Reimbursement for COVID-19 testing has been a bone of contention between labs and private insurers almost from the moment the public health emergency began. The focal point of the conflict has been the March 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) requiring insurance companies to provide patients free COVID-19 tests and reimburse the testing lab that provided the tests. Testing labs have accused insurers of not meeting their CARES Act reimbursement obligations. A significant new court ruling from a Minnesota federal court draws a line on how far labs can go when insurers short-change them.
Context: The CARES Act requires private insurers to provide patients free COVID-19 testing without copays or other cost sharing and reimburse the testing lab at the “negotiated rate.” If there’s no negotiated rate, the reimbursement amount is equal to the “cash price for such service as listed by the provider on a public internet website.”
The court case began when COVID-19 testing provider GS Labs sued Medica Insurance for violating the CARES Act, contending that instead of paying its Minnesota labs for tests at the required cash-price rate, the private insurer withheld payment and then requested medical records for each test.
The Minnesota federal court ruled that GS Labs didn’t have a valid legal claim and dismissed the case. Maybe Medica did violate its CARES Act reimbursement duties, maybe it didn’t. The real question is whether GS Labs could file a private lawsuit against an insurer for violating the CARES Act. Explanation: Private persons can’t sue another person for violating a federal statute unless the law provides for a “private right of action” to enforce the law.
The CARES Act includes no such express provision, the court found; nor can a private right of action be implied by the terms of the law. “There is no private right of action or remedy under the CARES Act for diagnostic-testing providers to recover reimbursement for COVID-19 testing at the publicly-posted cash price,” the court concluded [GS Labs, Inc. v. Medica Ins. Co., 2022 U.S. Dist. LEXIS 169307].
See more key cases involving labs in our October 2022 issue of Lab Compliance Advisor, posted online in advance of PDF publication.