CEO SUMMARY: New case law in how health insurers should reimburse for COVID-19 lab test claims might be one outcome if a New Jersey lab company were to prevail in a federal lawsuit it filed against UnitedHealthcare alleging non-payment of COVID-19 test claims. An interesting fact mentioned in court records is that the health insurer pays a larger proportion of COVID-19 test claims from self-insured health plans compared to claims from its own premium-funded plans.
IN NEW JERSEY, AN ANATOMIC PATHOLOGY LAB COMPANY has sued UnitedHealthcare (UHC), claiming the health insurer has failed to pay for about 46,400 COVID-19 test claims—worth more than $20 million—since last year. What gives this lawsuit a novel twist is the lab’s discovery that UHC treats COVID-19 test claims differently, depending on a patient’s health insurance plan.
Court documents filed by the lab company describe how UHC pays the COVID-19 test claim of a patient covered by a company’s self-insured health plan much more frequently than if the patient is enrolled in one of UHC’s fully-insured health plans. Stated differently, UHC shows a pattern of denying COVID-19 test claims where its own health plan must cover the cost of the test, but more readily pays COVID-19 test claims where an employer’s self-insured health plan is the source of payment for that test claim.
If true, this is a significant finding and may be of value to other labs that bill UnitedHealthcare for COVID-19 tests, but are encountering high rates of denials. One lab billing expert told The Dark Report that if UHC followed a similar process in how it was processing COVID-19 test claims from other labs, this might be grounds for a group of labs to come together and file some type of class action lawsuit against UHC to recover the money owed to them, as mandated in federal and state laws passed in response to the SARS-CoV-2 outbreak.
The story started early last year, when Genesis Laboratory Management of Oakhurst, N.J., began performing molecular SARS-CoV-2 tests after the onset of the pandemic. It submitted these COVID-19 test claims to UnitedHealthcare and other private and government health plans. It quickly saw that UHC was refusing to pay a high proportion of the COVID-19 test claims that the lab was submitting on behalf of patients enrolled in a health plan managed by UnitedHealthcare.
Time for Lab to Fight Back
This winter, rather than accept denials of its COVID-19 test claims stretching back more than a year, the molecular and anatomic pathology testing laboratory decided it was time to fight back using two steps.
In step one, Genesis had its attorney send a demand letter in March to UnitedHealthcare, the nation’s largest health insurer, saying UHC and its subsidiary, Oxford Health Plans, owed Genesis $20,419,169 for approximately 46,400 claims submitted since the middle of 2020 through this year for COVID-19 diagnostic testing. Note that, as the nation’s largest health insurer, UHC reported $257.1 billion in revenue last year and $22.4 billion in profit.
In the demand letter dated March 12, Genesis’ lawyer, Craig Carpenito, a partner with the New York law firm of King and Spalding, wrote, “As described in detail below, United’s failure to reimburse Genesis violates the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which govern reimbursement of testing during the pandemic.”
Violations of State Law
UHC also violated state law by failing to pay Genesis’ claims promptly, the letter claimed. Some of the unpaid claims date back to March 18, 2020, Carpenito wrote.
When the demand letter was unsuccessful in securing the funds, Genesis took the second step and filed a lawsuit on June 2 in New Jersey District Court. In the 27-page lawsuit, Carpenito made three arguments that may be difficult for UHC to challenge.
The first argument is that it is disingenuous and illegal for UnitedHealthcare to claim that it must review detailed clinical records to determine a patient’s symptoms before covering the COVID-19 test, the lawsuit said. Federal guidance in the FFCRA and CARES Act states that insurers cannot use medical screening criteria to deny claims for COVID-19 testing.
The second argument put forth by the demand letter and the lawsuit is that the health insurer must explain the steps it has taken to deny the claims, such as making extensive demands for documentation. For instance, the Genesis letter to UHC said UHC requested a place-of-service (POS) code for some claims when the place of service was Genesis’ CAP-accredited and CLIA-certified lab in Oakhurst.
“UnitedHealthcare instead seems to demand reporting of an incorrect POS code—the location where the specimen was obtained,” the letter added.
Self-Insured Employer Claims
The third argument is that UnitedHealthcare paid Genesis a much higher percentage of the lab’s COVID-19 testing claims when the funds involved came from UHC’s self-insured employer customers, the lawsuit claimed. At the same time, UHC paid far fewer claims when UHC itself would pay those claims from its own funds, Carpenito wrote.
“For example, United’s abusive requests and pre-payment review processes are far less prevalent when its customers’ self-funded plans are involved versus fully-insured plans where United’s own dollars are at stake,” he explained.
“United’s tactics are not in good faith because UnitedHealthcare is simply trying to reduce its own spending rather than acting out of legitimate concern that Genesis is not properly documenting its reimbursement claims,” he wrote. “Otherwise, United would not be paying such a large share of the claims of its self-funded plan customers where United is acting only as administrator.”
Since the start of the pandemic, Genesis has submitted claims to UHC for COVID-19 testing for more than 51,000 UHC members, even though Genesis is an out-of-network lab provider for UHC, court documents showed.
“Despite defendants’ failure to pay for these testing services, Genesis has never refused to treat their members,” the lawsuit stated. “In fact, Genesis was induced to continue performing testing services for defendants’ members because United initially paid COVID-19 testing charges during the early stages of the pandemic before it routinely stopped doing so.”
