed to reach a unanimous decision on three other wire fraud charges.

University of Michigan Law Professor Barbara McQuade, a former US Attorney and an NBC News Legal Analyst, told CNBC she expects prosecutors to rethink their strategy in the Balwani trial based on the jury’s acquittal of Holmes on conspiracy and fraud charges involving Theranos patients.

“Knowing that this jury acquitted on all of the patient counts, I think that strategically, they should look to find a more direct way to explain why that is part of the fraud, that they necessarily knew that ultimately patients would be defrauded. And that although they didn’t know these individual patients by name, they knew that they existed in concept,” McQuade said.

One of the jurors in the Holmes’ trial, Wayne Kaatz, told ABC News he and other jurors were dismayed by their inability to come to a unanimous consensus on the three of the charges. A mistrial was declared on those three counts.

“We were very saddened,” Kaatz said. “We thought we had failed.”

Did Holmes Charm the Jury?

When Holmes dropped out of Stanford at age 19 to form Theranos, her goal, she claimed during testimony, was to transform healthcare by creating a blood-testing device capable of performing hundreds of clinical laboratory tests using a finger-stick of blood. She became a Silicon Valley sensation because of her charisma and charm, which she used to sell her dream to big money investors such as Oracle co-founder Larry Ellison and former US Secretary of State George Shultz.

Kaatz acknowledged Holmes’ personality also impacted the jury.

“It’s tough to convict somebody, especially somebody so likable, with such a positive dream,” Kaatz explained to ABC News, noting, however, that he voted guilty on the three counts on which the jury could not agree. “[We] respected Elizabeth’s belief in her technology, in her dream. [We thought], ‘She still believes in it, and we still believe she believes in it.’”

In the light of Holmes’ conviction, McQuade suggested it would not be shocking to see Balwani consider a plea deal in exchange for a lighter sentence.

“Could we perhaps, enter a guilty plea and get a reduction for acceptance of responsibility?” she said. “It’s certainly something that you have to look at.”

And so, the saga continues. Clinical laboratory directors and pathologists who followed Holmes’ trial with rapt interest should prepare for a new set of twists and turns as Ramesh Balwani prepares to face his own day in court.

Andrea Downing Peck

Related Information:

Exclusive: Jury Speaks Out After Convicting Elizabeth Holmes

Elizabeth Holmes: Theranos Fraudster to Avoid Sentencing for at Least Eight Months

Theranos Ex-President’s Fraud Trial Delayed by COVID Surge

United States v. Elizabeth Holmes, et al.: 18-CR-00258-EJD

Former Theranos CEO Elizabeth Holmes to be Sentenced on Sept. 26

Elizabeth Holmes Verdict Complicates Upcoming Trial of Her Ex-Boyfriend and Former Theranos COO Sunny Balwani

Two Important Aspects for Clinical Laboratories to Consider Following Elizabeth Holmes’ Conviction

Theranos Ex-CEO Elizabeth Holmes Convicted on Three Counts of Wire Fraud and One Count of Conspiracy to Commit Fraud after Seven Days of Jury Deliberations

Theranos Whistleblower Tyler Shultz Celebrates Former CEO Elizabeth Holmes’ Guilty Verdict by Popping Champagne with Family Members

Private Labs in South Africa Voluntarily Agree to Lower Prices for COVID-19 PCR Tests following Investigation by Country’s Competition Commission

In an out-of-court settlement, two commercial clinical laboratory companies also agreed to reduce their prices for rapid antigen tests as well

How clinical laboratory companies were pricing their COVID-19 tests caught the attention of government authorities in South Africa. Government agencies in that country are establishing what they view as fair clinical laboratory pricing for private COVID-19 PCR (polymerase chain reaction) and rapid antigen tests without turning to litigation or fines.

The Competition Commission (Commission) is an organization charged with reviewing and acting on business practices in South Africa. In a December 11, 2021, news release, the Commission said it had reached a “ground-breaking agreement” with two private laboratories—Ampath and Lancet—to reduce their COVID-19 PCR test prices from 850 South African rand (R850) to R500 (from US$54.43 to US$31.97).

As of December 12, a third private laboratory company that also had been investigated, PathCare, had not agreed to the court settlement, Daily Maverick reported.

Also effective are lower prices for rapid antigen tests, the Commission said in a separate December 23 news release.

