It’s the latest example of how the ongoing SARS-CoV-2 pandemic is making it possible for new competitors to enter the clinical laboratory marketplace
In response to increasing demand for COVID-19 testing, warehouse retailer Costco (NASDAQ:COST) is seizing the opportunity to sell at-home saliva self-collection test kits to its customers. It makes Costco the latest company to enter the market for SARS-CoV-2 testing and compete against clinical laboratories.
And these non-invasive tests—which are as simple as spitting saliva into a container and mailing it to a medical laboratory—may be more effective at detecting the SARS-CoV-2 coronavirus than uncomfortable nasal swabs.
Costco is selling its COVID-19 Saliva PCR Test Kit for $129.99 ($139.99 with video observation). Included in the price is a self-collection device, a biohazard bag, a sticker for personal data, and a box for shipping the saliva to a medical laboratory.
The test is actually P23 Labs’ TaqPath SARS-CoV-2 assay and will be administered by Azova, a digital health services provider. P23 says their test has a 98% sensitivity and 99% specificity, according to Business Insider.
The Costco P23 test kit above, “uses parts from Thermo Fisher Scientific and works with collection kits made by testing companies Everlywell and OraSure Technologies, according to the FDA and a P23 spokesperson,” Business Insider reported. “Samples are tested in [P23’s] lab in Little Rock, Arkansas.” (Photo copyright: Costco.)
Saliva-Collection Kits Gain Popularity and FDA Emergency Use Authorizations
P23 Labs’ assay is one of 12 COVID-19 home tests that have received US Food and Drug Administration (FDA) Emergency Use Authorization (EUA). Three of which use saliva specimens.
The FDA’s EUA authorization summary for the P23 assay states it is “for use with saliva specimens that are self-collected at home or in a healthcare setting with or without the supervision and/or assistance of [a healthcare provider (HCP)], by individuals using the P23 At-Home COVID-19 Test Collection Kit, when determined to be appropriate by an HCP based on the results of a COVID-19 medical questionnaire. This test is also for use with nasal swab specimens that are self-collected at home or in a healthcare setting with or without the supervision and/or assistance of an HCP by individuals.”
In a news release announcing the first diagnostic test using saliva specimens, oncologist and FDA Commissioner Stephen Hahn, MD, said that “Authorizing additional diagnostic tests with the option of at-home sample collection will continue to increase patient access to testing for COVID-19. This (saliva sample collection) provides an additional option for the easy, safe, and convenient collection of samples required for testing without traveling to a doctor’s office, hospital, or testing site.” That test was manufactured by Clinical Genomics laboratory of Rutgers New Jersey Medical School.
Below is a list from Business Insider for at-home self-collection SARS-CoV-2 coronavirus tests that have received an FDA EUA. Most can be ordered online, and prices range from $109 to $149, which may be covered by insurance depending on the health plan.
Binx Health Home Nasal Swab COVID-19 sample collection kit
Yale Study Indicates Saliva Tests Have Greater Detection Sensitivity over Swab
Should consumers choose COVID-19 saliva tests over nasal cavity swab tests? Maybe.
A study led by the Yale School of Public Health found and “conducted at Yale New Haven Hospital with 44 inpatients and 98 health care workers—found that saliva samples taken from just inside the mouth provided greater detection sensitivity and consistency throughout the course of an infection than the broadly recommended nasopharyngeal (NP) approach. The study also concluded that there was less variability in results with the self-sample collection of saliva,” states a Yale University news release.
Anne Wyllie, PhD, Associate Research Scientist at Yale School of Public Health, told Time magazine, “Saliva itself is a newer diagnostic method, and a lot of people don’t know how to work with it, are scared to work with it, or not sure how to work with it. Just because a protocol is working with swabs doesn’t mean the same protocol will work with saliva.” Nevertheless, public demand for less invasive COVID-19 testing means clinical laboratories may soon be receiving more requests for processing saliva over nasal swabs. (Photo copyright: Yale University.)
Yale received FDA EUA for SalivaDirect, a real-time quantitative polymerase chain reaction (RT-qPCR) for detection of SARS-CoV-2. However, SalivaDirect is not an “at-home” test. It requires saliva samples to be self-collected into a sterile container in the presence of a healthcare professional, and is being provided by Yale to clinical laboratories as an “open source” protocol, the FDA said in a news release.
