The recent stories about Medicare fraud and genetic testing have been pretty awful. Taking advantage of older people in order to scam the government…. well, what can you say? There’s a cheater born every minute and they are doing their best, or, really, their worst, to turn honest people into feeling like suckers.
Moral outrage aside, the stories got me to thinking about how unsure I am about the costs of genetic testing and how it gets billed to patients and insurers. Important point – I am not suggesting that reputable labs are flimflammers or hucksters. I am forever grateful to labs for their efforts in working with patients’ health insurers to determine coverage. I understand that pricing structure and billing are complicated even for professionals who spend their whole life doing it. Labs should make as much legitimate profit as they can. Sometimes the eligibility and testing guidelines are not so clear. I was born – but not yesterday.* I just don’t know how it gets done and how the rules and regulations are navigated, at least in my narrow world of cancer genetics, though I suspect it is a problem in other specialties too. I’ve tried to become an informed user but it is a dense subject. I feel as clueless as Buzz Lightyear (or, as Woody sometimes calls him, Buzz Light Beer). Genetics is easy in comparison. So I have questions.
I understand that each lab negotiates prices with each private health insurer and that the specifics are sort of Top Secret. But why are the negotiated prices for essentially the same test so different for each lab and insurer? Surely insurers are not so incompetent that they don’t realize this. They too are looking to be as profitable as they can be. All else being equal, shouldn’t insurers negotiate about the same price with Labs A, B, and C? And if Lab D doesn’t like the price, well tough on them and they can be relegated to the dreaded status of “nonpreferred lab.”
Then there’s Medicare. Medicare rules vary a bit by region and are potentially negotiable in particular instances. But Medicare guidelines make it clear that usually patients must have a diagnosis such as breast or ovarian cancers (and in some situations also need to meet family history criteria) for testing to be covered. Some labs will not bill Medicare for patients who do not meet criteria and charge patients an out of pocket amount consistent with what they would have charged Medicare if it was a covered service. Other labs will bill Medicare and appear to eat whatever Medicare does not cover. Is it all a matter of different interpretations of ambiguous bureaucratic wording? And is it an illegal inducement if a lab offers free genetic counseling along with testing?
When insurance is bypassed and a patient pays out of pocket how is it that the charge to the patient for more or less the same gene panel across labs can range from $250 to ~$2,000? Depending on which lab you use, patients can even get a panel for fifty bucks if they are “fortunate” enough to have a pathogenic variant segregating in their family. Or the patient at risk for a specific familial pathogenic variant could get the gene in question sequenced, but not a panel, for free, if testing is ordered within 90 days of the relative’s test. Or that same patient could just be tested for the specific variant and pay around $400-$500 out of pocket. If you have prostate cancer, or certain other genetic conditions, you can get a panel test at no charge because the testing is “sponsored” by a separate lab, usually from Pharma, with whom de-identified data may be shared (is it still possible to deidentify DNA anymore?).
I am all for removing financial and other barriers to genetic testing and counseling. I work hard at making sure my patients pay the lowest possible price for a quality test. I understand the need for research and cooperation between labs to develop new treatments. And it can be cut-throat competition out there where everyone’s trying to hack off a big chunk of market share. For sure, many of these issues are symptoms of the crazy health care system and spending in the US. At the same time, I wonder whether my pursuit of making sure that my patients get coverage for their genetic testing is blinding me to problems with billing and charging. I do not want to cross any ethical or legal lines and I don’t want put my patients in financial jeopardy.
Perhaps the Good Readers of this blog are willing to share their insights and stories. Please don’t name names or try to vilify a particular lab; keep it de-identified. We can air it out collegially and constructively.
- – I admit that I stole this great line from Season 2 of the Showtime series The Chi.
The DNA Exchange 
Thanks for this post, Bob. This is an issue that is taking up way too much of my time and head space these days. Here is a story for you. Starts with a situation you are likely familiar with – a patient who has Medicare, no personal history of cancer, but a strong family history of cancer. She does not meet Medicare criteria for testing, although she does meet NCCN criteria for BRCA testing. Given that she does not meet the Medicare criteria, we discuss various options and pricing of various lab options, and she elects to move forward with a self pay option through a lab who offers this for a few hundred dollars. The patient seems happy with our plan. She calls the lab to arrange payment for the testing and the question comes up from the customer service rep as to why I didn’t have this testing go through her insurance? The rep goes ahead and takes down all of the patient’s Medicare information and then follows up with me to ask me to change the order to “insurance bill”. (As a side note, the insurance billed amount is at least 4xs the self pay amount from this lab). I informed the customer service rep that I ordered this test as self-pay because the patient doesn’t meet Medicare criteria for coverage of testing.
The lab responded: “Even if she doesn’t meet criteria for Medicare for testing, we would still try to bill her insurance and she wouldn’t have an OOP cost either way. Medicare patients pre-qualify for our [Financial Assistance Program] and don’t receive a bill from [LAB]. Does that change anything? She was pretty set on billing insurance if she could.”
