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 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 percent more in another? It comes back to a fundamental fact about the American 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 over all. 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…