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

Hosted by Robert Michel

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

Hosted by Robert Michel
Sign In

Lawsuits Fly as Employers, Providers Sue Health Insurance Companies Over Questionable Practices and Lack of Transparency

Legal actions highlight ongoing concerns about payer behavior and included a record-breaking settlement in antitrust case against Blue Cross and Blue Shield

Several high-profile federal lawsuits filed last year, along with settlements in older cases, demonstrate that providers, patients, and self-insured employers—including hospitals, clinical laboratories, and anatomic pathology groups—continue to have serious concerns about lack of transparency and certain business practices of health plans.

Self-Insured employers are suing because they cannot see their data and discovered their health plans overpaid providers from allowed charges (meaning a self-insured employer has greater health benefit costs).

Providers are suing because they are being paid less than agreed and have claims denied for spurious reasons.

These lawsuits show that there is increasing ill will and concerns by self-insured employers and providers as to how health insurers are properly conducting business.

Below is a rundown of the cases.

“Over the past 12 years we have dedicated an extraordinary amount of time, tireless effort, and resources to this historic outcome for providers,” said Co-Lead Counsel Edith Kallas, JD, of Whatley Kallas, a press release. The Blue Cross and Blue Shield Association settlement with healthcare providers is the largest healthcare-related antitrust settlement in US history, according to plaintiff’s attorney Whatley Kallas, LLP. Clinical laboratories and pathology groups can learn from these lawsuits. (Photo copyright: Whatley Kallas.)

BCBSA Settles Long-Running Antitrust Case

In October, the Blue Cross and Blue Shield Association (BCBSA) and the 33 independent Blue Cross and Blue Shield (BCBS) plans agreed to a $2.8 billion settlement in a 12-year-old federal antitrust lawsuit. Co-counsel for the plaintiffs Whatley Kallas, LLP, described the agreement as the “largest antitrust settlement in the history of the United States healthcare industry.”

Healthcare providers alleged that the BCBS plans had agreed “to allocate markets through the use of exclusive service areas and to fix the prices paid to providers through the BlueCard Program,” according to a news release.

In addition to the cash payment, the health plans also agreed to “invest hundreds of millions of dollars in system improvements for the benefit of providers,” the law firm noted, adding that the settlement would compel changes in how the plans “process claims, communicate with, and make payments to healthcare providers,” helping to “address resource-draining administrative burdens and inefficiencies currently experienced by providers.”

Whatley Kallas said the settlement would ultimately result in injunctive relief amounting to $17.3 billion during its first 10 years.

“Many important issues for providers are finally being addressed,” said Edith Kallas, JD, of Whatley Kallas in the news release. “We’re pleased that we have been able to achieve relief that will create a better system for healthcare providers and that will support the organizations and people we rely on to take care of us and our families every day.”

BCBSA also issued a statement: “This settlement ends a long-running legal challenge to the Blue Cross Blue Shield Association license agreements and related rules. We deny the allegations made in the lawsuit. However, to reach a settlement and put years of litigation behind us, we have agreed to make some operational changes and a monetary payment to the provider class involved in the case.”

Settlement in Billing Lawsuit

In North Carolina, Aetna and Optum agreed to a settlement in a long-running class action lawsuit alleging their billing practices violated the Employee Retirement Income Security Act of 1974 (ERISA).

As explained in court documents, plaintiff Sandra M. Peters was covered by an ERISA plan self-funded by Mars Inc. and administered by Aetna. The latter contracted with Optum to provide access to physical therapy, occupational therapy, and chiropractic services.

Peters alleged that Aetna, in collusion with Optum, fraudulently disguised the latter’s administrative fees as medical costs.

“These misrepresentations serve as the cover that allows Aetna to illegally (i) obtain payment of the Subcontractors’ administrative fees directly from insureds when the insureds’ deductibles have not been reached; (ii) use insureds’ health spending accounts to pay for these fees; (iii) inflate insureds’ co-insurance obligations using administrative fees; (iv) artificially reduce the amount of available coverage for medical services when such coverage is subject to an annual cap; and (v) obtain payment of the administrative fees directly from employers when an insured’s deductible has been exhausted or is inapplicable,” stated her original complaint, filed in 2015 in the US District Court for the Western District of North Carolina.

