Medicare Fails To Recover Hundreds of Millions of Dollars In Lab Overcharges

Kaiser Health News
Fred Schulte December 15, 2017

Five years ago, Companion DX Reference Lab hoped to cash in on cutting-edge genetic tests paid for by Medicare.

The Houston lab marketed a test to assess how a person’s genes affect tolerance for drugs such as opiates used to treat chronic pain. It also ran DNA tests to help treat cancer and urine screens to monitor drug abuse.

But the lab went bust last year after Medicare ordered it to repay more than $16 million for genetic tests health officials said were not needed.

Companion Dx is one of at least six clinical labs mired in bankruptcy court after Medicare alleged they improperly billed the government for unnecessary urine, genetic or heart disease tests expected to cause hundreds of millions dollars in losses to taxpayers, an investigation by Kaiser Health News found.

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As the nation’s bill for drug and genetic tests has climbed to an estimated $8.5 billion a year, there’s mounting suspicion among health insurers that some testing may do more to boost profit margins than help treat patients.

Medicare has slashed fees for urine tests and tightened coverage of some genetic screens, which can cost Medicare $1,000 or more per person. Private insurers, who mostly have paid these bills without question, also are taking a more penetrating look at spending on the controversial lab work.

Yet, getting these firms to repay Medicare and private insurers remains a formidable challenge. While some doctor-owned labs have dodged collection efforts for years, several testing firms deeply in debt to Medicare appear to have few assets to repay overcharges dating back years, court records show.

“Medicare shouldn’t be paying for dubious tests, but the time to catch that is in the very beginning when [labs] are asking for payment,” said Steve Ellis, vice-president of Taxpayers for Common Sense, a budget watchdog group. “They need to increase oversight so the dollars don’t go out the door in the first place.”

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Thank You Mr Schulte and KHN.