Andrew Baker: Federal government needs to stop Quest Diagnostics and LabCorp scam

Andrew Baker

Andrew Baker

Andrew Baker, the former CEO of Unilab and current CEO of Huntingdon Life Sciences, has written an article for The Huffington Post in which he states the federal government needs to stop Quest Diagnostics and LabCorp from continuing to “scam” the Medicare and Medicaid programs of billions of dollars.

You will recall Mr. Baker filed qui tam (whistleblower) lawsuits against Quest in 2005 and LabCorp in 2007, alleging they violated the federal False Claims Act and Anti-Kickback Statutes.  Those cases are still making their way through the system.  See this post and this one.

In his article, he estimates Quest and LabCorp have cost taxpayers $15 billion since 1996 in the form of false claims stemming from illegal kickbacks to Aetna, Cigna, United Healthcare and Blue Cross.

From the article:

These two labs are breaking federal laws by deeply discounting lab fees to private insurance companies, sometimes charging them for lab work even below their costs. In exchange, the insurance companies pressure doctors in their networks to send all of their patients’ lab work, including Medicare and Medicaid patients, to either Quest or LabCorp.

The labs fund the kickbacks — in the form of lower lab fees for private insurance patients — by charging Medicare and Medicaid patients the highest possible fee, instead of offering them a best price, and pressuring doctors to send all their lab work exclusively to them.

Mr. Baker also mentions Quest’s $241 million settlement with the state of California for violations of CA’s False Claims Act, LabCorp’s $50 million settlement with the state of California for overcharging CA’s Medicaid program and for providing kickbacks to physicians for referrals, and the lawsuit filed against Quest, Blue Cross/Blue Shield of California and Aetna by four California labs I wrote about back in November 2012.  Presumably this is for the “where there’s smoke, there’s fire” effect.

The purpose of Mr. Baker’s article appears to be to stimulate discussion about government intervention in laboratory pricing for government programs.  He advocates for clarification of the intent of current federal law that would require laboratories to charge Medicare and Medicaid their “best price”, just as California has already done.  In other words, labs would only be able to charge Medicare and Medicaid the lowest (read “best”) price they (the labs) charge private insurers.

Because labs would likely not want to take the massive hit to their bottom line this clarification would bring, I imagine the labs would have little choice but to raise the prices it charges private payors.  This should then allow smaller labs that have been essentially shut out of the market due to these aggressive marketing strategies the ability to compete with the Quests and LabCorps of the world yet again.

It will be interesting to see if this actually goes anywhere.

Comments

  1. Anonymous says:

    This is absolutely true. As recently as a few months ago, a Quest sales rep told me they get periodic emails from Aetna with lists of doctors who are in the Aetna network but aren’t sending their lab work to Quest. I think the rep even said that the emails specifically ask Quest sales reps to go after these doctors’s business. If just one of these reps could provide these emails as evidence, it would be huge for the whistleblower cases mentioned above.

    • A says:

      Do you think you would be able to get ahold of those emails from the same rep who already shared this info with you verbally?

    • Anonymous says:

      Of course it is. LabCorp did the same thing with their exclusive UHC contract. LC worked directly with UHC on “leakage.” Now, the term leakage only referred to the UHC business going to non-LabCorp labs, but from LabCorp’s end they called it a hunting license for all the business. LabCorp and Quest do not acquire these exclusive contracts with the hope of just getting the business from their covered lives. The “pull-through” business is what they are mainly after. And yes, the higher % of Medicare and other 3rd party (relative to low to negative client bill margins) the better.

    • Anonymous says:

      Yes, we get these lists, and no, I will not forward. It is not against the law and it is not coercement, in as much as you would like to think it is. A contract is in place with insurers so they receive volume discounts, so it is in the best interest of the insurance company to share MD information to the lab company that they are in contract with to assure they are getting the best prices. Going outside of their contacted labs costs the lab companies more–and since they are profit and have shareholders, this will continue to be discouraged. It happens in all areas of industry–get over yourself. And, since lab costs are only about 4% of total health care costs, why don’t you start looking at the inflated prices of medications…medical care…emergency care….hospital pricing.

