Medical testing companies' Medicare deal scrutinized
WASHINGTON -- The Senate Finance Committee is probing medical testing companies to determine if they offer insurers heavy discounts in exchange for the insurers funneling all of their Medicare tests their way, Senate investigators and a former company employee have told USA TODAY.
Researchers also fear doctors may be ordering tests that don't need to be performed so they can receive kickbacks from insurers.
Sens. Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, have asked five major health care companies — Cigna, Laboratory Corp. of America, Aetna, UnitedHealth Group and Quest Diagnostics— to send copies of lab service agreements, contract information and corporate communications, including documents provided in recent court cases relating to the practice.
Baucus is the committee chairman and Grassley its ranking Republican.
Cigna and UnitedHealth said they have received the letters and are reviewing them, and the other companies have informed Grassley's office they have also received the letters.
"We treat such requests seriously, and plan to cooperate," Quest spokeswoman Wendy Bost said.
Called "pull-through," laboratories sign contracts with insurers offering extremely low rates for a medical test in exchange for the insurers verbally agreeing that their physicians will send all of their Medicare and Medicaid cases to those laboratories.
Earlier this month, the state of California settled with Quest for $241 million and LabCorp for $49 million after a whistle-blower lawsuit accused Quest of charging California's Medicaid five times more per test than it did other customers. A similar case in New York is under appeal after a judge dismissed the case because a plaintiff released confidential information.
"The inspector general has raised a flag and recent court cases raise concerns," Grassley told USA TODAY.
Andrew Baker, a whistle-blower who refused to participate in the alleged practice and eventually lost his business, said the issue needs to be raised to the national level.
"The practice is blatant manipulation of Medicare to grow your market," Baker said. "We're talking billions of dollars per year."
The senators said they had looked into the California and New York lawsuits. In the meantime, there had been several reports, including from the Department of Health and Human Services inspector general and MedPac, showing the companies had been overpaid.
"The procedures given to Medicare and Medicaid beneficiaries should not be influenced by improper relationships between labs and insurance companies," Baucus said.
Baker said both the insurance companies and the labs pressured doctors to send their lab work, and that doctors received kickbacks. The labs made more money off the Medicaid and Medicare cases because the government pays a fixed rate, and because those patients usually need more lab work than do privately insured patients because Medicare patients are older. Baker said he wrote a letter to his clients saying he would not participate, and for that, he lost his job. Quest later bought Baker's company, Unilab.
Last month, Baucus and Grassley released another committee investigation that said home health care companies were unfairly manipulating the Medicare system to increase their billings.
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