On Nov. 6, attorneys for Peters notified the court that they had settled the case. A month later, Optum said it had withdrawn from the settlement and was prepared to go to trial. Then, the parties appeared to resolve their remaining differences, and Peters’ attorneys filed notice on Dec. 17 that they had once again settled, Mealey’s reported. Terms of the settlement were not disclosed.

Owens and Minor Alleges Mismanagement of Self-Funded Plan

As reported by The Dark Report and various news outlets, Owens and Minor, a healthcare logistics company, filed a lawsuit in November against Anthem BCBS of Virginia, which had been administering Owens’ self-funded employee health plan since 2017.

The lawsuit, filed in the US District Court for the Eastern District of Virginia, alleged that Anthem “used Plan funds to enrich itself and its affiliated companies and medical providers to the Plan’s detriment,” according to court documents.

The complaint further stated that “Defendant acted contrary to the fiduciary standards imposed by ERISA by, among other things, (i) paying more for healthcare claims than was even billed, (ii) securing kickbacks from providers, (iii) double-paying claims, and (iv) pocketing rebates belonging to Plaintiff.”

Owens initially requested plan data from Anthem in September 2021, but Anthem refused to do so, the complaint stated. “Eventually, Plaintiff had to sue Defendant to obtain its own data. Now that Plaintiff has a portion of that Plan data and has had the opportunity to analyze it, it is clear why Defendant fought so hard to prevent Plaintiff from accessing it.”

Becker’s Payer Issues noted that the lawsuit “reflects a wider legal trend for employers and health plan administrators navigating ERISA requirements. Under the law, plan fiduciaries must act in the best interests of beneficiaries by seeking the lowest reasonable costs for services. Recent amendments, such as the Consolidated Appropriations Act of 2021, have heightened transparency requirements, leaving employers with new tools—and new pressures—to ensure compliance.”

DOJ Alleges Overcharges Related to Military Managed Care

On March 13, the US Department of Justice (DOJ) announced that it had sued six health plans that participate in the Uniformed Services Family Health Plan (USFHP) program, which provides health benefits to military retirees and their families. The government alleged that the plans were aware of calculation errors that had inflated payment rates by more than $300 million between 2008 and 2012.

“The Plans failed to report or return any of those overpayments and, in fact, continued submitting claims to the government at the improperly inflated rates for several more months,” the complaint states.

Named as defendants were:

Shortly after filing the lawsuit, US Family Health Plan Alliance issued a statement describing the allegations as “meritless,” Becker’s Payer Issues reported. The group said that the plans and the government had “expressly negotiated [payment rates] in a fixed-rate contract more than 10 years ago.”

These developments are clear signals in the market that self-insured employers, along with providers—including physicians, hospitals, and medical laboratories—have growing evidence that certain health insurance companies are gaming the system and not paying claims according to contractual arrangements. Expect to see more lawsuits against health plans, particularly by self-insured employers because, for them, the sums involved can be in the tens of millions of dollars.

—Stephen Beale

Related Information:

Blue Cross Blue Shield Settles US Health Provider Class Action for $2.8 Billion

Blue Cross Blue Shield to Pay $2.8B to Settle Class Action Provider Antitrust Case

Blue Cross Blue Shield Settles for $2.8 Billion to Providers in Antitrust Class Action

BCBS Reaches Record Antitrust Settlement for $2.8B

Optum, Aetna Agree to Settle ‘Dummy Code’ Lawsuit

North Carolina Court Certifies Nationwide Class in Healthcare Fee Challenge

The ERISA Edit: Health Plan Excessive Fee Litigation Against TPAs Continues

‘A Fox in the Henhouse’: Owens and Minor Sues Anthem in Latest Data Transparency Lawsuit  

Owens and Minor Sues Anthem, Accusing Insurer of Mishandling Claims

Owens and Minor Sues Anthem over Mismanaging Health Plan, Lack of Transparency

Feds Sue Six Health Plans for Allegedly Hiding Overpayments

Debut of ixlayer on Inc. 5000 List of Fastest Growing Businesses for 2023 Indicates a Dynamic Clinical Laboratory Test ‘Middleman’ Sector

Growth of the middleman company is a sign of increased credibility and acceptance among its client organizations

There’s a new category of player in the clinical laboratory testing industry. It is the “middleman” company. One high-profile example of a middleman company in diagnostics is the company ixlayer of San Francisco, which has a novel plan for growth.