      • Anonymous says:

        Going outside of their contacted labs costs the lab companies more–and since they are profit and have shareholders—S/B going outside of their contract labs costs the insurance companies…..

      • A says:

        Thank you for the comment. I do pay attention to the other issues that determine the cost of health care, but seeing as I am a pathologist, I am most interested in the laboratory industry.

        You say what they are doing is not against the law but is that true? Are the labs and insurance companies participating in a strictly legal arrangement? Can a lab offer and can an insurance company accept fees for testing that are below market value in exchange for Medicare referrals? Isn’t that a kickback?

      • Anonymous says:

        A “kickback” is money paid back to a company after services are rendered–much different than volume discounts. Discounting prices for volume business is done in every type of business out there–it is the law of economics/supply and demand. Can you tell me who has determined “market value” of lab tests, what associations or government entities have endorsed these values, and where they might be published? I have not seen anything other than what insurance companies/Medicare deem reimbursable, and as far as I know, these have never been established as standards.

        • A says:

          So what you are saying is, if enough volume is provided, Quest and LabCorp may be able to reduce the fees they charge to private insurers effectively to zero and that would be OK?

          I would imagine each company’s “market value” is different, because the value has to take the cost of production into account. That is where efficiency and competition come into play. The company that can provide the cheapest product with sufficient value wins the market share.

          But, if every business out there only sold goods/services for less than it cost the company to provide or make the goods/services, the company would quickly go out of business. So businesses that do provide below cost pricing must be making it up elsewhere, or else the company would no longer exist.

          And the gov’t has said with respect to government programs, whether it be in the aerospace industry, health care, etc, you cannot offer incentives to induce an entity to provide you with government money.

  2. dr.cosell says:

    Fraud in rampant in the health care industry. Seek and ye shall find it. Pain clinics should be investigated by the government next. Sleazy pain doctors love having patients who are never cured but continually come back for meds, injections, and other procedures.

  3. Anonymous says:

    My lab was recently approached by Pennsylvania physicians who wanted to send their specimens to us. When we tried to get into network with UPMC, we were rejected and told that PA already has commercial labs in network for physicians. When one examines the list of “preferred” labs, one name keeps coming up: Quest.

  4. anonymous says:

    This is one of the most hysterical turn of events in the last 30 years. Andrew Baker was the king of scam artists when he joined Quest as president many years ago. He brought in his personal buddy Cody Evans as a consultant to be paid on commission based on how much additional revenue he could steal from government payers. He personally perpetrated the scam to add all kinds of tests to the Chem Screen including HDL, PBG, ferritin and a slew of other con artist schemes. He was the sole reason Quest had to pay back millions of dollars to the government for the profile and test add-on allegations. And he escaped untouched. And now this hypocritical fool is claiming Quest and Lab Corp should be investigated for improper business practices?? He’s the one that should be in jail and he’s making a mockery of the government he once defrauded to the tune of hundreds of millions of dollars.

    • Anonymous says:

      Ha! You posted the exact same comments on cafepharma. You’re a clown!

      • Anonymous says:

        So it’s ok for Baker to tout his claims on multiple sites but not ok for someone to post a rebuttal on multiple sites? Really? Please tell me you have better things to do in your life….

    • A says:

      Thank you for jumping in.

      I was not aware of Mr. Baker’s participation in deals that required Quest to pay back millions.

      Do you have documentation you could provide?

    • Anonymous says:

      Baker is a criminal. He owns Huntington Life Sciences which is a company that tortures animal for research and make a lots of money. He also owns Manhattan Clinical Labs which is as corrupt of a company you can imagine. Check into the “Italian” connection and these guys who will be in jail and out of business.

  5. Anonymous says:

    The industry is corrupt. You won’t know the scams in the industry unless u are inside it. Of course, the Author was involved in the crap. That’s why he was able to survive in it. And that’s the only way he was able to understand the abusive scams within it. As homonim attacks don’t address the issue of the scams. His article reeks of the ugly truth.

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