News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

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News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Media Reporting Shows Some Clinical Laboratories Charge Significantly Higher than Average Prices for COVID-19 Tests—and It Is Perfectly Legal

When people receive COVID-19 testing at an out-of-network facility, federal law requires insurers to pay that clinical laboratory’s posted ‘cash price’ when negotiated prices have not previously been established

In the latest example that some COVID-19 testing companies are charging significantly higher prices than others, The New York Times (NYT) recently reported that one COVID lab company with “more than a dozen testing sites” throughout the US was charging $380 for a COVID-19 rapid test that can be purchased at many drug stores for $20. Sadly, this practice, the NYT also noted, is protected by federal law.

Media reporters and the lay public are not fully aware of the long-established clinical laboratory test payment modalities that govern the daily performance of tests ordered as part of regular healthcare. Thus, when the COVID-19 pandemic hit—along with tens of billions of federal dollars to pay for SARS-CoV-2 tests—it triggered a gold rush of people wanting to get into the clinical laboratory testing business specifically to make money.

It is the bad actors in this group who are tainting the entire clinical laboratory industry with often outrageous business practices that, at best, cross ethical lines—such as overpricing tests to consumers—and at worst, represent fraudulent behavior, such as inducing medically-unnecessary tests, then submitting claims for these tests.

Even as the pandemic appears to be waning, news outlets are reporting instances of insurers being charged higher “cash prices” for tests performed by out-of-network testing laboratories. Worse yet, federal law requires insurers to pay these exorbitant prices and they are not happy about it.

In-Network versus Out-of-Network Pricing

In its report, the NYT noted that the CARES Act (H.R. 748) requires insurers to pay whatever “cash prices” out-of-network labs post online, and that this is leading to “expensive coronavirus tests” that could ultimately be reflected in future “higher insurance premiums” charged to healthcare consumers.

One company the NYT highlighted in its report is GS Labs in Omaha, Neb., a provider of COVID-19 testing throughout the US. The testing company’s COVID-19 Pricing Transparency webpage lists these prices for the following COVID-19 tests:

“Insurers are obligated to pay cash price, unless we come to a negotiated rate,” Christopher Erickson, a GS Labs Partner, told the NYT.

Negotiate or ‘Pay the Provider’s Cash Price’

In Missouri, Blue Cross and Blue Shield of Kansas City (Blue KC) has filed a lawsuit against GS Labs. “This action seeks a judgment declaring Blue KC and our members are not required to pay GS Labs’ unreasonable, inflated reimbursement demands,” according to a Blue KC news release.

However, section 3202 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act “specifies the process for private health insurance plan issuers to reimburse providers of COVID-19 diagnostic tests. Specifically, a reimbursement rate negotiated for such test prior to the public health emergency declared on January 31, 2020, continues to apply for the duration of the emergency. If a reimbursement rate was not negotiated prior to the emergency declaration, an issuer may either negotiate such rate or pay the provider’s cash price.”

In its own news release, GS Labs said it has “countersued Blue KC over the insurance company’s failure to pay $9.7 million for COVID tests covered by federal law.”

According to a legal expert who spoke with the NYT, GS Labs has grounds for its test charges due to the CARES Act. “Whatever price the lab puts on their public facing website, that is what has to be paid. I don’t read a whole lot of wiggle room in it,” said Sabrina Corlette, JD, Research Professor and Co-Director of the Center on Health Insurance Reforms at Georgetown University.

The law is aimed, partially, at “guaranteeing out-of-network testing entities receive payment,” wrote Loren Adler, Associate Director of the USC-Brookings Schaeffer Initiative for Health Policy, in a blog post, titled, “How the CARES Act Affects COVID-19 Test Pricing.”

The blog post, the Brookings editors noted, “is part of the USC-Brookings Schaeffer Initiative for Health Policy, which is a partnership between Economic Studies at Brookings and the University of Southern California Schaeffer Center for Health Policy and Economics.”

