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LabCorp, Medicare, and You

| Jun 26, 2013 | LabCorp

If you have blood drawn and testing procedures performed and are a Medicare or Medicaid recipient, chances are LabCorp is the lab that does the work and bills for it.

If you are in a private plan like Brown & Toland, chances are LabCorp does your work.

In 1995, National Health Laboratories and Roche Biomedical Laboratories merged to become one of the largest clinical lab providers in the world. Initially led by Dr. James Powell, the new company – Laboratory Corporation of America – was headquartered in Burlington, NC, LabCorp and continued to expand its specialty laboratory testing by acquiring other entities in the genomics, anatomic pathology, and personalized medicine arenas.  In July 2000, LabCorp acquired Los Angeles-based National Genetics Institute.  In 2001, ViroMed became a part of LabCorp.  In 2002, LabCorp acquired Dynacare with locations in Washington, Tennessee, Wisconsin, and Canada.  In 2005, LabCorp acquired Esoterix, Inc. and its specialty labs – Colorado Coagulation, Endocrine Sciences, and Cytometry Associates followed by more acquisitions expanding the company to one of the largest clinical laboratory networks in the world, with a United States network of 38 primary laboratories.  In 2010 it posted revenue of over 5 billion dollars.  In the first quarter of 2013, LabCorp booked $1.4 billion in sales on the quarter, a 1.2% increase over the same period in 2012.

LabCorp has 28,000 employees worldwide, and claims it has 220,000 clients including physicians, hospitals, managed care organizations, and biotechnology and pharmaceutical companies examining more than 400,000 samples per day.

Medicare Spends $900 Million Too Much on LabCorp, Quest Tests

On June 11, 2013, citing an Inspector General report auditing Medicare payments, Bloomberg News reported that Medicare spends $900 Million too much on LabCorp and Quest Tests.  Bloomberg analyzed the Inspector General’s study and stated;

“Quest Diagnostics Inc. (DGX) and Laboratory Corporation of America Holdings (LH), the two largest lab services companies in the U.S., each receive at least 15 percent of their annual revenue from Medicare, according to data compiled by Bloomberg.”

According to author Alan Wayne and the report’s author Daniel Levinson, indicated the Centers for Medicare & Medicaid Services, which runs the $574 billion health program, is exploring whether it can revise payments to labs to correct the overpayments.  Levinson reported “The lab test payment rate structure is outdated and should be changed”.

Levinson is the inspector general for the Department of Health and Human Services (HHS) since 2004, managing 1,500 OIG staffers nationwide who are responsible for promoting economy, efficiency, and effectiveness in HHS programs and addressing fraud, waste, and abuse.  Working with the Justice Department, Levinson is in charge of a special task force designed to combine federal, state and local law enforcement activities to target health-care fraud. It is funded primarily from the Medicare Trust Fund and is the primary source of funding for Levinson’s HHS office.  Under Levinson’s Health Care Fraud and Abuse Control (HCFAC) strike forces have resulted in approximately 270 convictions, 500 indictments, and more than $240 million in fines and penalties as they root our fraud and abuse.

When Medicare over pays it hurts all Americans.  But the Inspector General’s report is not the only instance where LabCorp has been alleged to engage in unfair business practices.

The Brandi Law Firm is currently representing consumers in a proposed class action against Laboratory Corporation of America (LabCorp) pending in the San Francisco Superior Court (No. CGC-12-518072).  The complaint alleges that LabCorp has a policy of changing diagnosis codes when submitting reimbursement claims to insurance companies allowing LabCorp to obtain a higher charge to you.  While preventative screening laboratory work is generally free of charge under many health care plans,  LabCorp’s actions of changing the codes results in consumers being responsible for co-payments and charges which are then pursued by LabCorp.

If you have any information regarding this practice or wish any information, please contact us at [email protected] or 800-481-1615