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Tag: Quest

Suit Says Test Labs Cheat Medicare, Medicaid

Despite recent court settlements that recouped more than a quarter billion dollars from lab-test companies for allegedly overbilling California’s Medicaid program, the federal government seems to be ignoring similar schemes that drain Medicare coffers.

The cases involve the nation’s two largest medical laboratory-testing companies – Laboratory Corporation of America and Quest Diagnostics – that together control about half the annual $25 billion lab test market. The Medicare suits, filed in federal court in Manhattan by a former industry executive, claim the testing companies charged insurers like UnitedHealthcare unprofitably low rates while squeezing Medicare and Medicaid.

The whistleblower suits allege the schemes relied on sweetheart deals in which managed-care companies required in-network physicians to send their patients’ lab tests to a single testing company. As part of the deal for below-cost prices, the insurance companies allegedly promised to encourage physicians in their networks also to send Medicare and Medicaid patients to the same testing company, which then billed the Centers for Medicare and Medicaid Services (the federal agency that oversees both programs) or state Medicaid agencies at significantly higher rates.

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A Modest Health Care Economics Experiment to Fight Rising Costs

Healthcare providers, medical institutions, local pharmacies and pharmaceutical companies generally set the price of their products/services well above the payment they expect to receive from all insurers. These healthcare vendors set their fee schedule at 150%, 200% or 1,000% of the maximum payment they expect to receive from their most generous payor.

Here in Massachusetts, when a healthcare product or service is consumed and the patient has health insurance, the vendor submits a bill to the insurance company who specifies the “allowed fee,” which is considerably less than the “billed fee,” and the vendor “writes off” the balance of the  “billed fee” from their books.

For example, I recently had some blood tests done at Quest Diagnostics. Quest Diagnostics sent a bill to my insurance company for $660. The “allowed payment” was $110, so Quest wrote-off $550 and the “allowed payment” of $110 was divided between me and my insurance company.

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