Issue: Volume XVII No. 18 - December 27, 2010

Any Future for Loss-Leader Lab Pricing?

OUTSIDE OF CALIFORNIA, few pathologists or laboratory administrators are aware of the unfolding enforcement campaign that was initiated by the state’s Medi-Cal program. At issue is a decades-long practice of offering providers low laboratory test prices—in some cases well below the Medi-Cal fee schedule. You may say, “what’s the big deal?”, since, for years, you’ve seen …

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Discounted Lab Prices Become Issue in California

CEO SUMMARY: For decades, California’s lab testing market has been considered the Wild West because clinical lab companies have felt relatively free to offer deeply-discounted prices to expand market share and take business away from competitors. Now these discounted pricing practices are being scrutinized by no less than three government bodies. First came a whistleblower …

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Who Wins and Who Loses With 51501 Enforcement

CEO SUMMARY: Assume that California’s Department of Health Care Services (DHCS) wins all challenges to enforcement of its interpretation of 51501(a). DHCS will get a one-time cash infusion as it collects money from labs which violated the state statute. But going forward, federally qualified health centers, independent practice associations, private payers, and patients will pay …

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How Could So Many Labs Violate California Law?

CEO SUMMARY: If a 40-year-old state law on Medi-Cal pricing was known to regulators and clinical laboratories alike, how did the legal and compliance departments of so many laboratories—staffed by some of the smartest legal minds in California and nationally—interpret the law in such a different way as the state’s primary laboratory regulator? After all, …

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Calif. Officials Back Off From Suspending Labs

CEO SUMMARY: Early in the summer, California’s Department of Health Care Services (DHCS) delivered letters to between 10 and 30 laboratory companies notifying them that, effective immediately, it was withholding their Medi-Cal payments and was suspending each lab’s Medi-Cal license. However, the intense reaction triggered by this unexpected and unequal enforcement campaign apparently caused DHCS …

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Did Qui Tam Suit Trigger Medi-Cal Price Concerns?

CEO SUMMARY: It is easy to track backwards to understand why the California Department of Healthcare Services (DHCS) began aggressive enforcement of its interpretation of statute 51501(a) against a number of labs this summer. DHCS officials were given a full education and a roadmap for action when, in April, 2009, the whistleblower lawsuit that accused …

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Dark Daily

December 27, 2010 “Intelligence: Late Breaking Lab News”

As the year ends, a bit of humor is in order and the recent dust-up involving Michael Moore’s healthcare documentary, titled “Sicko,” and a State Department cable posted on wikileaks.com may be just the item. About a week ago, The Guardian newspaper in Manchester, England, reported that a State Department cable posted on wikileaks.com had …

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