Major Lab Companies Fleecing Patients

It used to be that the greatest cost at a doctor’s visit was paying for the visit itself. Nowadays, the office visit is just a drop in the bucket compared to what medications cost. Medication costs were already starting to rise, but have risen to unprecedented levels since Medicare Part D became law about a decade ago and with the latest government attempt to help with the un-Affordable Care Act. In the last few years, add the rising cost of laboratory testing to that list.

Most people can remember the days when lab testing was done in the physician’s office and the cost was reasonable in most instances. If the lab prices got too high, patients could choose to go elsewhere. Competition took care of any price gouging problem with no government intervention needed. How all of this morphed into the current problem started with the introduction of CLIA  (Clinical Laboratory Improvement Amendments).  CLIA laws were created with the intention to improve laboratory standards, but one of the consequences was increased costs. After CLIA went into place, some physicians stopped offering in-house lab work due to the increased costs and regulation, but many did continue to operate labs in their practices.

Medicare then decided that if a patient had lab testing which they determined was not “medically necessary”, Medicare would not pay and patients couldn’t be charged either. This was the last nail driven into the coffin of most physician office labs. While physician labs were declining in numbers, the large reference lab companies were growing by leaps and bounds. Eventually, most lab work was done by these lab companies and still is. After this transition, Medicare reversed course, allowing patients to be billed for any lab work that Medicare didn’t approve. Apparently the large lab corporations are a much more powerful lobby than the individual physicians.  Unfortunately, the near monopoly these laboratory corporations now have makes that bill incredibly high for patients.  Previously, in the physician’s lab,  a much lower price, or even a negotiated amount, could be charged for a non-approved lab test.  Now there is hardly an option,  as larger and larger lab companies without any personal relationship or responsibility to the patients charge outrageous prices and make it difficult for patients and physicians to avoid these companies and their policies.

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As an example, patients are restricted to how many lipid profiles that they can have within a year.  If there are medication complications requiring adjustments, the lipid recheck may not be approved as “medically necessary”.  Clearly, it is necessary to know if a medication is working or not. A lipid profile is reimbursed by Medicare at just under nineteen dollars, but if Medicare denies it, these companies are sending bills to patients for over one hundred dollars. If lab corporations can make 500% more money instead of the usual payment, it’s not a stretch to think these companies would not have much interest to help patients get their lab work covered through Medicare. Medicare has gone from one extreme to another and patients are being put into financial jeopardy. One common sense solution is for anyone performing lab tests is to be able to charge the patient what they would have gotten from Medicare had it been approved, but allowing over five times as much to be charged is allowing inflated pricing to occur.

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Upon learning about what these reference lab companies are being allowed to do, I contacted one of Congressman Gregg Harper’s (R-MS) offices and discussed my concerns with one of his staff members. I had thought that there would be interest in protecting people from being charged such outrageous prices for inexpensive lab work. However, I was accused of not being a “capitalist” and questioned about how could I possibly “desire for (them) to tell these lab companies what (they) can charge”. I was stunned at such indifference and at being made to feel as though I was out of the mainstream, maybe even not American in my thoughts, according to their viewpoint.

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I replied to them that Medicare, which is regulated by Congress, certainly does not mind telling physicians what we can charge and restricts us all so severely that hospitals and clinics are having trouble making ends meet now. If it is good enough for the doctors, hospitals, and other health care suppliers and workers, why should these large reference lab companies be exempted from price regulation? I could not get an answer to that question and was left frustrated that Congress is ok with the fleecing of Medicare patients.  Just as Congress is allowing this to occur, they can also decide to not allow it to occur. Concerned citizens should contact their U.S. Representatives and U.S. Senators and let them know that they should reign in this unnecessary extra expense being placed on the backs of those who are already overloaded.

David P. Smith MD is a family physician in private practice in Mississippi.

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