CEO SUMMARY: Here’s an innovative way to help uninsured and underinsured patients gain access to affordably priced laboratory tests. In Akron, Ohio, physicians organized a partnership between the Summit Country Medical Society and PrePaidLab, LLC, to offer laboratory tests at prices that are comparable to Medicare. Everything worked well until CNN broadcast a laudatory story In December on the arrangement and how it helped uninsured patients. Soon after, the national lab company terminated its low-price lab test contract with PrePaidLab.
SEEKING A NEW WAY TO OFFER affordable and low-cost laboratory tests to uninsured and underinsured patients, a county medical society and an Internet-based lab test company got together and created an innovative arrangement that was immediately praised by physicians and patients alike.
Normally such a success story would end with “and they all lived happily ever after!” But, following a national news story last December during which CNN interviewed grateful patients and reported on the enthusiasm of doctors for this low-cost lab testing service, the Internet-based lab company was sent a notice of termination by the national lab company that provided it with lab testing at wholesale prices!
Caught by surprise, the Internet-based lab test company filed a Temporary Restraining Order so it could dispute this action in court. And it would not be in the courtroom alone. Faced with the loss of their source of low-cost laboratory tests used to help uninsured and underinsured patients, physicians in the community also prepared to go to court in support of the Internet-based lab company.
This story centers around three principal players. The story continues to unfold even as this issue of THE DARK REPORT goes to press. The key players are:
• PrePaidLab, LLC, of Avon Lake, Ohio. This is the Internet-based discount lab test company. (www.prepaidlab.com)
• Summit County Medical Society (SCMS) of Akron, Ohio. It collaborates with PrePaidLab in the arrangement to provide low-cost lab tests to uninsured and underinsured patients. (www.scmsoc.org)
• Laboratory Corporation of America, of Burlington, North Carolina. PrePaidLab contracted with LabCorp to get its patients’ specimens tested at discounted prices. PrePaidLab also pays LabCorp to use its patient service centers (PSC) to collect patient specimens.
Helping Uninsured Patients
Since 2009, PrePaidLab and the Summit County Medical Society have collaborated in an arrangement specifically designed to help uninsured and underinsured patients access laboratory tests at an affordable price. On its website, the Summit County Medical Society allows patients to order the laboratory tests requested by their physicians and PrePaidLab receives these test orders.
Upon receiving such an order, PrePaidLab does two things. It transmits a laboratory test request to the patient that the patient prints out and gives to the phlebotomist. It also directs the patient to a nearby LabCorp PSC through a “Find a Lab Feature” on the website. LabCorp collects these specimens and performs the tests. PrePaidLab uses a secure email to send the test results to the patient and faxes the results to the patient’s physician.
By all accounts, physicians in the Akron area place a high value on this arrangement. It gives them an effective way to help uninsured patients get access to much-needed laboratory tests at an affordable price.
CNN Airs A News Report
In fact, it was broad support by both physicians and members of the community for this uncommon low-cost lab test service that caught the attention of CNN, the cable news network. In December, 2010, CNN ran a news story titled “Doctors Slash Patients’ Lab-Test Costs.”
The CNN reporter told the story about how Akron family physician Doug Lefton, M.D., organized a way to help uninsured patients access necessary laboratory tests at an affordable price. “It’s a little heartbreaking when you have someone in your office and they need a blood test and they won’t do it [the lab test] because they can’t afford it,” stated Lefton to the CNN reporter.
Lefton took action to change this situation. On his own initiative, Lefton worked with PrePaidLab and the Summit County Medical Society to create an arrangement that made it possible for uninsured patients to get lab tests at a very low price. With PrePaidLab prepared to provide lab testing services at discounted prices, the new service went live on the SCMS website in January 2009.
PrePaidLab CEO Tom Patton told CNN that Lefton’s uninsured patients who “would ordinarily not be able to afford lab work are paying almost identical the amount the government pays for Medicare.”
The CNN news story gave the example of a lipid panel. It said that, in the Akron area, an uninsured person will pay as much as $148. That patient can order the same test on the PrePaidLab website at a cost of $18.
Available In 47 States
CNN explained the role of Lefton, the Summit County Medical Society, and PrePaidLab. CNN noted that LabCorp performed the tests for PrePaidLab and that LabCorp PSCs in all states except New York, New Jersey, and Rhode Island participated in this program.
To give this innovative low-cost test service a human face, CNN reported on the experience of Akron resident Jeff Hughey, who is a 50-year-old information systems technician. Hughey needed a comprehen- sive metabolic profile, a lipid panel and a hemoglobin A1c test for blood sugar.
He was told that, despite having health insurance, the three laboratory tests would cost him $400 or more. Although he had health insurance, the high deductible was a problem. “Insurance doesn’t kick in until you have paid $2,000 out of pocket,” stated Hughey “…I just couldn’t afford over $400 for three simple tests.”
Purchase Lab Tests On Web
His physician, Dr. Lefton, had told him about the low-cost lab test service on the SCMS website. “I got online with PrePaidLab, registered with them, checked the pricing, and the final total was $50.45, including the $9.50 service fee,” said Hughey to the CNN reporter.
CNN’s positive coverage of this story had two consequences. One was favorable and the other was not. After CNN aired this story in December, the number of patient specimens increased as consumers learned about the availability of a low-cost source of laboratory tests.
However, the unfavorable consequence is that, within a few weeks of the CNN news story, LabCorp sent notice to PrePaidLab that it was terminating its contracts to provide low-cost lab tests to PrePaidLab.
…within a few weeks of the CNN news story, LabCorp sent notice to PrePaidLab that it was terminating its contract to provide low-cost lab tests to PrePaidLab.
The Akron Beacon Journal reported, on February 11, 2011, that “in a letter to PrePaid [Lab, LLC], an attorney for LabCorp said the discount pricing program with the medical society breaches the terms of their contract.”
Beacon Journal reporter Cheryl Powell also wrote “In her letter to Patton, LabCorp Senior Vice President and General Counsel Sandra D. van der Vaart said Patton ‘personally publicly made false and misleading representations and statements regarding LabCorp’s relationship with Prepaid Lab to a reporter at CNN.”
Further, the CNN web page that carries the December story about this arrangement now has a correction: “The Summit County Medical Society and Dr. Doug Lefton’s arrangement for the low-cost laboratory test program was made with PrePaidLab LLC, not Laboratory Corporation of America (LabCorp). PrePaidLab CEO Tom Patton’s state- ments represented only his own views, not those of LabCorp.”
Temporary Restraining Order
In response to this notice, PrePaidLab prepared to go to court and obtain an temporary restraining order to require LabCorp to continue testing per the existing contract while negotiations took place. Also preparing to go to court in support of PrePaidLab was the Summit County Medical Society.
However, as of this date, the parties have not yet been in a courtroom. Patton told THE DARK REPORT that his attorney is in contact with attorneys representing LabCorp. Inquiries to LabCorp about this matter by THE DARK REPORT had not been returned as of the time that this issue went to press. As of press time, the two sides were still talking and PrePaidLab’s customers continue to use LabCorp PSCs to have their blood drawn and other specimens taken. Patton said that LabCorp continues to process the specimens and send out the test results.
Resolution To This Dispute
It is not possible to predict how PrePaid Lab, SCMS, and LabCorp may decide to resolve this issue. However it is not a surprise that the use of deeply-discounted lab test pricing for some customers and not others is causing is causing disruption in the lab testing marketplace. In this case, it is uninsured patients who are likely to lose access to affordably-priced lab tests.