Loren Adler

“Unfortunately,” noted Loren Adler (above), Associate Director of the USC-Brookings Schaeffer Initiative for Health Policy, in a blog post, “this ‘cash price’ is not a market-determined price—it is irrelevant to patients because all options have to be made free to them by law, so there is little constraint on how high this is set by testing entities. Nor is there any reason for out-of-network entities to accept any less than this amount (other than a desire to contract in the future with the insurer for fear of a public relations backlash). Moreover, in theory the patient can still be surprise balance billed if the provider’s charge is higher than this ‘cash price,’ though it is unclear why any provider would list a ‘cash price’ lower than their charge.” (Photo copyright: The Brookings Institution.)

In his analysis, Adler suggested the law be revised to require commercial insurers to pay for COVID-19 testing at Medicare prices.

Patient Receives a $54,000 ‘Surprise’ Bill for COVID-19 Out-of-Network Test

Meanwhile, in Texas, a consumer was billed $54,000 for a COVID-19 PCR (polymerase chain reaction) test, an antigen test, and ER facility fee by a SignatureCare Emergency Center in Lewisville, Texas, according to a Kaiser Health News (KHN) Bill of the Month report, titled, “A COVID Test Costing More Than a Tesla? It Happened in Texas.” 

The patient, Travis Warner, reportedly has insurance from Molina Healthcare through the federal Health Insurance Marketplace. After an employee at his company tested positive for COVID-19, Warner drove 30 miles outside of Dallas in search of COVID-19 testing sites. He eventually visiting an out-of-network free-standing emergency room in Lewisville where he received PCR diagnostic and rapid antigen tests. The results of the tests were negative for COVID-19. But the bill was a shock.

The total bill came to $56,384. Molina Healthcare paid its negotiated rate of $16,915.20 for the testing and facility fee, leaving Warner responsible for the remaining $54,000!

In the end, Warner did not have to pay the bill. Molina resolved the charge with SignatureCare and, in a statement to KHN, wrote, “This matter was a provider billing error, which Molina identified and corrected.”

For its part, SignatureCare Emergency Centers, with freestanding centers throughout Texas, said it has a “robust audit process” to flag errors and processed “thousands of records a day” at the height of the pandemic, according to KHN, which reported the business showing a $175 price for a COVID-19 test on its website.

“If the insurance company is paying astronomical sums of money for your care, that means in turn that you are going to be paying higher (insurance) premiums,” Adler told KHN.

Insurance Group Finds Price Gouging

“Price gouging on COVID-19 tests by certain providers continues to be a widespread problem,” according to a statement by America’s Health Insurance Plans (AHIP), a national association representing insurers.

AHIP has studied COVID-19 test prices since April 2020. It released a survey earlier this year which found COVID-19 test prices were on average $130. However, AHIP also found that out-of-network providers charged “significantly higher” (more than $185) for more than half (54%) of COVID-19 tests (PCR, antigen, antibody) in March 2021—a 12% increase since 2020. More than 27% of COVID-19 tests in March 2021 were done out-of-network, a 6% increase since 2020.

However, in, “COVID-19 Lab Test Prices Give Some Health Plans ‘Indigestion’,” Dark Daily’s sister publication, The Dark Report, wrote, “Interestingly, [AHIP] researchers reported that the share of COVID-19 tests claims submitted from ‘high-cost locations’—identified as hospitals and emergency departments—declined from 18% in the first three months of the pandemic to only 5% during the first three months of 2021.”

Niall Brennan, President and CEO of the Health Care Cost Institute (HCCI), told KHN, “People are going to charge what they think they can get away with. Even a perfectly well-intentioned provision like [the CARES Act] can be hijacked by certain unscrupulous providers for nefarious purposes.”

Of course, most medical laboratories priced their tests fairly and have performed them in an efficient and professional manner during the pandemic. So, it is unfortunate to learn through AHIP’s survey findings and the media that some COVID-19 testing providers are posting prices that may confuse patients and affect their health insurance premiums. 

Donna Marie Pocius

Related Information:

This Lab Charges $380 for a COVID Test. Is That What Congress Had in Mind?

