Most Coronavirus Tests Cost About $100. Why Did One Cost $2,315?

Laveta Brigham

Gibson Diagnostic Labs in Irving, Texas, June 12, 2020, has charged remarkably high prices for testing of the coronavirus.(Dylan Hollingsworth/The New York Times) In a one-story brick building in suburban Dallas, between a dentist office and a family medicine clinic, is a medical laboratory that has run some of the […]

Gibson Diagnostic Labs in Irving, Texas, June 12, 2020, has charged remarkably high prices for testing of the coronavirus.(Dylan Hollingsworth/The New York Times)
Gibson Diagnostic Labs in Irving, Texas, June 12, 2020, has charged remarkably high prices for testing of the coronavirus.(Dylan Hollingsworth/The New York Times)

In a one-story brick building in suburban Dallas, between a dentist office and a family medicine clinic, is a medical laboratory that has run some of the most expensive coronavirus tests in America.

Insurers have paid Gibson Diagnostic Labs as much as $2,315 for individual coronavirus tests. In a couple of cases, the price rose as high as $6,946 when the lab said it mistakenly charged patients three times the base rate.

The company has no special or different technology from, say, major diagnostic labs that charge $100. It is one of a small number of medical labs, hospitals and emergency rooms taking advantage of the way that Congress has designed compensation for coronavirus tests and treatment.

“We’ve seen a small number of laboratories that are charging egregious prices for COVID-19 tests,” said Angie Meoli, a senior vice president at Aetna, one of the insurers required to cover testing costs.

How can a simple coronavirus test cost $100 in one lab and 2,200% more in another? It comes back to a fundamental fact about the U.S. health care system: The government does not regulate health care prices.

This tends to have two major outcomes that health policy experts have seen before and are seeing again with coronavirus testing.

The first is high prices overall. Most medical care in the United States costs double or triple what it would in a peer country. An appendectomy, for example, costs $3,050 in Britain and $6,710 in New Zealand, two countries that regulate health prices. In the United States, the average price is $13,020.

The second outcome is huge price variation, as each doctor’s office and hospital sets its own charges for care. One 2012 study found that hospitals in California charge between $1,529 and $182,955 for uncomplicated appendectomies.

“It’s not unheard-of that one hospital can charge 100 times the price of another for the same thing,” said Dr. Renee Hsia, a professor at the University of California, San Francisco, and an author of the appendectomy study. “There is no other market I can think of where that happens except health care.”

There is little evidence that higher prices correlate with better care. What’s different about the more expensive providers is that they’ve set higher prices for their services.

Patients are, in the short run, somewhat protected from big coronavirus testing bills. The federal government set aside $1 billion to pick up the tab for uninsured Americans who get tested. For the insured, federal laws require that health plans cover the full costs of coronavirus testing without applying a deductible or co-payment.

But American patients will eventually bear the costs of these expensive tests in the form of higher insurance premiums. In some cases, they are paying for additional tests, for flu and other respiratory diseases, that doctors tack onto coronavirus orders. Those charges are not exempt from co-payments and can fall into a patient’s deductible.

Those kinds of bills could make patients wary of seeking care or testing in the future, which could enable the further spread of coronavirus. In an April poll, the Kaiser Family Foundation found that most Americans were worried they wouldn’t be able to afford coronavirus testing or treatment if they needed it.

Redacted medical bills and explanation-of-benefit documents provided by health insurers, coupled with bills that New York Times readers have shared, show the huge price variation in coronavirus tests. In Texas alone, the charge for a test can range from $27 to the $2,315 that Gibson Diagnostic has charged.

Some patients are billed nothing at all for testing at public sites, where local government agencies pick up the tab. It’s hard to know the true range of what health providers charge and what insurers pay, because both parties typically keep that information secret.

Health care providers testing for coronavirus also have additional protections if they want to charge high prices. The recent CARES Act requires that insurers cover the full cost of coronavirus testing, with no co-pays or deductibles applied to the patient. The health plans must also pay an out-of-network doctor or lab its full charge so long as the provider posts that “cash price” online.

That latter provision is meant to prevent a practice known as “balance billing”: when an insurer pays an out-of-network doctor something less than the full charge, and the doctor bills the patient for the remainder.