“We are trying to work with smaller local labs that want to get up and running to support schools, community groups, universities, and colleges,” Wyllie told Time.
In “Saliva or Nasopharyngeal Swab Specimens for Detection of SARS-CoV-2,” published in the New England Journal of Medicine (NEJM), Wyllie and others suggest saliva can be just as effective in detecting the coronavirus that causes COVID-19. In their study, COVID-19 patients who were tested by healthcare workers using nasopharyngeal swabs were then asked to collect their own saliva samples.
The researchers found that “Collection of saliva samples by patients themselves negates the need for direct interaction between healthcare workers and patients. This interaction is a source of major testing bottlenecks and presents a risk of nosocomial infection. Collection of saliva samples by patients themselves also alleviates demands for supplies of swabs and personal protective equipment. Given the growing need for testing, our findings provide support for the potential of saliva specimens in the diagnosis of SARS-CoV-2 infection.”
The Yale scientists used primer sequences identified by the Centers for Disease Control and Prevention to detect the coronavirus. They found more SARS-CoV-2 RNA in saliva specimens than in the nasopharyngeal swab specimens. Also, 81% of saliva samples were positive one to five days after diagnosis, as compared to 71% of the nasopharyngeal swab specimens.
“The findings suggest saliva specimens and nasopharyngeal swab specimens have at least similar sensitivity in the detection of SARS-CoV-2 during the course of hospitalization,” the researchers wrote in their NEJM paper.
The increasing popularity of at-home COVID-19 testing—along with studies showing that results improve when specimens are self-collected—suggest that medical laboratory managers should closely monitor the rise of COVID-19 home tests, as well as progress being made in saliva for diagnosing the SARS-CoV-2 coronavirus.
Further, it might be a smart strategy for clinical laboratories with the capability to perform this testing to approach retailers in their region and establish relationships where retailers sell the collection kits, and the lab performs the test and reports the results.
Since patients pay cash for the SARS-CoV-2 tests at the time they purchase the kits, clinical labs are guaranteed payment for the tests without the need to submit claims to consumers’ insurance companies. That’s another benefit to these types of arrangements.
United Airlines creates pilot program for on-site rapid PCR tests, as other airlines facilitate at-home specimen collection for rapid coronavirus testing
Four US airlines attempting to recover lost business due to the COVID-19 pandemic are partnering with developers of rapid RT-PCR (reverse transcription polymerase chain reaction) tests to facilitate testing of passengers either at airports before they board their flights, at drive-through testing sites, or at-home in advance of scheduled travel.
This would be a great opportunity for clinical laboratories to gain business, but few details are known about how these airlines are selecting providers for the COVID-19 tests that will be part of their programs.
The deals come amid calls from the International Air Transport Association (IATA) “for the development and deployment of rapid, accurate, affordable, easy-to-operate, scalable and systematic COVID-19 testing for all passengers before departure as an alternative to quarantine measures” in many countries, states an IATA press release.
“The key to restoring the freedom of mobility across borders is systematic COVID-19 testing of all travelers before departure,” said Alexandre de Juniac, IATA Director General and CEO, in the IATA press release. “This will give governments the confidence to open their borders without complicated risk models that see constant changes in the rules imposed on travel.”
From a clinical laboratory testing perspective, the requirement for passengers to be tested prior to travel may contribute to two changes in the lab testing marketplace:
Consumers may become accustomed to buying home collection kits for COVID-19 and sending specimens to clinical laboratories. This could have the added benefit of helping consumers become comfortable doing this for other diagnostic tests as well.
Pursuit of profit from manufacturing COVID-19 tests that utilize consumer-collected specimens may increase competition in this market and would likely increase the number of at-home specimen collection products that are easier and more convenient to use.
US carriers offering the COVID-19 tests include United Airlines, American Airlines, Hawaiian Airlines, and JetBlue.
United Airlines
United is providing on-site testing through pilot programs at San Francisco International Airport (SFO) and Newark Liberty International Airport (EWR). At SFO, passengers are tested before taking flights to Hawaii. At EWR, they are tested prior to boarding a thrice-weekly flight to London Heathrow.
“We believe the ability to provide fast, same-day COVID-19 testing will play a vital role in safely reopening travel around the world and navigating quarantines and travel restrictions, particularly to key international destinations like London,” said Toby Enqvist, United’s Chief Customer Officer, in a press release.