COVID Test Prices ‘Unfairly Inflated’

The changes in PCR test prices in South Africa followed a formal complaint by the Council for Medical Schemes which alleged the private pathology labs [the term for clinical laboratories in South Africa] were “supplying” COVID-19 PCR tests at “unfairly inflated, exorbitant, and/or unjustifiable” prices, Daily Maverick reported.

Tembinkosi Bonakele

The clinical laboratory companies “exploited consumers by earning excessive profits on essential products or services,” Tembinkosi Bonakele (above), Commissioner of the South Africa Competition Commission, told the Daily Maverick. “It is always encouraging for companies to voluntarily consider reducing prices, especially where the public is detrimentally affected by the prices, as to avoid protracted litigation,” he added. (Photo copyright: Sowetan Live.)

According to the Daily Maverick, as part of the investigation, which began in October 2021, the Commission asked the private clinical laboratory companies for financial statements and costs of COVID-19 testing.

“We did, then, further interrogation in order to strip out what we saw was potentially padding the costing and unrelated costs. And on the basis of that, we came to the figure of R500,” James Hodge, told the Daily Maverick. Hodge is Chief Economist, Economic Research Bureau, and Acting Deputy Commissioner at the Competition Commission South Africa.

 For its part, Lancet, Johannesburg, said in a statement that it “Appreciates the spirit of constructive engagement with the Commission which has resulted in an outcome that best serves the people of South Africa as they confront the fourth COVID wave. We are sensitive to the plight of the public and agree that reducing the COVID-19 PCR price is in best national interest.”

Clinical Laboratory Test Prices: Market Dynamics

So, were the prices too high? In the US, clinical laboratories are reimbursed considerably more by Medicare for COVID-19 testing (about $100), as compared to the South Africa private clinical lab prices.

Also, the Centers for Medicare and Medicaid Services (CMS) said in a statement that effective January 2021 it included in that rate an incentive of $25 to labs that provide results within 48 hours.

Medical laboratories are reimbursed $75 for a high throughput COVID-19 test when results are reported beyond 48 hours, CMS added.

Antigen Tests Prices Also Reduced

The Commission said that during its review of COVID-19 PCR test pricing it received a Department of Health Republic of South Africa complaint about prices for rapid antigen test pricing as well.

After another Commission review, PathCare, Lancet, and Ampath agreed to reduce prices for rapid antigen tests to a maximum of R150 or $9.74 (from a range of R250 to R350 or $16.28 to $22.79), a news release noted.

By comparison, Abbott’s BinaxNOW COVID-19 Antigen Self Test is priced at $23.99, on Abbott’s website as well as online at Walgreens.

“The reduction of COVID-19 rapid antigen test prices will help alleviate the plight of consumers and widen accessibility and affordability of COVID-19 rapid antigen testing, which is a critical part of the initiatives to avoid escalation of the pandemic,” said Bonakele in the news release, which also stated that the Commission would receive financial statements from the three labs every few months.

The Commission also is reviewing a “large retail pharmacy chain’s” rapid antigen prices, which “follows a complaint lodged by the Department of Health (DOH), on December 14 2021, against service providers delivering COVID-19 Rapid Antigen tests in South Africa to consumers,” Cape Town Etc reported. The specific pharmacy chain was not identified.

Data Show COVID Plight in South Africa

More than 21.6 million COVID-19 tests have been offered by healthcare providers in South Africa, and 3.5 million cases were detected, according to the Department of Health, Republic of South Africa.

In January, The New York Times reported:

  • 28% of South Africans are fully vaccinated.
  • 33% of residents have had one vaccine dose.
  • One in 17 people was diagnosed with COVID-19.
  • One in 632 had died from the infection.
  • COVID-19 deaths total 92,830.

Considering those data, one wonders if the South African government acted fast enough on test pricing.

For medical laboratory leaders, it’s important to recognize that not only are lab services in the spotlight during the COVID-19 pandemic, business practices and prices also are being monitored by officials in this country.

Donna Marie Pocius

Related Information:

Urgent Media Briefing on the Announcement of a Ground-Breaking Agreement on PCR Test Prices

PathCare Also Agrees to an Immediate Price Reduction of COVID-19 PCR Tests

Big Three Private Pathology Groups Agree to Another Price Reduction

Major Pathology Labs Agree to Lower Price of COVID-19 PCR Tests to R500

Lancet Laboratories Agreement with Competition Commission of South Africa

CMS Changes Medicare Payment to Support Faster COVID-19 Diagnostic Testing

Private Pathology Groups to Reduce COVID-19 Rapid Antigen Test Price to No More than R150

Tracking Coronavirus in South Africa: Latest Case Count

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