Lawsuit Seeks a Judgment to Ensure Blue KC Members Are Not Required to Pay GS Labs’ COVID-19 Testing Reimbursement Demands

GS Labs Countersues, Fires Back at Blue KC over $9.7 Million Payment Failure

How the CARES Act Affects COVID-19 Test Pricing

A COVID Test Costing More than a Tesla? It Happened in Texas

New Data Shows Continued Evidence of COVID-19 Testing Price Gouging

AHIP: COVID-19 Test Prices

COVID-19 Lab Test Prices Give Some Health Plans ‘Indigestion’

Smartwatch-based Fitness Apps Gaining Popularity Over Other Fitness Wearables such as Fitbit. Will This Affect the Data Clinical Laboratories See Streaming Their Way?

Consumer demand for health trackers combined with other smartwatch capabilities is driving a trend away from simple health trackers and toward more complex devices, such as the Apple Watch, for their more powerful capabilities

It is still an open question as to whether clinical laboratories will experience an onrush of patient test data streaming at them from healthcare consumer portals and mobile devices. The popularity of wearable fitness/medical technology has been widely touted in the media. Predictions have been that these devices—when coupled with smartphone and tablet applications (apps)—would generate substantial volumes of digital patient data that would be useful for medical laboratories to capture and add to the clinical lab test data of the patients they serve.

But will these predictions of a flood of data from wearable devices become reality? Is this a trend about which medical laboratories should be concerned? Recent statistics provide some insight into these questions. For example, the sales numbers for wearable devices are significant.

Smartwatches Gaining Ground in Wearable Fitness Market

In 2016, 102.4 million wearable devices were sold, which was a 25% increase over the previous year, according to Smart Insights, a publisher for marketers. Now, several sports apparel companies, such as Adidas and Under Armour, are either launching smartwatches with health/fitness-related software and activity trackers, or eliminating their digital fitness business units altogether.

And according to MobiHealthNews, “[today’s] landscape looks awfully different.

“I think the industry is still struggling to find real, meaningful points of reference with consumers,” Dan Ledger, Principal and Founder, Path Collaborative, a Massachusetts consulting firm, told MobiHealthNews. “You hear anecdotes of people who had Fitbit (NYSE:FIT) and lost weight. But it hasn’t really been a success as a market product like a smartphone—like a lot of these companies were expecting when they were reading the tea leaves four or five years ago.”

For example, Adidas reassigned employees working in the fitness watch and sensor-enabled footwear departments to other areas, according to the Portland Business Journal. “We are integrating digital across all areas of our business and will continue to grow our digital expertise but in a more integrated way,” an Adidas spokesperson told Just-Style.

And, Nike announced its intention late last year to abandon the wearables market altogether. “It wasn’t authentic to who we were,” Jordan Rice, Senior Director of Nike NXT Smart Systems Engineering, told MobiHealthNews.

Meanwhile, Under Armour announced in 2017 that it planned to eliminate the UA HealthBox, a wearable device that offered a connected activity tracker, heart rate monitor, and smart scale tools, according to MHealth Spot. Instead, the publication reported, Under Armour was partnering with Samsung on fitness apps:

  • MyFitnessPal;
  • MapMyFitness;
  • Endomondo; and,
  • UA Record.

More Consumers Strapping on Smartwatches

Fitbit recently released the Fitbit Ionic Watch. According to Fitbit’s website, features include:

  • Personal coaching;
  • Heart rate monitor;
  • All-day activity tracking;
  • Sleep stages monitoring; and more.


The smartwatch may be the new “smart” way to go, compared to simple activity trackers. Smartwatch manufactures are partnering with biometric monitoring app developers (such as Apple Watch and IBM Watson Health, shown above) to service consumers who need to monitor, capture, and distribute their critical health data. (Photo copyright: Alexey Boldin/Shutterstock.)


Consumer Reports, citing NPD Group market data, noted smartwatches are increasingly becoming the device-of-choice for consumers who gather fitness data. Besides tracking heart rate, some smartwatch apps also release notifications about accomplishment of goals, enable access to e-mail, and more.

