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.
The insurer is opting for a name change to better reflect its purpose in the healthcare business.
Anthem is changing its name to Elevance Health to emphasize its commitment to "elevating whole health," the company announced today.
The rebrand by the insurer, which serves 118 million people through its affiliated companies, will be subject to shareholder approval but will not affect Anthem Blue Cross Blue Shield health plans' name.
"Improving health means more than just treating what ails us. We must address whole health and the physical, behavioral, and social drivers that impact it," said Anthem president and CEO Gail Boudreaux.
"This need has driven our transformation from a health benefits organization to a lifetime, trusted health partner. Our commitment to always expect more from ourselves has led us to reimagine the way we operate and take a more holistic approach to health. As Elevance Health, we will continue to work toward a healthcare system that better serves the needs of our consumers, care providers, communities, partners, and associates," Boudreaux said.
Anthem's portfolio has expanded over the years to offer more than just health insurance. Between pharmacy, behavioral, clinical, and complex care assets, along with its digital capabilities, the payer offers consumers a wide range of services. With the name change, Anthem believes Elevance Health better encompasses their mission as they seek continued growth.
"Elevance Health represents who we are today," said Boudreaux. "Powered by industry-leading capabilities and a digital platform for health, Elevance Health's companies will serve people across the entire care journey, connecting them to the care, support, and resources they need to lead healthy lives. By simplifying every step and making health more equitable and accessible, Elevance Health will remain committed to helping everyone reach their full potential."
There was no observed correlation between higher-priced hospitals and higher quality of care in certain markets, a study by the National Bureau of Economic Research found.
The assumption that higher prices translate to better quality of care was challenged by the study, which found that the relationship between the two is largely dependent on location and market size of the hospital. Mortality rates decreased in hospitals with higher prices in only unconcentrated markets, while no correlation was observed with hospitals in concentrated markets.
The cost of care at hospitals has steadily climbed over the years as mergers of health systems have impacted the bottom line for patients. The Department of Justice has even blocked acquisitions in an effort to curb monopolies and the undermining of competition.
To quantify any perceived connection between hospital prices and patient outcomes, researchers from the NBER gathered data from June 2007 to June 2014 from the Health Care Cost Institute for individuals aged 18 through 64 with employer-sponsored insurance provided by Aetna, Humana, or UnitedHealthcare. To overcome selection challenges, the study used data of patients who were transported to the hospital by ambulance, as ambulances are effectively randomly assigned to emergency calls.
The final sample consists of 202,408 admissions among 171,432 patients that occurred at 1,814 hospitals, with the mean hospital price of $14,652 and the standard deviation at $4,634. The researchers also used the Herfindahl-Hirschman Index (HHI) to measure the market concentration of the hospitals, with the mean hospital HHI in the study being 4,327 and the HHI at the 25th and 75th percentile being 2,344 and 5,422, respectively.
Ultimately, the study found that in markets with an HHI of less than 4,000, receiving care from hospitals with two standard deviations higher prices resulted in a 35% reduction in in-hospital mortality. For each life saved in this instance, the cost was an additional $1.09 million in health spending, "suggesting that higher priced hospitals are likely saving lives cost effectively," according to the researchers.
In concentrated markets, however, the study concluded that higher prices are more indicative of patients' lack of options and not quality of care. But with approximately 69% of hospitals in the U.S. located in markets with an HHI of greater than 4,000, competition isn't geographically feasible, according to the researchers.
That raises the topic of price regulation and whether patients would benefit from policymakers stepping in. While the strategy has cost-saving potential for hospitals and patients, it could also adversely affect quality of care.
"Our findings suggest policymakers should use caution in regulating hospital prices in less concentrated markets. Regulating prices in these markets has the scope to lower clinical quality," the researchers wrote. "Finally, while we cannot rule out a positive or negative relationship between price and quality in concentrated markets, our results suggest policymakers should consider regulating providers' prices where competition is geographically infeasible."
The health system said it will officially disband the process of turning Conifer into a standalone business following a turnaround in financial prospects.
Tenet Healthcare announced it will reverse course on its plans to spin off its revenue cycle management subsidiary Conifer Health Solutions citing the division's renewed financial profile and growth potential.
