Better Solutions for Healthcare

NYTIMES: This Lab Charges $380 for a Covid Test. Is That What Congress Had in Mind?

By Sarah Kliff

September 26, 2021

Insurers say it’s price-gouging, but a law left an opening for some labs to charge any price they wished.

At the drugstore, a rapid Covid test usually costs less than $20.

Across the country, over a dozen testing sites owned by the start-up company GS Labs regularly bill $380.

There’s a reason they can. When Congress tried to ensure that Americans wouldn’t have to pay for coronavirus testing, it required insurers to pay certain laboratories whatever “cash price” they listed online for the tests, with no limit on what that might be.

GS Labs’s high prices and growing presence — it has performed a half-million rapid tests since the pandemic’s start, and still runs thousands daily — show how the government’s longstanding reluctance to play a role in health prices has hampered its attempt to protect consumers. As a result, Americans could ultimately pay some of the cost of expensive coronavirus tests in the form of higher insurance premiums.

Many health insurers have refused to pay GS Labs’ fees, some contending that the laboratory is price-gouging during a public health crisis. A Blue Cross plan in Missouri has sued GS Labs over its prices, seeking a ruling that would void $10.9 million in outstanding claims.

In court last month, the insurer claimed that the fees were “disaster profiteering,” and in violation of public policy.

Omaha-based GS Labs contends the exact opposite: that it has public policy on its side, pointing to the CARES Act passed in 2020. “Insurers are obligated to pay cash price, unless we come to a negotiated rate,” said Christopher Erickson, a partner at GS Labs.

The requirement that insurers pay the cash price applies only to out-of-network laboratories, meaning those that have not negotiated a price with the insurer. There are signs other laboratories may be acting like GS Labs: A study published this summer by America’s Health Insurance Plans, the trade association that represents insurers, found that the share of coronavirus tests conducted at out-of-network facilities rose to 27 percent from 21 percent between April 2020 and March 2021.

It found that the average price for a coronavirus test at an in-network facility was $130, a figure that includes both rapid tests and the more widely used, and more expensive, PCR tests. About half of out-of-network providers are charging at least $50 more than that.