Consumer Reports noted:

  • Smartwatches were used by 17% of US adults in the first quarter of 2015, and the remaining 83% in the demographic used activity trackers;
  • Smartwatch use jumped to 38% by the fourth quarter of 2017; and,
  • Smartwatches will rise to 48% of new market purchases by the fourth quarter this year.

Hardware is Hard

Fitness wearable devices have long been touted by the media for their potential to stream critical health data directly to physicians, to patients’ electronic health records, and to medical laboratories. Dark Daily foresaw in 2016 that, when paired with a smartphone or table computer, the momentum of the fitness wearables trend was substantial. For this reason, clinical laboratory managers and pathologists would want to stay current with these developments. However, today it appears companies offering wearable monitoring devices could be finding it more difficult than anticipated to capture the attention of consumers and leverage what the devices do.

In the end, sports apparel companies are not leaving the digital fitness space entirely, but simply adjusting to new consumer demands. Clinical laboratory leaders will want to keep watch on these developments as the trend evolves. The outcome could alter how patient data enters the pathology workflow.

—Donna Marie Pocius

Related Information:

Digital Marketing Strategy Wearables Statistics 2017

Sports Apparel Brands are All Walking Away from Fitness Wearables

Under Armour Kills the HealthBox Suite of Connected Devices

Adidas to Cut Digital Sports Division

Fitness Tracker or Smartwatch: Which is Best for You?

Improvements to Fitness Wearables Help Stream Data from Consumers Homes to EHRs and Clinical Pathology Laboratories

Consumer Reports Says Thousands of Doctors Facing Medical Probation Continue to See Patients; Calls for More Patient Access to Physician Disciplinary Records

Latest calls for easier public access to information on physician performance and quality is a reminder to clinical laboratories and pathology groups of the trend to greater transparency on provider outcomes

If any clinical laboratory executive or pathologist still doubts that more transparency of provider outcomes is a topic of interest to patients, they have only to look at Consumer Reports, well-respected for its advocacy on behalf of consumers. Consumer Reports is using multiple ways to educate their readers about medical errors and how the medical community makes it difficult for consumers to learn about physicians who have been involved in state medical board investigations.

One example is the Consumers Union, which is the policy and advocacy arm of Consumer Reports. Through its Safe Patient Project, the Consumers Union seeks to eliminate medical harm in healthcare.

Consumers Union advocates for increased public disclosure of information about such issues as: (more…)

Several of Becker’s Top 2014 Health Information Technology ‘Game Changer’ Trends Have Major Implications for the Nation’s Clinical Pathology Laboratories

In particular, medical laboratories and pathology groups should be doing better at using information technology to meet the needs of consumers and to support physician workflow

Improving patient-provider communication and speeding clinician workflow are two of the top 2014 game changers in healthcare information technology (HIT) cited by a recent report. Each of these top 2014 game changers can be expected to change how patients and physicians interact with their clinical laboratory and anatomic pathology providers.

The report was published by Becker’s Hospital Review. Of the top 10 2014 HIT game changers, Dark Daily considered the two mentioned as the most notable for medical laboratory managers and pathologists. (more…)

Many Genetic Tests Offered to Consumers Over the Internet are Misleading and of No Practical Use

GAO Gives Congress a Poor Report on Direct-to-Consumer Genetic Tests Sold by Web-Based Companies

According to the Wall Street Journal, Direct-to-consumer (DTC) genetic tests from the four companies 23andMe, Navigenics, deCODE genetics, and Pathway Genomics Corp, are generating results “that are misleading and of little or no practical use.”  This was the finding of the U.S. General Accounting Office (GAO) in its recently released report.

Pathologists and clinical laboratory managers will be interested to know that the GAO sent multiple specimens to these four companies—each of which is organized to sell genetic tests and molecular diagnostics directly to consumers via the Internet. The GAO determined that, even when given identical DNA samples, the tests from these four companies yielded contradictory results.