This story was originally published by ProPublica.
As the COVID-19 pandemic continues to churn, Medicare spending on testing for the virus continued to increase in 2022 and is outpacing the two prior years.
Through Oct. 31, Medicare had spent $2 billion on COVID-19 tests in 2022, an amount that will surpass last year’s total as claims are filed, according to new data provided to ProPublica by CareSet, a research organization that works to make the health care system more transparent.
That compares to
$2 billion for all of 2021 and
$1.5 billion in 2020, a recent analysis by the Department of Health and Human Services’ Office of Inspector General shows.
Fraud and overspending are contributing to the increases, experts say, because federal money for COVID-19 testing is not subject to some of the same financial and regulatory constraints as other tests covered by Medicare, the government insurance program for people 65 and older and the disabled.
The growing costs concern some of these experts, who say the need for financial incentives to expand the availability of testing has passed.
Early in the pandemic, testing was both critical to slowing the spread of the virus and in short supply. So the federal government enacted measures to make it more profitable to get in the COVID-19 testing business. Good for the duration of the public health emergency, which has not yet expired, the measures include a generous Medicare reimbursement rate, requirements for private insurance to cover testing — even compelling insurance plans to pay whatever cash price is demanded by out-of-network labs — and a hefty fund for testing those people who didn’t have insurance.
The measures succeeded in drawing new and existing labs into the COVID-19 business and helped ensure most people had access to testing, even if some faced excessive waits to get their results. But the incentives also attracted price-gougers, fraudsters and people with no experience in the laboratory business. The result was a chaotic approach that ranged from bungled testing programs and confusion over new requirements to outright fraud.
“It was an unprecedented wave of fraud,” said Michael Cohen, an operations officer with the HHS Inspector General, which investigates crimes involving federal health care programs.
This year,
ProPublica detailed how one Chicago-based lab, Northshore Clinical, used political connections in Nevada to speed its licensing and generated tremendous volume through agreements with school districts, universities and local governments. The story also detailed questionable billing practices that one insurance expert described as fraudulent. A study of Northshore’s testing on the University of Nevada Reno campus found the company missed 96% of COVID-19 cases during December 2021.
The company submitted 600 pages of documentation to state regulators to support its claim that it fixed deficiencies noted by inspectors, but it ultimately asked the state to close its license and pulled out of Nevada before the investigation was finished. Northshore repeatedly declined to comment to ProPublica.
Cohen said OIG investigators have faced challenges responding to the onslaught of suspected fraud — from a lack of additional resources to constantly evolving policies.
In April, the Department of Justice
announced criminal charges against people in eight states who allegedly submitted more than $149 million in COVID-19 false billings to federal programs. The OIG has also performed analyses on Medicare data, including for a report released this month that
found 378 labs had billed Medicare for expensive add-on tests at “questionably high levels” after testing individuals for COVID-19.
Attorneys general in a handful of states have taken action against labs for forging results, charging fees for “expedited results” that arrived days later and deceptive marketing practices.
Programs to pay for COVID-19 testing aren’t the only pandemic assistance funds that have attracted people seeking to profit. Paycheck Protection Program loans went to
fake businesses or were spent on
luxury goods instead of keeping people employed, ProPublica and other news outlets have reported. Expanded state unemployment programs also saw unprecedented fraud that a partial accounting estimates is
$57.3 billion.
Tolerating some fraud is a necessary trade-off to attain legitimate public policy goals, said Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy. But once the incentives and loose regulations boosted the availability of testing, they could have been revised to prevent abuse and overspending, he argued.
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