United began offering testing at SFO on Oct. 15. According to “COVID-19 Testing for United Travelers,” the San Francisco to Hawaii passengers have two options:
A $105 drive-through test administered two or three days prior to flights by Color, a San Francisco Bay area health technology company.
The airline says a negative test ensures that travelers can bypass Hawaii’s mandatory quarantine requirements in Lihue, Maui, and Honolulu. For the Newark-to-London flights, United plans to run a pilot rapid testing program from Nov. 16 to Dec. 11. for passengers boarding Flight 14, departing at 7:15 p.m. Mondays, Wednesdays, and Fridays. Premise Health will administer the testing, which will be free to passengers. Those who choose not to be tested will be placed on other flights.
A United Airlines flight attendant (above) receives an RT-PCR test for COVID-19 prior to boarding. If the flying public embraces preflight coronavirus testing, including at-home specimen collection kits, clinical laboratories may see a spike in requests for test processing. (Photo copyright: The Washington Post.)
American Airlines
American is offering COVID-19 testing for passengers scheduled on flights to Hawaii, Latin America, and the Caribbean, according to a press release. For the most part, these are at-home specimen collection RT-PCR tests provided by healthcare testing services company PrivaPath Diagnostics, Inc. (d.b.a., LetsGetChecked). Customers receive their results within 24 to 72 hours after the lab receives the samples.
As with the United flights to Hawaii, the testing program allows passengers to bypass quarantine requirements at their destinations. Customers pay $119 for the LetsGetChecked at-home specimen-collection kit and subsequent RT-PCR testing.
“Our initial preflight testing has performed remarkably well, including terrific customer feedback about the ease and availability of testing options,” American Airlines President Robert Isom said in the press release.
Hawaiian Airlines and JetBlue
In separate press releases, Hawaiian Airlines and JetBlue announced partnerships with Vault Health to offer at-home saliva tests to passengers. After receiving the at-home specimen collection kit, customers can connect through Zoom video conferencing with a Vault Health supervisor who ensures the sample is collected properly.
Hawaiian Airlines also offers drive-through testing at SFO and Los Angeles International Airport through a partnership with Worksite Labs. Passengers pay $90 to receive test results within 36 hours or $150 for express service on the day of travel. Worksite uses a Droplet Digital PCR shallow nasal swab test. The airline says it plans to expand this to other airports.
The Vault Health and Worksite Labs tests meet the state’s guidelines for exemption from the 14-day quarantine requirement, the airlines say.
Impact on Medical Laboratories
Airlines offering COVID-19 testing to their passengers may trigger both an opportunity and a change in the clinical laboratory testing marketplace. First, there is a business opportunity for labs to provide rapid molecular SARS-COV-2 tests to airlines.
Second, if consumers begin using at-home specimen collection kits in greater numbers as part of their air travel requirements, might this make them more comfortable doing self-collection for other types of clinical laboratory tests? A shift in consumer willingness to collect their own medical laboratory specimens—accompanied by ongoing innovations in diagnostic technologies, may eventually reduce the need for medical labs to operate extensive networks of patient service centers.
Of course, such a scenario is years away. But airline COVID-19 testing programs are just one of the progressive steps that can help make that possibility into a reality.
Clinical laboratory managers and pathology practice administrators should consider how these trends may affect their business and patients when planning for the future.
The McKinsey graphic above illustrates the “six trends that are likely to shape post-COVID-19 healthcare.” Clinical laboratories that support health networks struggling with any of these challenges should take steps to prepare for anticipated changes to healthcare delivery. (Graphic copyright: McKinsey and Company.)
1: Healthcare Reform
McKinsey identified three areas where the coronavirus pandemic may impact healthcare reform:
“COVID-19-era waivers that could become permanent.
“Actions that may be taken to strengthen the healthcare system to deal with pandemics.
“Reforms to address the COVID-19-induced crisis.”
McKinsey reports that “the Centers for Medicare and Medicaid Services has introduced more than 190 waivers since the beginning of March 2020.” These waivers can affect all aspects of healthcare, from clinical practice to reimbursement. Some of them, according to McKinsey, are “only relevant during the crisis (for example, the waiver of intensive care unit death reporting). A retrospective assessment of others (for example, expansion of telehealth access) could reveal beneficial innovation worth preserving.”
