Minnesota didn't overpay for COVID-19 tests, audit reports

A three-month audit of rates paid by the state of Minnesota for COVID-19 testing found no evidence that it overpaid the two private companies running the testing programs, according to a report released Wednesday.

The Minnesota Legislative Auditor's Office reviewed the issue after receiving complaints this spring about the state's emergency, no-bid contract with the companies and concerns they were overbilling. The companies — Vault Medical Services of New York and Infinity Biologix (IBX) of New Jersey — have collected and processed millions of COVID-19 tests taken by Minnesotans.

Auditors examined 22,714 claims for COVID testing submitted to publicly funded insurance programs and found that insurers collectively paid nearly $400,000 of the more than $1.3 million in billed charges from Vault and IBX. Separately, the Minnesota Department of Health, which signed the no-bid contract last November with the two companies, has paid Vault just over $3 million for testing costs.

The state's maximum obligation under the contract is $74.9 million.

The auditors didn't examine bills for COVID testing submitted for privately insured people, such as those covered by their employer. They also didn't opine on the appropriateness of the testing prices.

Vault runs many of the state's testing sites and its mail-order testing program, and coordinates billing, logistics, physician services and post-test communications. Infinity Biologix operates the testing lab in Oakdale established with equipment purchased by the state.

The Star Tribune reported in April that private insurers were initially billed $300 or more per test. Those rates dropped as the insurers worked to negotiate pricing contracts. The tests came at no cost to patients.

Vault and IBX could charge private companies their customary rates for testing and related services, but the insurers were not obligated to pay those rates.

The contract between Vault, IBX and the state said Minnesota would guarantee the companies received no less than the "total inclusive price," capped at $120.99 per test, if any private insurer didn't pay the total amount owed.

The report quotes anonymous officials at three Minnesota insurers who say the rates charged for publicly insured individuals — such as those on Medicaid or in the state employee group insurance program — were initially too high. But auditors found no evidence of intentional overbilling.

Officials with Vault and IBX told the auditors that they charge the same rates regardless of whether the patient's insurance coverage is publicly or privately funded. They said it's common in health care for insurers to pay less than what was initially invoiced.

"Some payors pay amounts at or near the standardized rates charged, but more often they actually reimburse providers far less than the amounts billed," IBX General Counsel Mary Storella wrote in an e-mail to auditors.

Sen. Michelle Benson, R-Ham Lake, who pushed for the audit, said the review was a "good first step," but added that she still has questions about the state's negotiations with the companies.

"I will continue to press for more answers," she said in a statement.

The auditor's report will be presented to the Legislative Audit Commission Audit Subcommittee at 9 a.m. Thursday.

Joe Carlson • 612-673-4779