Kansas City insurance provider: COVID test lab is price gouging

A major Kansas City health insurance provider is accusing a medical laboratory of price gouging for COVID-19 tests, charging roughly 10 times more than other companies.

Blue Cross Blue Shield of Kansas City filed a federal lawsuit Wednesday in the Western District of Missouri seeking a declaratory judgment that would prevent the insurance provider from having to pay for testing done by the company, GS Labs. Blue Cross Blue Shield announced the lawsuit in a statement Wednesday, saying the company is “not working with us in good faith.”

GS Labs is based in Omaha, Nebraska. The company says on its website that the lab began offering COVID-19 tests in 2020, “with a mission to offer convenient and quick testing options.” It advertises prices around $380 for a basic COVID-19 test and up to $979 for more advanced tests.

In a statement, GS Labs called the lawsuit a “naked attempt to bully our company.” The company says its prices “accurately reflect the level of service we provide on a national level and the industry’s safest and most convenient patient experience.”

“Every single claim against GS Labs is false,” the company said in the statement. “We look forward to vigorously defending our business practices and our company’s reputation.”

According to the lawsuit, Blue Cross Blue Shield has received 10,000 claims for COVID-19 rapid antigen testing from GS Labs. The test equipment is typically available for a wholesale purchase price of under $20 apiece, according to the lawsuit.

Other lab test providers charge as little as $35 to administer tests, the suit alleges.

In total, GS Labs has submitted over $9.2 million of “inflated and otherwise improper claims” to the insurance provider, the lawsuit alleges.

In December, the Kansas Insurance Department began investigating a lab in Lenexa operated by GS Labs in regard to its higher-than-average prices. In a letter, Justin L. McFarland, the state agency’s general counsel, noted the Lenexa lab was charging a $1,000 cash price for a test that averages around $185.

“If these astronomical costs charged by unscrupulous providers are borne by the health plans and insurers without recompense, consumers will ultimately pay more for their health care as health insurance costs will rise,” McFarland wrote.