Several areas that McKinsey says are clearly ripe for reform include improving the resiliency of the healthcare system and the way the system is funded.
Public sector budgets are generally kept strictly separate, each with its own rules and policies that dictate operations. But in his article, “After COVID-19—Thinking Differently About Running the Health Care System,” published in JAMA Health Network, Stuart M. Butler, PhD, Senior Fellow in Economic Studies at the Brookings Institution, wrote, “The intensity of the COVID-19 pandemic … is forcing jurisdictions all across the country to find ways to be nimble so that multiple agencies can work together.”
Thus, McKinsey recommends, “Given the substantial shifts in relative market positioning among industry players that prior reforms have created, leaders would do well to plan ahead now.”
2: Better Access to Healthcare Services
Some people who develop COVID-19 are at far greater risk of hospitalization and death than others, including those who have:
Chronic health conditions, including obesity.
Mental and behavioral health challenges, such as substance abuse.
Unmet social needs, such as food or housing insecurity.
Poor access to healthcare.
McKinsey wrote that these “intersecting health and social conditions,” combined with certain races that have higher risk for severe complications, including Black, Indian, and Hispanic/Latino Americans, “correlated with poorer health outcomes.”
Value-based healthcare, telehealth, and greater attention to the social determinants of health may help address some of these issues, McKinsey notes, but the pandemic has shined a spotlight on how lack of care increases risk for certain populations during a public health crisis.
3: Era of Exponential Improvement Unleashed
Some of the trends that appear to be accelerating as a result of the pandemic are good news. McKinsey cites several benefits, including:
Improved understanding of patients.
Delivery of more convenient and individualized care.
$350-$410 billion in annual revenue by 2025.
Through telehealth and other types of virtual care enabled by digital technology, “intuitive healthcare ecosystems” may arise and offer a more integrated experience for patients and their caregivers, McKinsey notes.
“While the pace of change in healthcare has lagged other industries in the past, potential for rapid improvement may accelerate due to COVID-19. An example is the exponential uptake of digitally enabled, virtual care,” McKinsey wrote. “Our analysis … showed that health systems, primary care, and behavioral health practices are reporting increases of more than 50–175 times in telehealth visits, and the potential market size for virtual care could reach around $250 billion.”
The graphic above is taken from the McKinsey and Co. report, which noted, “Proliferation of digitally enabled, virtual care could further contribute to the rise of personalized and intuitive healthcare ecosystems [that] have the potential to deliver an integrated experience to consumers, enhance productivity of providers, engage both formal and informal caregivers, and improve outcomes while lowering cost.” (Graphic copyright: McKinsey and Company.)
4: The Big Squeeze
The pandemic has caused an enormous outflow of cash from the healthcare system, and some experts don’t expect an injection of funding until 2022. “This outflow is expected to be primarily driven by coverage shifts out of employer-sponsored insurance and possible coverage reductions by employers as well as Medicaid rate pressures from states,” McKinsey states.
“We estimate that COVID-19 could depress healthcare industry earnings by between $35 billion and $75 billion compared with baseline expectations,” McKinsey predicted, adding, “Select high-growth segments will remain attractive (for example, virtual care, home health, software and platforms, specialty pharmacy) and will disproportionally drive growth. These high-growth areas are expected to increase more than 10% over the next five years, while other segments may stagnate or decline altogether.”
5: Fragmented, Integrated, Consolidated Care Delivery
McKinsey says, “The shift of care out of hospitals is not new but has been accelerated by COVID-19.” Rather than the hospital being the center of care delivery, patients are increasingly choosing to receive care at a range of sites across many healthcare ecosystems that are connected digitally and through analytics.
Early in the course of the pandemic, visits to ambulatory care facilities dropped nearly 60% by early April. But by mid-May, those visits were beginning to rebound.
In, “The Impact of the COVID-19 Pandemic on Outpatient Visits: A Rebound Emerges,” the Commonwealth Fund reported that “the relative decline in visits remains largest among surgical and procedural specialties and pediatrics” but is “smaller in other specialties, such as adult primary care and behavioral health.”
The McKinsey graphic above shows how “virtual care and outpatient options show more potential revenue growth through 2022.” Clinical laboratories that support those healthcare settings, especially ambulatory surgery, behavioral health, and retail clinics, should experience similar growth. (Graphic copyright: McKinsey and Company.)
