The large insurer claims GS Labs charged more than five times the market rate for COVID-19 tests and administered additional tests to drive up the amount owed.
Blue Cross and Blue Shield of Minnesota has filed a lawsuit against COVID-19 testing laboratory GS Labs to recoup more than $10 million in alleged overpayments stemming from price inflation since the beginning of the pandemic.
The health insurer filed the complaint in the U.S. District Court of Minnesota last week, claiming the Omaha-based lab fraudulently charged more than five times the median market value for its most common COVID-19 test. Blue Cross also alleges that GS Labs administered additional tests just to increase the total amount it could charge the payer.
The price transparency requirement under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, says each COVID-19 testing provider is required to disclose specific cash prices on their website in the absence of a contractual payment agreement. According to Blue Cross, GS Labs intentionally posted inflated prices on their website with the intention of charging the payer larger amounts than what it was willing to accept from individual customers.
"It is our claim that GS Labs intentionally disregarded and misinterpreted federal guidelines for the sole purpose of maximizing profits during a public health emergency," Scott Lynch, senior vice president of pharmacy and chief legal officer at Blue Cross and Blue Shield of Minnesota, stated in a press release.
"After months of attempts at good-faith negotiations, we were unable to reach an agreement with GS Labs that would put in place appropriate COVID-19 testing practices at a fair price. It's egregious price-gouging like this that ultimately drives up the cost of health care for everyone," Lynch said.
In response, GS Labs spokesperson David Leibowitz told the Twin Cities Pioneer Press that the lawsuit amounts to “strong-arm gamesmanship” by the insurer and that Blue Cross owes the lab more than $1 million for thousands of tests.
"GS Labs has followed federal law to the letter," Leibowitz said. "Our posted cash price for COVID tests is in line with the marketplace across the U.S. and we have been paid that price or a negotiated rate by numerous insurers around the country."
GS Labs, which has eight facilities in Minnesota alone, said that its advertised cash price for a rapid COVID-19 antigen test was $179 in January, according to the report.
Blue Cross, meanwhile, stated its continued commitment to providing COVID-19 testing, treatment, and vaccines to all its members. "Since the start of the pandemic, Blue Cross has paid and processed claims for more than 3.5 million COVID-19 tests administered by thousands of different providers in Minnesota and across the country," the insurer said.
Jay Asser is the contributing editor for strategy at HealthLeaders.