Senate to probe Aetna, Cigna, United Healthcare, Quest, LabCorp for alleged billion-dollar fraud

Senate members yesterday called for an investigation of possible Medicare and Medicaid fraud between the nation's largest laboratory testing companies and insurers, reports The Fiscal Times. Senate Finance Committee chairman Max Baucus (D-Mont.) and ranking member Charles Grassley (R-Iowa) demanded Quest Diagnostics and Laboratory Corporation of America, along with Aetna, Cigna, and United Healthcare, fork over their records in what could document billions of dollars worth of overpayments from Medicare and Medicaid.

The insurance companies allegedly encouraged in-network physicians to send their patients' lab tests to a specific testing company. Known as a pull-through scheme, a clinical laboratory testing company offers contracts for discounted or below-cost pricing, in exchange for in-network physician referrals of other laboratory testing business, including testing for Medicare beneficiaries, to that clinical laboratory testing company, according to the Senate letters sent to the companies. Congress passed the federal anti-kickback law to protect patients and the federal programs from potential influence of financial arrangements on care decisions.

Earlier this year, Quest and LabCorp settled with the state of California for $241 million and $49.5 million, respectively, for overbilling, although they did not admit wrongdoing, according to the article.

The companies have until Dec. 1 to respond to the request from Senate investigators, asking for lab service agreements, correspondence about contract negotiation, presentations about contracts, and other documents.

The government recovered a record $4 billion from health fraud cases in 2010. The federal government specifically tripled recovered Medicaid funds in the past six years, worth $1.84 billion in scams.

For more information:
- read the Fiscal Times article
- read the Reuters article
- read the Senate Finance press release

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