"We have achieved significant operational and financial progress within Conifer in the last few years and dramatically improved Tenet's profile across key financial metrics like adjusted EBITDA, free cash flow, and net debt leverage," Ron Rittenmeyer, executive chairperson of Tenet Healthcare, stated in a press release. "We believe that continuing to build on our progress with Conifer will provide greater returns for Tenet's shareholders."
The resolution of Conifer's fate closes the book on plans Tenet first put in motion more than four years ago to either sell the unit or spin it off into a standalone business. With cost-cutting in mind, Tenet announced in December 2017 it would begin exploring a potential sale of Conifer. Then, in July 2019, the company said it would officially pivot to a tax-free spinoff of the subsidiary to maximize Conifer's value.
Now, the health system, which operates 60 hospitals and approximately 550 outpatient centers, will keep Conifer in-house after an improvement in outlook. In their announcement, Tenet said Conifer's adjusted EBITDA margin has increased by more than 1,000 basis points since 2017 with expectations that the subsidiary will deliver revenue growth in the mid to high-single digits in the fiscal year 2022.
In addition to a strong margin and cash flow profile, Conifer should see benefits from revamped commercialization, new sales talent and technology, and new clients, according to Tenet.
"Conifer is primed with a robust pipeline and recent client wins with value that is not yet fully realized," said Saum Sutaria, MD, chief executive officer of Tenet Healthcare. "When coupled with ongoing efficiency opportunities from offshoring and automation, we have a compelling runway for the business."
Last month, Tenet reported a quarterly profit of $250 million—a drop-off from the $414 million in the fourth quarter of the previous year but an increase from $89 million to $153 million when removing COVID-19-related stimulus grant income. For the fiscal year 2021, net income was reportedly $915 million compared to $399 million for 2020.
Proposed legislation follows the lead of the No Surprises Act to take aim at surprise bills and price gouging from COVID-19 testing.
U.S. Representatives introduced the No Surprises for COVID-19 Tests Act last week to extend free COVID-19 testing while combating associated price gouging and surprise bills.
While Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020 to provide free COVID-19 testing for the public regardless of insurance coverage, some providers are using loopholes to slap patients with surprise bills for tests at unreasonable prices, according to the legislators.
The No Surprises for COVID-19 Tests Act would extend coverage of free testing beyond the public health emergency until December 31, 2023, with insurance companies required to continue providing coverage for related items and services without any cost-sharing such as health provider office visits, urgent care visits, and emergency room visits resulting in a COVID-19 test. The bill would also strike a provision of the CARES Act that allows providers to bill at whatever cash price they choose, causing price gouging of tests.
"Congress passed the Families First Coronavirus Response Act to ensure that everyone would have access to free and widely available COVID-19 testing," Frank Pallone, chairperson of the Energy and Commerce Committee, said in a statement.
"Unfortunately, some test providers are exploiting unintended loopholes in the system to unfairly price gouge and wrongfully bill patients for tests that should be free. The No Surprises for COVID-19 Tests Act will close these loopholes and ensure that Americans do not receive surprise medical bills for doing their part to stop the spread of COVID-19. Congress must act on this commonsense legislation soon," he added.
The legislation follows the No Surprises Act, which was signed in 2020 and took effect on January 1 to protect patients from surprise bills after receiving care. As support grows against unfair billing practices, the No Surprises for COVID-19 Tests Act appears to be a natural next step for Congress to take while the pandemic continues.
"One of the most critical steps Congress took at the onset of the pandemic was providing Americans with free COVID-19 testing and vaccinations. We must provide consumers with the certainty that this protection will remain in effect in the months ahead," said Robert Scott, chairperson of the Education and Labor Committee. "The last thing families need during this ongoing public health emergency is an unexpected medical bill for a COVID-19 test. This legislation will help ensure that all Americans can continue to access no-cost COVID-19 testing and slow the spread of COVID-19."
"I decided to join Clover because of where they sit in the healthcare ecosystem," Wai told HealthLeaders. "Leading a team building its own proprietary tech stack within an insurer allows us to prioritize developing functionality that makes the product more useful to physicians. At the end of the day, helping doctors practice more effectively and efficiently, by definition, means healthier patients.
"Additionally, Clover's unique position as a technology company and insurer has allowed it to build a data feedback loop to fuel consistent product iteration in close collaboration with its users – healthcare providers. I believe this gives Clover a significant advantage over so many others in the market and is part of why I'm so excited about the opportunity,” added Wai.