The software developer provides cloud-based diagnostic testing platforms to retailers, health plans, and biopharma companies. Medical laboratory tests are not processed by ixlayer, however, but are instead sent to independent CLIA-certified clinical labs for completion and results reporting.

Thus, ixlayer acts as a third-party “middleman” in the lab testing chain.

Ixlayer recently debuted as number 1,418 on the 2023 Inc. 5000 list of fastest-growing private companies in the US, according to a company news release. Might this signal a dynamic and expanding clinical laboratory middleman sector?

There are a number of other established middleman companies doing this on the web as well, including:

Produced by Inc. Business Media, the Inc. 5000 list is based on data analysis of the fastest growing private businesses in the US. Ixlayer reportedly grew its 2023 revenue 100% year-over-year. 

Pouria Sanae

“To be selected for the Inc. 5000 list is an honor that validates the value we deliver while enabling greater access to care for all,” said Pouria Sanae (above), co-founder and CEO of ixlayer. “We’ve developed a platform that powers millions of diagnostic tests each year and serves as the backbone of thousands of health testing programs for trusted health brands, healthcare delivery organizations, payers, and life sciences companies. I’m excited about the future as we redefine and simplify the diagnostic laboratory testing ecosystem.” (Photo copyright: ixlayer.)

Ixlayer Works with Retailers, Insurers, Biopharma, and Clinical Labs

Ixlayer “facilitates” tests by working with industry partners and clinical laboratories, Managed Healthcare Executive explained.

One such relationship is with retailer CVS, Fierce Healthcare reported. Ixlayer provides the cloud-based diagnostics platform, at-home sample collection kits, and coordination of testing services for some of the pharmacy company’s at-home testing products. They include:

“With nearly 70% of medical decisions dependent on lab testing, regular diagnostic testing is a cornerstone of improving health and wellness,” Pouria Sanae, co-founder and CEO of ixlayer, told Drug Store News. “At-home testing enables people to proactively take control of their health, on their own schedule, in the privacy of their own home and on a regular basis. Our mission of creating a healthier world through more accessible, affordable, and easy health testing requires systemic changes and buy-in from key stakeholders and partners.”

Ixlayer directs specimens to independent labs that perform the tests and report results to consumers via an online portal.

“Founded in 2018, ixlayer initially focused on remote lab testing for Alzheimer’s disease patients. The company now offers thousands of white-labeled, at-home, and onsite health tests ranging from women’s wellness to sexually transmitted diseases and chronic condition management,” the news release notes.

“We’re thinking of it more from the perspective of: How do we infiltrate this infrastructure into our whole healthcare ecosystem? How do we let traditional providers run their programs the way they want to?” Alecia Pritchett, ixlayer Chief Growth Officer, told Managed Healthcare Executive.

Ixlayer “is not a lab,” Managed Healthcare Executive explained. “It describes itself as a platform. Instead of performing its own lab tests, it connects providers and retailers to accredited laboratory partners. Instead of sending out its own team of phlebotomists to collect blood samples, the company coordinates with mobile phlebotomy firms.”

“This comprehensive data visualization solution provides a more insightful analysis of testing performance data, empowering health plans, retailers, and biopharma organizations to monitor and manage progress in real-time effectively. With this actionable intelligence, decision-makers can focus on addressing gaps in care, accelerating access to critical drug studies, and promoting greater health equity to improve clinical and quality outcomes and economics across the healthcare ecosystem,” said David Yu, Chief Product Officer at ixlayer, in a news release.

Any Lab Test Now Also Makes Inc.’s 5000 List

Also making the 2023 Inc. 5000 list is Any Lab Test Now, an Alpharetta, Ga.-headquartered laboratory franchise that was founded in 2007. Any Lab Test Now is another form of middleman company which bills itself as the nation’s first direct access lab testing service with 200 locations. This is Any Lab Test Now’s second consecutive year on the list, according to a news release.

