Chuck Grassley

United States Senator from Iowa





Grassley, Baucus scrutinize practice by health insurers and testing labs

Nov 08, 2011

Grassley, Baucus scrutinize practice by health insurers and testing labs

WASHINGTON – Senators Chuck Grassley and Max Baucus are asking the leaders of three major health insurance companies and two leading clinical laboratory testing companies for information about a practice where insurers receive discounted pricing from labs in exchange for referrals, including testing for Medicare beneficiaries.  

In a letter sent today, the senators noted that the Inspector General for the Department of Health and Human Services previously has issued advisory opinions expressing concerns about what’s called “pull through” and calling such discount arrangements “particularly suspect.”  A Medicaid fraud case in California that recently settled for $241 million involved allegations that a medical laboratory had overcharged the state’s insurance program as part of paying kickbacks to doctors and hospitals that referred patients to its labs.

As Ranking Member of the Judiciary Committee and Chairman of the Finance Committee, respectively, Grassley and Baucus said they want to “protect the interests of our nation’s Medicare and Medicaid beneficiaries and the federal health care programs.”

Grassley and Baucus asked Cigna, Laboratory Corporation of America, Aetna, Inc., UnitedHealth Group Inc., and Quest Diagnostics Incorporated for copies of lab service agreements, correspondence related to negotiation of the contracts, presentations to boards about contracts, presentations to clinical laboratory testing providers, and other documents related to pull-through practices, including those provided in response to subpoenas from attorneys general.

Together, Grassley and Baucus have conducted oversight on fraud against the nation’s health care programs and sponsored legislation to improve the government’s ability to fight fraud.  Last month, they released a report detailing tactics used by home health companies meant to increase their profits by gaming Medicare.  Earlier this year, when their investigation found that the drug company Sanofi interfered in the approval of generic alternatives to its blood-thinner drug Lovenox, the Finance leaders called on the Food and Drug Administration (FDA) to help guarantee consumers have access to affordable generic medications.  Last December, Baucus and Grassley released a report detailing the relationship between Abbott labs and a Maryland doctor who allegedly implanted nearly 600 unnecessary cardiac stents into his patients, costing the federal government as much as $3.8 million in overpayments.  The specific stent case highlighted in the Senators’ report is indicative of a widespread, national problem of unnecessary stenting.  The Senators also spearheaded a two year inquiry which revealed undisclosed side effects of the diabetes drug Avandia.  This resulted in the FDA restricting use of the drug, ensuring that patients and doctors have the information they need to make safe, informed decisions about their medication.