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28 Jul 13 Labcorp Scamming Federal Government

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LabCorp ScamAndrew Baker, the former CEO of Unilab and current CEO of Huntington Life Sciences, has written an article for The Huffington Post in which he asks the federal government to stop LabCorp and another lab company from continuing to scam the Medicare and Medicaid programs of billions of dollars.

Mr. Baker had previously filed a whistleblower lawsuit against LabCorp in 2007 alleging that LabCorp violated the federal False Claims Act and Anti-Kickback Statutes.  Those case is still in court.

In the article he estimates that LabCorp and the other lab 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.

The claims are that Labcorp is breaking federal laws by deeply discounting lab fees to private insurance companies, sometimes charging them for laboratory tests 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 LabCorp.

He claims that Labcorp funds the kickbacks, in the form of lower lab fees for private insurance companies, by charging Medicare and Medicaid patients the highest possible fee instead of offering them the lowest charged price, and by pressuring doctors to send all of their lab work exclusively to Labcorp. Other categories in Medicaid and Medicare require that the government be charged the lowest charged fees by a provider.

Mr. Baker also mentions LabCorp’s $50 million settlement with the state of California for overcharging California’s Medicaid program and for providing kickbacks to physicians for referrals.

As a result of his article, pressure is increasing for 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.  This would require that Laboratory Corporation of America can only charge Medicare and Medicaid the lowest price they charge private insurance companies or HMOs. Which in turn means a massive hit to Labcorp’s bottom line. It would also open up the market to smaller labs which don’t have the multi-tier, lower than cost pricing intended to put them out of business. Such a hit to Labcorp’s financials would tumble their stock (NYSE: LH).

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26 Jul 13 LabCorp Shareholders Disappointed

LabCorp Shareholders are DisappointedLabCorp shareholders were disappointed at the lower than expected earnings that Laboratory Corporation of America, also known as LabCorp, revealed. Medical laboratory operator Laboratory Corp. of America Holdings said Friday that its net income slipped in the second quarter and lowered its guidance for the full year. This was a major disappointment to analysts and shareholders alike, but not to the patients who have received lackluster service at LabCorp facilities.

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Its revenue rose 3 percent but the company said the advance was constrained by reduced Medicare payments, steep federal budget cuts in April, and delays and denials of coverage by some health care payers after new payment codes were introduced. Its shares slipped by midday.

LabCorp said its net income fell to $151.9 million, or $1.62 per share, in the second quarter ended June 30, down from $153.3 million, or $1.56 per share, a year earlier. Revenue rose 3 percent to $1.47 billion from $1.42 billion.

LabCorp said testing volumes rose 5 percent during the quarter, but revenue per request for testing fell 1.8 percent. It said testing for drugs of abuse increased. The company expects to earn between $6.90 and $7.10 per share for the year, down from $6.85 to $7.15 per share.

LabCorp said earlier this year that reduced Medicare payments will cut its annual net income by about 35 cents per share, and it maintained that view on Friday. Analysts are forecasting earnings of $7.08 per share.

The company still expects its annual revenue to grow 2 to 3 percent, which implies a total of $5.78 billion to $5.84 billion. Analysts project $5.79 billion in revenue on average. Shares of LabCorp (NYSE: LH) lost 74 cents on the announcement. As of today, July 26th, shares of LabCorp are trading at around $98 per share.

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