6: Adoption of Next-Generation Managed Care Is Accelerating
How will COVID-19 affect the managed care industry? McKinsey says the “next generation” of managed care might use Medicare Advantage as a model.
“Payers pursuing the next generation of managed care model (through deep integration with care delivery) demonstrate better financial performance, capturing an additional 50 basis points of earnings before interest, taxes, depreciation, and amortization above expectation,” McKinsey noted, adding, “Employers and payers could consider fundamentally rethinking how employer-sponsored health coverage is structured. Learning from Medicare Advantage could provide inspiration for such a reimagination.”
What Should Clinical Laboratory Managers Do?
The McKinsey article concludes by stating, “While the challenges are numerous, leaders who seize the mindset that “disruptive change provides an opportunity to separate yourself from the pack” will build organizations meaningfully stronger than the ones they ran going into the crisis.”
The McKinsey article authors recommend that healthcare organizations take several proactive steps, including:
Launch a plan-ahead team.
Question your role and your future business model.
Prepare to transform your business.
Reimagine your organization to make faster decisions.
Take action to drive health equity.
Though the McKinsey and Company article covered healthcare in general, many of the authors’ observations and recommendations can apply to clinical laboratories and pathology groups as well and may be valuable in future planning.
This fourth edition of the annual event will be held virtually with free registration for pathologists and clinical laboratory professionals
In its fourth year, stakeholders in the clinical laboratory community have promoted thought leadership around the Lab Industry at the Project Santa Fe Foundation’s Clinical Lab 2.0 Workshop. Clinical Lab 2.0 (CL 2.0) which identifies new opportunities for medical labs to add value as the healthcare industry transitions from fee-for-service to value-based delivery models. But how does this concept apply during the era of COVID-19? That’s a key question participants will discuss at the 2020 Clinical Lab 2.0 Workshop, a virtual event scheduled for Oct. 26-27 with a focus on Population Health.
“This workshop will help all clinical laboratory leaders and pathologists to better understand, ‘How do we manage a pandemic, identifying high risk pool, where are the care gaps, and how do we better manage in the future proactively?’” said Khosrow Shotorbani, MBA, MT (ASCP), co-founder of the CL2.0 initiative and a regular speaker at the Executive War College, in an exclusive interview with Dark Daily. He is President and Executive Director of the Project Santa Fe Foundation, the organization that promotes the Clinical 2.0 Movement.
The coronavirus pandemic has “truly elevated the value of the clinical laboratory and diagnostics as one essential component of the care continuum,” he noted. “The value of the SARS-CoV-2 test became immense, globally, and the mantra became ‘test to trace to treat.’”
Project Santa Fe Foundation’s website defines Clinical Laboratory 2.0 as an effort to demonstrate “the power of longitudinal clinical lab data to proactively augment population health in a value-based healthcare environment.” The “goals are to improve the clinical outcomes of populations, help manage population risk, and reduce the overall cost of delivering healthcare,” the CL 2.0 website states.
“It’s about harnessing lab test results and other data that have predictive value and can help us proactively identify individuals that need care,” explained Shotorbani. “In the context of population health or value-based care, our labs potentially can utilize the power of this data to risk-stratify a population for which we are responsible or we can identify gaps in care.”
Clinical Lab 2.0 and the SARS-CoV-2 Pandemic
In the context of COVID-19, “Clinical Lab 2.0 argues that there is a hidden universe of value that can help augment what happens between COVID-19 testing and COVID-19 tracing to convert this reactive approach—meaning we wait for the person to get ill—versus considering who may be most at risk if they were to become infected so that our clinical laboratories can help caregivers create proactive isolation or quarantine strategies,” he added.
Shotorbani then explained how clinical laboratories have data about comorbidities such as diabetes, asthma, heart disease, and immunosuppression that are associated with more serious cases of COVID-19. “This clinical lab data can be harnessed, associated with demographic and risk data such as age and zip codes to help physicians and others identify patients who would be most at risk from a COVID-19 infection,” he noted.
“Historically, the primary focus of a clinical laboratory was very much on the clinical intervention, contacting the care manager physician, and identifying who’s at risk,” he said. But with COVID-19, Shotorbani sees opportunities to forge relationships with public health specialists to encourage what he describes as “consumer engagement.”