In addition to failing to pay Genesis’ claims, UHC made extensive demands for documentation from the testing lab, including information that only the requesting physician would have, according to the letter and the lawsuit. Also, UHC gave Genesis what appears to be an unreasonably short time to respond to its demands for more information on the claims Genesis filed, the lawsuit said.
Under the CARES Act, if a health insurer does not have a negotiated rate with a provider, it must pay an amount equal to the cash price for such services the provider has listed on a public website, Carpenito wrote. Under the law, UHC also could negotiate a rate with the lab for less than the cash price on the website, but UHC “did not make any effort to do so,” he added.
On its website, Genesis posted the cash price of its COVID-19 diagnostic tests as $256.65 from March 2020 through mid-April 2020. Genesis revised the price to $513 when the federal Centers for Medicare and Medicaid Services (CMS) increased its fee schedule amount for COVID-19 testing payment to labs for Medicare members, Carpenito wrote.
The legal publication Law 360 reported that a UHC representative responded to a request for comment with an e-mailed statement, saying, “We disagree with the allegations in the complaint and intend to vigorously defend ourselves in this matter.”
Genesis Lab’s Lawsuit Describes UHC’s Unusual, Extensive Requests for Documentation of Claims
CLINICAL LABORATORY DIRECTORS AND PATHOLOGISTS WILL RECOGNIZE at least one of the tactics that UnitedHealthcare has used in its dispute over claims for COVID-19 testing with Genesis Laboratory Management of Oakhurst, N.J.
In a demand-for-payment letter and in a lawsuit, the Genesis lab company charged that UnitedHealthcare and its subsidiary Oxford Health Plans have received enough information from the lab to pay the COVID-19 claims the lab submitted after running the lab tests for UHC members. The lab also charged that by demanding more information to support the claims, UHC’s request for more records violated federal law.
“For the majority of the claims at issue, United is demanding an unreasonable level of clinical documentation underlying each COVID-19 test,” the demand letter said.
“United appears to be wrongfully withholding payment on these claims—and even instituting some sort of ‘pre-payment review’—by sending Genesis repetitive documentation requests with tight response-time demands with which Genesis cannot feasibly comply,” the letter said.
Craig Carpenito, a partner with the New York law firm of King and Spalding, represents Genesis.
“United is demanding that Genesis produce this documentation reflecting the physician decision-making process despite it being the laboratory service provider, not the physician ordering the test,” he wrote.
Last year, for example, UHC demanded that Genesis produce clinical and operational documentation related to a series of patients “within 30 days from the date of this letter.”
Earlier this year, UHC sent a medical records request seeking patient records such as treatment history and physical information, presenting symptoms and complaints, the physician’s findings on examination, daily progress notes, X-rays, consultation reports, medication records, and physician orders for durable medical equipment, Carpenito wrote.
He also wrote that before UHC will pay Genesis’ COVID-19 testing claims, it also has requested the following information:
- Test results,
- Physician orders,
- Standing orders,
- Laboratory requisitions,
- Pathology reports,
- Unspecified correspondence,
- Patient intake forms,
- Patient initial visit and consultation forms,
- Copies of CLIA certificates for six years,
- All CMS-116 applications,
- Types of equipment used for testing,
- Reagent supply lists and invoices for six months,
- List of reference labs used and tests designated as send-out tests,
- List of names, positions, and credentials of every onsite technical lab staff member,
- Specimen shipping and transport logs,
- Average daily test volumes,
- Average daily send-out test volumes,
- Inspection and proficiency test reports,
- Courier, FedEx, UPS, and USPS information for how each testing specimen is received, and
- Photographs of COVID-19 test kits used and photographs of all contents of the kits.
Why Requests for ‘Plethora of Records?’
SOME ALLEGATIONS IN THE LAWSUIT FILED BY GENESIS LABORATORY MANAGEMENT against UnitedHealthcare (UHC) over nonpayment of COVID-19 test claims are concerning to one attorney experienced with managed care and lab test billing issues.
“The Genesis lawsuit raises very troubling concerns about whether UHC is intentionally—and without a good faith reason—denying payment for COVID-19 testing and putting ridiculous hurdles in the way of the laboratory’s being able to get paid,” said Jeffery J. Sherrin, attorney at O’Connell and Aronowitz in Albany, NY.
“There are very few exceptions to the obligation of payers to cover COVID-19 testing, and—at least from the Genesis complaint—it does not appear that the denials or delays are founded in any of these exceptions,” he noted.
“Allegations in a complaint are always one-sided and we have not heard the UHC side, but what is being alleged here is symptomatic of problems labs have been having generally with UHC,” Sherrin observed. “If the allegations are true, there would not seem to be a justifiable reason to treat claims funded by premiums differently than claims paid by self-funded plans. Also, I can see no justifiable reason why UHC would need the plethora of medical records it has demanded according to the complaint, when those records would not serve as the basis for denial of the claim.
“I have not heard of any other insurer making similar demands, and on their face these demands appear to be purely obstructionist,” he added. “Whether or not there is some impropriety in the Genesis testing and billing that would justify these measures by UHC is to be determined, and it will be interesting to hear what UHC claims as its reasons for adopting the alleged payment practices.
Contact Craig Carpenito at 212-556-2142 or firstname.lastname@example.org; Jeffrey J. Sherrin at 518-462-5601 or email@example.com.