BCBS Kansas City claims national COVID-19 testing lab is ‘disaster profiteering’


Blue Cross and Blue Shield of Kansas City has sued a national COVID-19 testing facility, alleging GS Labs intentionally inflated its cash prices and performed unnecessary coronavirus tests in an attempt to fleece the not-for-profit insurer out of $9.2 million.

The AHIP insurance lobbying group said BCBS Kansas City’s suit represents the nation’s first payer complaint against a coronavirus testing provider.

The insurer’s lawsuit comes as the Washington D.C.-based powerhouse reports that payers across the nation are being “price gouged” by out-of-network COVID-19 testing centers, which are performing more diagnostic, antibody and antigen tests than ever. AHIP found that out-of-network clinicians administered 27% of coronavirus tests in March, a 6% increase from last April. The number of these providers charging at least 50% more than the commercial average for COVID-19 tests has doubled since the start of the pandemic, with 36% of out-of-network physicians pricing tests at above the standard rate, AHIP said.

“GS Labs is intentionally engaging in an abusive scheme to exploit the COVID-19 pandemic by duping health insurers into paying thousands of COVID-19 diagnostic testing claims at grossly inflated rates,” BCBS Kansas City’s lawsuit reads.

BCBS Kansas City’s complaint, filed in the U.S. District Court for the Western District of Missouri on Wednesday, seeks a declaratory judgment that would prevent BCBS Kansas City from having to pay nearly 29,500 claims related to coronavirus testing done by GS Labs, an Omaha, Neb.-based testing facility with some 30 locations across the U.S. The Coronavirus Aid, Relief, and Economic Security (CARES) Act requires insurers to cover testing without cost-sharing during the public health emergency, and instructs insurers to pay out-of-network providers their listed cash price.

GS Labs is an out-of-network provider for BCBS Kansas City members, and charges about 10 times what Medicare reimburses clinicians for administering a COVID-19 antigen test, or $380, the suit said. The lab charges twice as much for administering more advanced PCR tests, or up to $979, according to the suit. Meanwhile, GS Labs accepted cash payments from consumers for a fraction of what it charged insurers.

In addition to issuing “unreasonable, inflated reimbursement demands” to insurers, GS Labs also performed multiple, unnecessary tests on a single individual, as a means to submit as many bills as possible to BCBS Kansas City, the complaint said. If BCBS Kansas City were to pay the claims submitted by GS Labs, the higher prices would ultimately be passed on to its members, the lawsuit said.

“GS Labs’s posted “cash prices” and claims for those prices amount to unlawful price gouging and disaster profiteering,” the complaint reads.

In addition to avoiding paying GS Labs’ claims, BCBS Kansas City also aims to prevent the lab company from balance billing its members—which would result in “hundreds of thousands of complaints, appeals and substantial and unnecessary administrative burden,” the suit said—and any other relief the court deems just.

BCBS is not the only group questioning GS Labs’ prices.

In December, the Kansas Insurance Department began investigating a local facility owned by GS Labs that was charging $1,000 for tests, which the state agency’s general counsel said was higher-than-average. GS Labs did not immediately respond to an interview request.