“As medical laboratory professionals, we must evolve to accommodate and support the needs of consumers as they take a more active role in their health,” he continued. “This is moving past simply providing lab test results, but to then be a useful diagnostic and therapeutic resource that helps consumers understand their health conditions and what the best next steps are to manage those conditions.”
Khosrow Shotorbani (above) is President, Executive Director, of the Project Santa Fe Foundation and one of the leaders of the Clinical Laboratory 2.0 movement. He is hopeful that the prominent role of medical laboratories in responding to the coronavirus pandemic will lead to an ongoing “seat at the table” in the higher echelons of healthcare organizations. In normal times, “we reside in basements, and we’re done when we release a result,” he said during an exclusive interview with Dark Daily. “COVID-19 was a kick in the rear to get us upstairs to the C-suite, because healthcare CEOs are under the gun to demonstrate more SARS-CoV-2 testing capacity.” Looking ahead, “we want to make sure that our clinical laboratories stay in that seat and design a future delivery model above and beyond COVID-19, maybe even help health systems, hospitals, and other providers drive their strategies.” (Photo copyright: Albuquerque Business First.)
“None of these are pathologists or come from the lab,” Shotorbani said. “They represent the C-suite and higher organization constituents. These are the healthcare executives who are dealing with their organization’s pain points. As clinical labs, we want to align ourselves to those organizational objectives.”
Pathologist Mark Fung, MD, PhD, will then present a CL 2.0 model for managing COVID-19 or other infectious disease pandemics, followed by a response from the other panelists. Fung is Vice Chair for Population Health in the Department of Pathology and Laboratory Medicine at the Larner College of Medicine at the University of Vermont. He is also on the Project Santa Fe Foundation (PSFF) board of directors.
“Lab 2.0 is a thought leadership organization,” Shotorbani said. “We are developing a template and abstract of this model of clinical laboratory services that other labs can follow while applying some of their own intuition as they make it operational.”
Day Two to the CL 2.0 workshop will feature case studies from the Henry Ford Health System in Detroit and Geisinger Health in Danville, Pa., followed by a discussion with eight PSFF directors. Then, Beth Bailey of TriCore Reference Laboratories in Albuquerque, N.M., will preside over a crowdsourcing session with participation from audience members.
Free Registration for Clinical Laboratories
This will be the first Clinical Lab 2.0 Workshop to be held virtually and registration this year will be free for members of the clinical laboratory community, Shotorbani said. In the past “there has been a hefty tuition to get into this because it’s a very high-touch workshop, especially for senior leaders. But given the critical topic that we’re facing, we felt it was important to waive the cost.”
The Fourth Annual Clinical Lab 2.0 Workshop is partnering this year with the American Society for Clinical Pathology (ASCP), which will provide the software platform for hosting the event, he said. In addition to the live conference sessions, registrants will have access to prerecorded presentations from past workshops. Content will be viewable for six months following the event.
Register for this critical event by clicking here, or by placing this URL in your browser (https://projectsantafefoundation.regfox.com/clinical-lab-20-workshop).
A former officer of a Cigna contractor claims the insurer hatched a scheme to submit invalid diagnostic codes and filed the now-unsealed qui tam action in 2017
In a case that could provide a cautionary tale for clinical laboratories, a federal whistleblower lawsuit alleges that Cigna, through its HealthSpring subsidiary, “received billions in overpayments from the federal government” in a scheme involving the insurer’s Medicare Advantage plans. The Qui tam (whistleblower) lawsuit was filed by Robert A. Cutler, a former officer of Cigna contractor Texas Health Management LLC (THM), under the federal False Claims Act.
Cutler alleged that “Cigna-HealthSpring has knowingly defrauded the United States through an intentional and systematic pattern and practice of submitting to CMS invalid diagnosis codes derived from in-home health assessments.” He claimed this took place “from at least 2012 until at least 2017,” and likely thereafter.
Cigna has denied the allegations. “We are proud of our industry-leading Medicare Advantage program and the manner in which we conduct our business,” the insurer stated in an email to HealthPayerIntelligence. “We will vigorously defend Cigna against all unjustified allegations,” Cigna stated.