Unlike ixlayer, Any Lab Test Now’s business model features independently owned and operated locations around the US. Customers go online to choose a testing location, pay for tests, and schedule an appointment. Tests include:

At-Home Testing Market Growing

Allied Market Research reported that the global at-home testing market is expected to grow by about 10.5% annually from 2022 to 2031, when it will reach $45.5 billion.

Another middleman company offering at-home tests is Everlywell of Austin, Texas. Other middleman companies that enable consumers to order tests online and then visit a local clinical laboratory for specimen collection include Testing.com and Walk-In-Lab.com.

Ever since the COVID-19 pandemic, demand for at-home sample collection testing has grown steadily. Dark Daily has covered this in numerous ebriefs. That middleman companies are showing up on the Inc. 5000 list of fastest growing companies indicates that the middleman sector of the clinical laboratory testing industry is growing as well.

—Donna Marie Pocius

Related Information:

ixlayer Joins the Inc. 5000 List of Fastest Growing Companies in America

2023 Inc. 5000 List Company Profile: ixlayer

Health Tech Startup ixlayer Partners with CVS on Home Health Tests

ixlayer Enhances At-Home Diagnostic Health Testing Platform with Cutting-Edge AI and Data Visualization

Any Lab Test Now Lands on Prestigious Inc. 5000 for Second Consecutive Year

What’s Next for At-home Diagnostic Testing: Four Trends to Watch in 2024

Allied Market Research: Home Testing Market

Vitals Study Shows Consumers Using Cost Transparency Tools Select Clinical Laboratories with Low Test Prices

Researchers find shopping for medical laboratory tests increased by nearly 50%, and people are saving more than a million dollars annually by shopping for blood tests

Each year, more consumers use online healthcare price-shopping tools to find hospitals, physicians, and clinical laboratories that have the lowest prices. And medical laboratory tests is among the top services on their lists!

Researchers at Vitals of Lyndhurst, NJ, a company that publishes online physician ratings, analyzed how consumers were using its price and quality transparency tools. They confirmed that shopping for medical laboratory tests/blood work is one of the top healthcare procedures checked by consumers.

According to a recent Vitals press release, approximately 46% more people shopped for blood tests in 2015 than the year before, and they saved $1,149,682 by doing so. That’s because their health plans reward them for selecting good quality and low-price providers, as well as adopting healthy behaviors, such as losing weight, exercising more, and lowering high cholesterol scores. (more…)

American Medical Association’s Study of Nation’s 25 Largest Health Insurers Indicates that Biggest Companies Hold Dominant Market Share in Most Regional Markets

Survey results show pathologists and clinical lab managers why largest health insurers have market clout and can exclude local labs from their provider networks

Over the past two decades, ongoing mergers and acquisitions of health insurance organizations have led to ever-greater concentration of market share, even as the number of large health insurance companies has shrunk. One consequence of this trend is that many clinical laboratories and anatomic pathology groups have lost access to managed care patients.

The degree of market concentration will surprise most pathologists and medical laboratory professionals. The concentration of market ownership is clearly demonstrated by the fact that the 25 largest health insurers in the United States now control two-thirds of this $744-billion market. But the largest plans are not necessarily the best, according to 2013 consumer satisfaction surveys conducted by J.D. Power & Associates. (more…)

HEDIS Data Provides Evidence that Physicians Are More Effective in Using Clinical Pathology Laboratory Tests Improve Patient Care

NCQA published annual report showing increased rates of screening for most of its HEDIS quality measures and medical laboratory testing often plays a role in these screening activities

For almost a decade now, clinical laboratories and pathology groups have been asked by many private payers to provide laboratory test data for a number of clinical services. In turn, these private health insurers annually submit this data to the Healthcare Effectiveness Data and Information Set (HEDIS) program managed by the National Committee for Quality Assurance (NCQA).

Although their medical laboratories regularly feed this data to payers, few pathologists or lab administrators track how HEDIS data is used by NCQA. Thus, it is useful to know that, over the years, HEDIS data provides evidence that better utilization of certain clinical laboratory tests by physicians directly contributes to measurable improvements in patient outcomes across the United States.
(more…)

;