Health policy experts worry that the policy unintentionally gives some providers the green light to set exceptionally high charges, knowing that insurers are legally required to pay.

“If you are an out-of-network lab, you can name your price,” said Loren Adler, an associate director at the USC-Brookings Schaeffer Initiative for Health Policy. “I could say it’s $50,000, and you are required to pay me that amount.”

No health care provider has been quite that bold in its coronavirus testing prices; most have kept their charges relatively modest.

Many health care providers have settled on test prices of $50 to $200. Medicare initially paid heath providers $51.31 for coronavirus tests but bumped reimbursements up to $100 in mid-April. LabCorp, one of the country’s largest diagnostic testing firms, bills insurers $100 for its tests.

A few health providers have set their prices significantly higher. A chain of emergency rooms in Texas and Oklahoma, for example, has regularly charged patients $500 to $990 for coronavirus tests. A small hospital in Colorado and a laboratory in New Jersey have also come to insurers’ attention for their especially high bills.

Multiple insurers identified Texas as the state where they’ve received the highest proportion of expensive tests. Blue Cross and Blue Shield of Texas has received more than 600 out-of-network bills for coronavirus tests that are over $500, with an average charge of $1,114.

Gibson Diagnostic Labs’ website advertises “COVID-19 testing for your patients with results in just 24 to 48 hours.” The website states the “cash price” for a coronavirus test as $150, which is what they bill the government for uninsured patients’ tests. The billed charges for insured patients were many multiples higher.

Three large health insurers independently identified Gibson Diagnostic, which is in Irving, Texas, as the source of their highest-priced tests received during the pandemic.

One national health plan was surprised to notice testing for sexually transmitted diseases tacked onto some of the coronavirus bills that ran through Gibson Diagnostic.

In a statement last week, the company said the $2,315 price was the result of “human error” that occurred when a billing department employee entered the wrong price into an internal system. It billed 117 tests at that price and had 23 of the claims paid in full. Some insurers paid partial reimbursements or sent back no money at all.

The company said one insurance plan flagged the high price in mid-April, which led it to reduce the price to $500. The new charge was still 500% of the Medicare rate and $350 higher than the online cash price. The company declined to comment on how it settled on the new price and why it differed from the one posted on its website.

Gibson Diagnostic also said that it had recently reversed a few of its $2,315 charges and, after an inquiry from The Times, would reverse the rest of those bills within 24 hours.

Other laboratory owners questioned why even $500 would be necessary to run a relatively simple test. A data set of 29,160 coronavirus test bills provided by Castlight Health, a firm that assists companies with health benefits, found that 87% cost $100 or less.

The American Clinical Laboratory Association estimates that its members, which have run a collective 11 million coronavirus tests, charge between $95 and $209.

“I don’t believe it’s commercially reasonable,” said Peter Gudaitis, who runs Aculabs in New Jersey, a member of the association.

Gibson Diagnostic may have come to a similar conclusion: This week, the company reached out to The Times to say it would once again lower its price. Now, the lab charges $300 per coronavirus test.

The high prices have frustrated state insurance regulators, who lack authority to tamp down what health care providers charge.

“We see these infrequently, but they are infuriating when they do occur,” said Mike Rhoads, a deputy commissioner of consumer services at the Oklahoma Insurance Department. “There are free testing sites in our state. This does not need to happen.”

He has encouraged the administrators of health plans he regulates to contact their members of Congress, to urge refinements to the CARES Act that would help bring prices down.

Some members of Congress say they are looking into the issue, particularly those who recently worked on a bipartisan effort to outlaw surprise medical bills (that effort has been sidelined since the arrival of the pandemic). Legislators say they are still researching the issue, and no action is currently planned.

“We’ve got no regulatory authority over the health care providers,” Rhoads said. “There is not much we can do. We hope that somebody puts some pressure on these out-of-network providers to stop doing this, particularly during this period of time.”

This article originally appeared in The New York Times.

© 2020 The New York Times Company

Source Article

Next Post

Build your brand's digital footprint with this online class bundle

Build your brand’s digital footprint with this online class bundle TL;DR: The Complete SEO and Digital Mega Marketing bundle is on sale for £39.08, saving you 97% on list price. Most people use Google to search for answers on all of life’s questions — from the mundane choice of “where […]