As the lawsuit explains, Medicare Advantage (MA) plans are administered by private insurers under Medicare Part C. “Rather than pay providers directly based on the medical services provided, Medicare Part C pays MA Organizations a monthly capitated rate for each covered beneficiary, and tasks the MA Plan with paying providers for services rendered to plan members,” the lawsuit states. “MA insurers are generally paid more for providing benefits to beneficiaries with higher-risk scores—generally older and sicker people—and less for beneficiaries with lower-risk scores, who tend to be younger and healthier.”
The lawsuit notes that CMS relies on information—specifically ICD codes—from the insurers to calculate the risk scores.
Cigna’s 360 Program as Described in Lawsuit
Cutler alleged that Cigna defrauded CMS through its “360 Program,” in which primary care providers (PCPs) were encouraged to perform enhanced annual wellness visits that included routine physical exams. He claimed that “Cigna-HealthSpring designed the program so that, in practice, the 360 assessment was a mere data-gathering exercise used to improperly record lucrative diagnoses to fraudulently raise risk scores and increase payments from CMS.”
Cigna-HealthSpring, he alleged in the court documents, offered PCPs financial bonuses to perform the 360 program exams, especially on patients deemed most likely to yield high-risk scores. However, many clinicians declined, so the insurer recruited third-party contract providers, including THM, to send nurse practitioners (NPs) or registered nurses (RNs) to the homes of MA plan members.
For each visit, the NPs and RNs were given health reports listing the beneficiary’s previous diagnoses. “Cigna-HealthSpring intended the document to serve as a ‘cheat-sheet’ list of conditions and diagnoses it expected 360 contractors to capture during the in-home visit,” Cutler alleges. “The list of diagnoses did not indicate the date they were reported or any other information concerning their status.”
During each visit, which typically lasted 30-60 minutes, “NPs and RNs relied primarily on the patient’s self-assessment, i.e., subjectively reported information, as well as current medications to the extent available and, during certain time periods and for certain plan members, limited [clinical] laboratory findings,” Cutler alleged.
NPs were expected to record 20 or more diagnoses per visit, he wrote, including diagnoses based on “weak links” involving medications. “For example, Cigna-HealthSpring encouraged contractors to record atrial fibrillation, deep vein thrombosis, and pulmonary embolus based on the presence of certain classes of anti-coagulation medications on members’ medication lists or in their homes,” he stated.
He also alleged that “Cigna-HealthSpring, in purposeful violation of CMS rules, designed its 360 form to force NPs to capture diagnoses that were uncertain, probable, or merely suspected.”
These diagnoses were subsequently submitted as risk-adjustment data to CMS, he alleged, adding up to “hundreds of thousands of false claims from its six contractors during the relevant period. Although the exact amount will be proven at trial, the United States has paid billions of dollars in improper, inflated payments to Defendants under the MA Plan as a result of this scheme.”
The graphic above is taken from an AARP article, titled, “Medicare Under Assault from Fraudsters,” which states, “The amount of tax dollars that are lost each year to Medicare fraud and waste is greater than the entire annual budget of some of the federal government’s most important programs and departments.” Clinical laboratories also are in danger of being drawn into the federal government’s fraud investigations which can be disruptive to business and revenues. (Graphic copyright: AARP.)
The Federal False Claims Act “allows a private citizen to step into the shoes of and pursue a claim on behalf of the government,” explained the Boyers Law Group of Coral Gables, Fla., in an article for HG.org, which states, the lawsuit “may proceed with or without the assistance of the government.”
If the government chooses to intervene, the whistleblower, known formally as the “relator,” can receive 15% to 25% of the proceeds recovered in the action, the law firm explained in another article for HG.org, adding that, in most cases, the government does not intervene, which increases the potential award to 30%.
In the Cigna case, the US Attorney’s office notified the court on Feb. 25, 2020, that the government had decided not to intervene “at this time.”
Significance for Clinical Laboratories
Regardless of how this case proceeds, medical laboratory managers should remember that they are subject to legal action if internal whistleblowers identify policies or procedures that violate federal fraud and abuse laws. And because it involves coding, it is also a reminder of the importance of documenting diagnoses and clinical laboratory test orders as protection against fraud allegations.
Another benefit of carefully documenting each lab test order is that labs can make the information available when auditors from government or private payers show up and want documentation on the medical necessity of each lab test claim.