“With this new chapter of my career, I welcome the challenge to develop truly transformational technology that positively impacts the lives of hundreds of thousands of Americans today, and what I believe could be millions more in the future."
Before making the move to Clover, a company focused on healthcare plans for seniors, Wai oversaw functions such as product management, design, data analytics, and growth as senior vice president of product for Hinge Health. He has also held leadership positions at Yahoo and Google and began his career in venture capital, consulting, and engineering after earning a bachelor’s and master’s degree in computer science from Stanford University.
"Conrad is a world-class technologist and will take the lead on day-to-day Clover Assistant product development, engineering, and deployment," said Toy. "His background in driving success through constant product iteration at large technology organizations, combined with his healthcare background, makes him a perfect fit for realizing the full potential of the Clover Assistant."
Vidant Health is being accused of unfair billing and debt collection schemes after charging a patient 11 times the Medicare rate for a CT scan in 2018.
One of North Carolina's largest hospital systems is the target of a lawsuit alleging deceptive billing and debt collection methods.
George Cansler is accusing the 1,477-bed system Vidant Health of not informing him of how much his care would cost, as well as deploying FirstPoint Collection Resources for aggressive debt collection practices on the unpaid bills.
According to the lawsuit, Cansler visited the Vidant Chowan Hospital emergency room in Edenton, North Carolina in 2018 for extreme pain from a likely kidney stone. More than a year later, he received a bill from Vidant asking him to pay $3,119 for a CT scan, 11 times the Medicare rate for the procedure at the time.
Cansler also alleges he was not told of the price beforehand and that Vidant later falsely told him it was a violation of federal law for them to disclose prices to patients before care.
While Vidant's alleged actions predate the No Surprises Act, this is in direct opposition to the federal law which took effect January 1 and prevents healthcare organizations from springing surprise medical bills on patients. For people covered under group and individual health plans, the new protections deal with most emergency and non-emergency services from out-of-network providers at in-network facilities, while those who are uninsured or opt for self-pay will receive a good faith estimate that provides the cost of care up front.
Even so, Vidant’s practices were manipulative and highly unreasonable, according to Cansler and his attorneys.
"Surprise billing is a widely criticized, predatory practice and it is especially harmful when one hospital system is the monopoly provider in a region because patients have no alternatives for care," Jamie Crooks of the law firm Fairmark Partners, LLP, said in a statement. "This complaint alleges that Vidant has abused its monopoly by sending surprise bills demanding unreasonable prices for common procedures."
Cansler's lawsuit is asking the court to require Vidant to reimburse residents who were overbilled and put an end to their alleged surprise billing and debt collection practices.
The 2021 CAQH Index observed a savings opportunity of $1.7 billion annually for fully electronic claim submissions and a 60% increase in number of medical claim payments.
The cost savings opportunity for fully electronic claim submissions in the medical industry more than tripled in 2021, while claim payments boomed in volume as the benefit of automation remained apparent, according to the 2021 Council for Affordable Quality Healthcare Inc. (CAQH) Index.
The ripple effects of the COVID-19 pandemic were far-reaching and greatly impacted healthcare administrative transactions, which dealt with a rise in total spend in the past year, further highlighting the need for adoption of fully electronic processes across the board. The Index measured adoption, volume, and cost savings in the various transactions in 2021 and found an opportunity to save $1.7 billion on claim submissions with electronic methods—a massive leap from the $522 million reported for the previous year.
Though automation adoption for claim submissions remained highest of the transactions analyzed (97%), spending ballooned by 10% and accounted for $6.1 billion of the total annual medical spend, trailing only eligibility and benefit verification. As providers poured more time and resources into manual transactions to submit new information for telehealth or engage with health plans, spending on claim submissions increased.
With manual provider volume and cost per transaction going up and electronic costs declining, the result was a money savings opportunity of $1.7 billion and a time savings opportunity of six minutes on average per transaction.
On the claim payments side, lower utilization in the early months of the pandemic caused providers to settle past due payments, especially claims that were unresolved before COVID-19, according to the Index. This contributed to a 60% increase in total volume, which opposed the other transactions in the report.
Providers sought to be paid more quickly through electronic means and billed more regularly for telemedicine visits to help counteract the loss of revenue from the early stages of the pandemic, the research states, resulting in an increase in payment transaction costs for providers. The jump in volume and provider costs resulted in an 89% percent surge in spend to $2.2 billion.