I felt that I was put in a difficult position with this. From everything I understand, what the lab suggested does not seem like a proper approach to billing. She does not meet Medicare criteria for coverage and they are promising that she won’t have to pay. This same scenario was laid out in June 2019 NSGC webinar on waste fraud, waste and abuse and the presenter laid out this exact scenario as problematic. But now that the lab has been speaking directly with the patient, and questioning my rationale with the order I feel I was left with two options 1) give my okay for the insurance billing or, 2) insist that they stick with the patient pay, and then follow-up with the patient to let her know that I believe what they are suggesting does not comply with the medicare rules as I understand them, and thus would not support having the testing billed to her insurance (and in doing so contradict all she is being told by the lab).
Health care billing is a mess and I can’t imagine any other situation where a person would be asked to spend so much $$$ on something so important, with no transparency to how much it will cost. I do not fault the labs and the insurance companies for doing what they can to make a profit. But as a healthcare provider I feel hopelessly caught in the middle of this game between the labs and the payers. And it feels increasingly difficult to both follow the rules and do what is in the best interest of our patients.
I had a very similar situation with a patient who didn’t meet NCCN or Medicare guidelines, but wanted testing anyway. We discussed options, and sent the sample off to a lab with a reasonable cost for patients who want to self-pay. After a few days I was contacted by the lab asking for ICD10 codes because the patient contacted the lab to pay, and he was offered to switch from self-pay to going through Medicare (I don’t know if he asked or if they just offered, but either way it was inappropriate for them to allow him to think that would work). I explained to the lab why I was not going to order testing in that way, and I got the same response about how it would change his oop to $0. I told them they could either do the test as I ordered or they could cancel my order and bill Medicare for a new order under their own doctors’ name. After that the patient ended up self-paying.
During results he did ask me about it, and once I explained (again) that he didn’t meet criteria, not medically necessary, etc., I think he understood. But I’m sure he still feels like I somehow ended up costing him extra money, which is not conducive to good rapport.
Yeah, this is the type of awkward position we all want to avoid. Sure makes us look bad in the eyes of patients. I would venture a guess that plenty of cancer genetic counselors have found themselves in this position, not just you two, Katie and Laura. Sure, it helps patients financially, but we shouldn’t have to put ourselves in ethically or legally tenuous positions.
Hi Laura – I am experiencing the exact same scenario with a patient right now. Although I appreciate the labs trying to overcome the limitations of Medicare criteria by offering $0 OOP to patients who meet NCCN, but not Medicare criteria, it is really problematic when they sent the wrong message to patients after we have discussed with the patient that if they want a test that is NOT medically indicated, then they need to pay for it. This situation tremendously undermines our position as the experts and definitely jeopardize our rapport with patients. I have not heard from the lab with results yet and therefore have not talked with the patient after our initial meeting, but I am definitely expecting this would be brought up, as the patient repeatedly asked me to bill her insurance for the test. Thanks, Bob, for yet another thought- and conversation-provoking post.
Bob- Thank you for your post. I agree with you that insurance billing is a mess and much too complicated. What really concerns me is the concept of free or complimentary genetic counseling. I wish laboratories would say that genetic counseling is bundled or part of a comprehensive service. Saying genetic counseling is included is much different than saying that it is free. I resent that our services are deemed, “free” it undervalues us as professionals.
Kathleen, this is a great point. I share your concerns about the GC profession being undervalued by the marketing of “free” genetic counseling when one purchases a particular brand of genetic test. This is also linked in Bob’s article, but in case it is missed, Eleanor Griffith wrote an excellent post on this topic https://thednaexchange.com/2018/03/26/the-hidden-costs-of-free-genetic-counseling/
While I agree that calling genetic counseling “free” is problematic, I am not sure it is much better calling it “bundled” or anything else. The genetic counseling included with genetic testing is a loss leader for the labs. I believe in many cases the labs are losing money on genetic counseling, but see it as a necessary strategy to attract customers given the competitive market. It seems impossible to me that the costs of genetic counseling services could be bundled into a $250 test when you consider the cost of the analysis, variant interpretation, test kit, fedex and everything else that goes into it. But maybe it comes out in the wash when the amount billed to insurance is so much more than the self pay price? Or maybe the labs are counting on making money in other ways such as use of the customer data? Or maybe the promo codes for family member testing and upsells that come from the companies by email to the patients that sign up for the free genetic counseling makes up for it?
As the saying goes, TANSTAAFL – there ain’t no such thing as a free lunch.
Thank you Bob for asking these important questions. I think a companion piece to this blog could be titled “Who’s Paying for This Test Anyway?”. As we all know, there is no such thing as a free lunch….. when labs are able to offer free or below cost testing (typically under $500 is below cost for most NGS at a lab I previously worked for), SOMEONE has to pay for it/cover those costs. This is largely covered by increased pricing to private insurers. Enough reimbursements cover the costs of lower self-pay or free testing. I always found it funny to hear from some laboratories that a 1,000 gene panel and 10 gene panel should cost the same, when in our lab, that 1,000 gene panel took far more specialist hours to research and write a report for any variants identified. The overhead alone was a huge factor.
