Insurers Suing Labs Across US: What Your Lab Needs To Know

Across the nation, tensions are rising between labs and insurance companies over billing discrepancies.

The more labs try to get their claims processed the more payers will try to find ways to avoid paying, and it's escalated to the point of frequent lawsuits.

We are here to help you maximize your revenue by informing you of trending habits across the lab billing world.

As the number of legal battles between the two parties continues to rise it’s important to understand the reasoning behind these occurrences and how it could affect your revenue cycle.

The Situation

Labs across the US have been facing increasing pressure against lawsuits brought against them by the insurance companies that reimburse them for their claims.

While the battle between payers and labs is no new topic, the tension elevating to accusations and lawsuits over millions of dollars is putting labs on notice.

The Background

Over the course of the past 11 years, there has been a steady rise in insurance fraud lawsuits filed against labs.

  • In 2014, Cigna sued Health Diagnostic Laboratory Inc. (HDL) for around $84 million.
  • In 2016 UnitedHealth filed a lawsuit against Sky Toxicology and other various labs for over $50 million.
  • In 2017 Proove Biosciences was forced into receivership after disputes over coercing patients into unnecessary testing and negligent practice.
  • In 2014 and in 2017 Medicus Laboratory (owned by Next Health) was charged for defrauding Medicare over improper urine testing in what is referred to as the “Whataburger Scheme”.
  • In addition to facing federal kickback charges for allegedly paying or receiving around $40 million dollars in bribes for fraudulent testing, Next Health also faces United Healthcare (UHC) filing a lawsuit for fraudulent testing for millions of dollars.
  • And now, most recently UnitedHealthcare has sued two Texas-based labs over “greed personified” claim settlement issues requesting payment of $44 million dollars.

The landscape has been changing for over a decade now to hinder the revenue cycle of labs. 

Let's take a look at our assessment of the situation to understand how it applies to your lab, and what real danger these lawsuits could pose.

Our Assessment

There are various reasons that these lab companies are being sued. The alleged claims are involving:

  • Fraudulent “Fee-Forgiving”: Labs would entice payer members to use services by stating they wouldn’t have to pay for the testing.
  • Being paid “Kickbacks” for referring drug tests to the labs. "Investors" would bribe doctors to refer services to their labs and then pay a "commission" back to those physicians.
  • Forged doctor's signatures for medical referrals. This leads to malpractice and charges filed from the federal government.

However, the emphasis is heavily on “alleged”.

Things like "fraudulent billing" and "greed personified" are terms used without a ton of clarity.

Fraudulent billing is claimed by the accusing insurance companies; however, often insurers will blame on labs not billing the patients for the entire balance.

This desire is completely unethical, as the insurance companies are doing this to get out of paying their mandated rates.

And while they claim "kickback" schemes are being run, insurers aren't taking into account the fact that these issues were in states that allowed physician-owned labs.

Essentially, payers never want to pay on claims because it costs them money, and they will find any excuse not to.

And why sue? Payers are most likely doing this to discourage patients from using health care services, to fight out of network billing by labs, and to force labs to charge patients for the full balance.

But, the importance lies in your lab and how you run your billing practices. Next, we will cover our recommendations to avoid his rising lawsuit trend.

Our Recommendation

As pressure is applied nationwide on labs, revise your current patient billing practices, and verify your revenue cycle for proper functioning.

Payers sue in attempts to scare labs out of business, establish a legal precedent, or simply to force labs to bill full balances to patients.

Don't fall into this trap. Develop a plan to ensure compliance and mitigate risks.

Through implementation of a well-managed billing program that coordinates the revenue cycle with your marketing and sales team's interactions with ordering physicians, you can better avoid these lawsuits.

The microscope grows closer and closer, so attention to your billing cycle is becoming more and more crucial to ensure the proper operation of your lab.

For more tips to stay up to date with laboratory billing and revenue cycle tips subscribe to our blog.

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