According to the Index, the cost savings opportunity for claim payments switching from manual to fully electronic was $577 million, a 35% increase from $426 million in 2020. The time savings opportunity, meanwhile, was four minutes on average per transaction.
The findings add to the evidence backing automation adoption across all administrative transactions in the medical industry.
"After an extraordinarily challenging two years in healthcare, the industry's progress toward automated and efficient administrative processes is encouraging," said April Todd, CAQH senior vice president, CORE and Explorations, in a press release. "Our experience during the pandemic has also highlighted future opportunities for savings through automation."
Payers surveyed in Moody's earnings quarterly report managed 2.6% EBITDA growth in 2021, a drop-off from both estimates and figures in recent years.
Insurers experienced minimal growth in 2021 due in large part to the Delta and Omicron COVID-19 variants, according to new analysis from Moody's Investors Service.
Among the surveyed group of publicly traded payers, [[{"fid":"12154","view_mode":"default","fields":{"format":"default"},"link_text":"the earnings quarterly report","type":"media","field_deltas":{"1":{"format":"default"}},"attributes":{"class":"file-default media-element","data-delta":"1"}}]] found the EBITDA growth for this past year to be 2.6%—below the expected range of mid-to-upper single digits and short of the growth in recent years.
Though the individual market saw 2.8 million people sign up after the Biden administration implemented a special enrollment period for The Affordable Care Act (ACA) from February 15 to August 15 and passed increased subsidies, the flip side for insurers was adverse selection.
"But in a throwback to the early days of the ACA, it also led to significant adverse selection, which caused performance to decline," the analysts said. "The insurers have responded with pricing actions and product redesign, which could lead to lower enrollment but better performance."
Growth in Medicare Advantage (MA) counterbalanced some of the negative effects related to the ACA, as enrollment increased to 14% for the payers surveyed. Medicaid also benefited from the suspension of eligibility redeterminations until the expiration of the public health emergency, rising 14.3% in enrollment.
Aetna suffered the biggest drop-off of the insurers analyzed, as their EBITDA of $5.3 billion for 2021 was 17.5% lower than the previous year. Aside from Cigna, which also experienced a decrease of 1.9%, Anthem (8.7%), Centene (2.8%), Humana (1.2%), Molina (15.5%), and UnitedHealth (7.0%) all saw an increase in EBITDA to varying degrees.
After navigating the challenges of 2021, payers are expected to benefit from the shifting landscape as "growth will likely accelerate to the low double digits" for 2022, according to the report. As COVID costs lower and the individual market performs better, insurers should receive a bump.
"For 2022, earnings growth is likely to pick up, based on improved performance in the individual market, better commercial enrollment trends in line with projected economic growth, and continued growth in [MA], offset by declining Medicaid enrollment once eligibility redeterminations resume, which is likely to happen midway through the year," the analysts said.
Following the COVID-19 surge and its burden on the U.S. healthcare system, providers and health plans have worked together to conduct administrative functions more efficiently, particularly remotely. The result, the Index observed, is an increase in automation of transactions, with prior authorization seeing one of the most significant improvements, jumping from 21% in 2020 to 26% this past year.
Researchers also found that despite spending associated with prior authorizations decreasing 11% to $686 million due to decrease in volume and increase in automation, the cost savings opportunity from switching to electronic methods increased to $437 million annually, from $417 million in 2020.
The increase in automation, however, doesn't just save money, but time as well. According to the Index, providers saved, on average, 16 minutes per transaction by conducting prior authorizations electronically.
Finding ways to cut down on money and time spent on prior authorization should be a priority, as the process is often considered an administrative hindrance and one of the most costly and time-consuming transactions to conduct among those studied, according to the Index. To alleviate the stress on staff and streamline care for patients during the pandemic, prior authorization requirements were even suspended or waived, which researchers found contributed to a 23% decrease in prior authorization volume.
"The 2021 CAQH Index uncovered important shifts in healthcare administrative operations during the pandemic, some of which could have lasting implications," said April Todd, CAQH senior vice president, CORE and Explorations, in a press release. "Social distancing, remote work and an increase in the use of telemedicine have resulted in greater levels of automation today and additional opportunities for savings in the future."