It might be helpful for readers to consider the larger view of healthcare when facilitating testing. Even if your patient isn’t paying for this test, who is?….
Juie – You are right. Ultimately the cost of all medical care falls on those who utilize it – the patients. Sure insurance “covers” testing but who pays the higher insurance premiums when costs become high? It’s not like there’s a fresh crop of money trees out there, spontaneously bearing new fruits of wealth that pay for medical care. Cash Crop is only a figure of speech, not a real agricultural product.
The massive capital investments in labs that enable ‘free testing’ feels manipulative, anticompetitive and unsustainable.
Bob – this post is bringing up all kinds of thoughts/questions for me! I’ll try to quit blowing up to comments thread after this last one…You raise the question of whether including free genetic counseling with genetic testing is an illegal inducement. It seems to me that the only way this practice is not treated as an inducement is due to regulatory gaps and gray areas. If genetic counselors were recognized by CMS as healthcare professionals, and if LDTs were regulated by the FDA (and thus also more regulated by CMS) then this practice of genetic counseling/genetic test bundling would probably not be so common.
Imagine a similar scenario: What if drug company, Pfizer said to clinics, hospitals and healthcare providers, “we want to help you offer a comprehensive service to your patients so we will provide free mental health counseling by our licensed clinical psychologists to all patients that are prescribed Zoloft by your providers.” Does this seem so different than saying, we want to offer a comprehensive service so we include genetic counseling with all of our genetic testing products?
But given that clinical psychologist, clinical social workers are recognized and reimbursed under CMS, and given that pharmaceutical companies are under more scrutiny given FDA regulation (which affects CMS oversight as well) I don’t see this bundling of mental health counseling with a prescription drug ever passing go. Can anyone out there provide another example in which a healthcare professional service (like genetic counseling) is wrapped up into the cost of a healthcare product (drug, device, etc)??
Bob – Thank you for this post.
I am a firm believer that our healthcare system – and all of us – will benefit from pricing and billing transparency; a problem that is not unique to genetic testing. Despite our professional frustration with “genesurance” counseling, our understanding of (and willingness to learn more about) the financial layer that is woven into laboratory service/quality, makes genetic counselors an ideal group of providers to bridge the gap between clinicians, patients, laboratories and health plans.
I am grateful that our last few professional conferences have included presentations that expose some of the challenges behind the question posed here, “…why are the negotiated prices for essentially the same test so different for each lab and insurer?” We’ve learned that although service providers and health plans utilize a common language of CPT codes, the exact interpretation of how to use these codes is variable; in part, out of necessity, as the advances in genetic testing outpace the changes that are able to be made in medical billing.
Most health plans work diligently to create a fee schedule that will provide fair reimbursement for specific CPT codes. However, these contracting departments may or may not understand the different ways these codes are then packaged into a “billable test” by different laboratories, as a claims system does not routinely bundle codes into a distinct service.
I believe we can educate health plans about the nuances of molecular billing and help them achieve laboratory contracts that include consistent coding for, and fair reimbursement of, a complete “test” rather than an individual CPT code. If successful, high quality laboratories should receive consistent and predictable reimbursement when tests are billed in alignment with the health plan’s medical policy. Furthermore, I expect this process will expose laboratories who may have (knowingly or unknowingly) participated in aberrant billing practices, and with a better handle on how to identify these vendors, we may even see a future where health plans feel empowered to lower defensive barriers such as complicated prior authorization processes. #dreambig
Cheryl – I’d love to educate the health plans about the nuances of molecular billing – if only I understood them! But yes, transparency and clarity by insurers, providers, and labs would go a long way to solving some of these issues. And help us all avoid “aberrant” billing practices that may in part arise from motivated blindness. I think we can all start with the basic principle that all parties are in it for the good of patients.
Great post, Bob! I won’t pretend to have insight into this topic (especially as a GC practicing in Canada). But I did recently hear something curious I would love to validate. I was told that some lab equipment companies price their reagents lower for genetic testing labs if they are offering their testing to a private paying consumer, rather than billing insurance or an institution. If anyone has any insight on 1) if this is true and 2) if so, what the rationale would be for this type of pricing system – please chime in!
Allie – I’ve not heard of this rumored policy about reagent pricing. Sounds like a fishy story that might be even fishier if it turns out to be true.
As usual, very thought-provoking post, Bob! My guess at the pricing differential from lab equipment vendors may be volume-based. For example, if the lab is projecting more volume for private pay, perhaps the contract can be set up with the equipment vendor to be more favorably priced (I’m thinking consumer genetics here, which are typically cheaper and therefore higher volume anyway). However, I do not see how/why this would work for labs that offer BOTH insurance-billed and private pay options for the same tests….unless again there could be a data-sharing or other hidden deal which I think someone mentioned earlier🤔. If this is true, someone please share the secret so we can all negotiate better lab equipment vendor contracts! #dreambig
Let’s stay focused on the big stuff for a moment people. Bob, you attribute “I was born — but not yesterday” to Season 2 of The Chi. But isn’t it a mere rip off of the ancient “I was born at night but not last night”?