Pop-up COVID test sites and labs capitalize on lax regulations, prey on vulnerable Americans – USA TODAY

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Tents, storage units, trailers, a former barbershop, an old karate studio and worn-down suburban strip malls.

The locations are among the hundreds of sites nationwide where pop-up coronavirus testing vendors have set up shop in recent months, capitalizing on lax regulations, financial incentives and high demand for testing.

State officials have been warning residents to avoid unregulated sites. But many Americans – without free, quick and accessible alternatives for coronavirus testing – have rushed to the locations anyway.

As the nation scrambles to address a shortage of timely tests, the federal government has endorsed an all-hands-on-deck approach, authorized billions in federal funds and loosened pre-pandemic safeguards to increase access to testing.

The effort pushed COVID-19 testing capacity in January higher than it’s ever been, with labs routinely completing more than 2 million tests per day, according to Johns Hopkins University data.

But it’s also created opportunity for bad actors to take advantage of ripe conditions.

In the months it has taken regulators to catch up with a handful of nationwide testing operations, the federal government has shelled out more than $500 million to three labs now under investigation. The FBI last month searched the headquarters of one testing marketer, Center for COVID Control in the Chicago area, headed by an entrepreneur whose social media posts cited “COVID money” with images of new Lamborghinis, a Ferrari and a $1.36 million mansion.

In the meantime, many who sought tests from from pop-up sites that partnered with the labs now question their test results  – if they received them at all.

“There are insatiable demands for testing and a lot of money floating around,” said Richard Scanlan, a professor of pathology and laboratory medicine at Oregon Health & Science University. “Undoubtedly, people see that as an opportunity.”

Pop-up testing sites ‘not licensed or regulated’

The federal government has taken measures to increase access to coronavirus testing during the pandemic.

One move made it easier for providers to offer point-of-care coronavirus tests. During the pandemic, the U.S. Centers for Medicare and Medicaid Services allowed sites that offer point-of-care tests – such as rapid antigen tests that provide results in 15 minutes and don’t require a lab – to seek a CLIA (Clinical Laboratory Improvement Amendments) certificate of waiver. They can test and report results as long as they have applied for a waiver.

The government also made private insurers pay for COVID-19 tests even if administered by out-of-network labs that charged high rates. And the U.S. Centers for Medicare and Medicaid Services no longer require a physician’s order for testing, a relaxed standard a government watchdog warned “could allow unscrupulous actors more leeway for fraudulent billing of unnecessary add-on testing.”

The changes created fertile ground for an economy of pop-up testing sites to take root across the nation. 

“It is important for people to know that these sites are not licensed or regulated by a government agency,” Illinois Attorney General Kwame Raoul said in a consumer alert last month. Officials in other states have issued similar warnings.

In recent weeks, coronavirus testing sites in tents popped up in Philadelphia, causing a stir among residents and prompting warnings from local officials.

“Their materials were not professional, they were not following proper safety procedures, and they told us – falsely – that they were being funded by FEMA (the Federal Emergency Management Agency),” said Matt Rankin, spokesperson for the Philadelphia Department of Public Health.

THEY GOT RICH OFF ‘COVID MONEY’:  Now they’re under investigation

Many of the new testing sites have partnered with new or existing labs, which can bill private insurers or a federal fund for uninsured patients. Because they are paid per test, labs are incentivized to test more.

The pop-up testing site in Philadelphia contracted with a lab that has been reimbursed more than $80 million through the U.S. Health Resources and Services Administration’s COVID-19 Uninsured Program, public data shows.

Rankin added: “Our worry is that, given the false pretenses the tables we visited were operating under, and the fact that anyone can set up a tent and say they’re conducting COVID testing, people should take extra special care.”

Labs exploit regulatory weaknesses

There are signs a handful of labs are exploiting existing weaknesses in the regulatory system.

Two states have sued the nationwide coronavirus testing chain Center for COVID Control and its primary lab, Doctors Clinical Lab, alleging the sites and lab provided inaccurate results, fraudulently reported negative results and listed people with private insurance as uninsured. Federal and state investigators are still probing the operation.

The case draws attention to the federal Clinical Laboratory Improvement Amendments law, which establishes lab standards for accuracy, reliability and timeliness of test results.

Some experts say unscrupulous lab operators can take advantage of a regulatory opening that allows labs to register, test and bill before inspectors finish a CLIA certificate survey. In other cases, investors might purchase or establish management agreements with existing labs and begin testing before inspectors get in to verify the lab’s reliability.

“You can apply for a CLIA certificate and then start testing before anybody ever walks into the laboratory,” said Scanlan, chair of the College of American Pathologists Council on Accreditation. “And that’s sort of the loophole that these people are exploiting.”

Center for COVID Control was incorporated in December 2020, according to Illinois state filings. The business, which describes itself as a “test collection marketing and management firm,” began working closely with an existing lab, Doctors Clinical Lab.

Regulators didn’t visit the lab for an on-site inspection until the end of September of the following year, according to the U.S. Centers for Medicare and Medicaid Services. Regulators found the lab was not reporting COVID-19 test results to public health officials.

Inspectors visited the lab and testing sites again in November and December and found numerous “deficiencies,” according to an 81-page report from the agency. The report listed the lab as being in “immediate jeopardy,” a designation the federal government describes as one that requires immediate corrective action of conditions likely to injury, harm or death.

With no regulators checking its on-site operations for months on end, Doctors Clinical Lab partnered with Center for COVID Control’s network of more than 300 testing sites in more than 26 states and, at its peak, took in about 80,000 tests a day.

Lisa Sanchez, 55, said she visited a walk-up site run out of an old bank building in Everett, Washington, on Jan. 11. Her husband had tested positive, and she felt lethargic and congested with a sore throat. Local health department testing sites were booked out for the week, she said, and she saw a friend share information about the Center for COVID Control site on Facebook.

Sanchez said she drove half an hour each way to the site twice that day to take a rapid test, waited hours each time and was told twice that the site lost her test. That evening, she received an email stating her test was negative.

“My manager said, ‘Oh, you’re negative, OK, come back to work,'” said Sanchez, who works in manufacturing. Sanchez went back to work for three days but then tested positive at a different location on the fourth day. She filed a complaint against the testing chain to the state attorney general’s office.

“They’re taking advantage of the situation, and of people,” Sanchez said. “I was pretty angry because they collected a lot of personal information. I felt frustrated because I had wasted time and gas money. To me, it seemed like they put up this whole front.”

Center for COVID Control’s primary lab, Doctors Clinical Lab, has collected more than $155 million through the COVID-19 Uninsured Program, public data shows. The lab and others have attributed customers complaints to testing delays during the surge of the omicron variant of the coronavirus.

Health providers that seek reimbursement from the federal fund must provide a unique national provider identifier as well as a tax identification number.

Labs also must also provide a CLIA number. Labs can get this number when they apply for a license with state agencies that administer the federal laboratory laws. Once the  application is accepted by the state agency, the lab is issued a “certificate of registration,” which has a CLIA number, even before a lab gets a certification survey.

With travel restrictions and heavy workloads for lab inspectors, the lag from the time a lab registers until it gets an on-site inspection for a certificate “can be considerable,” Scanlan said. 

The loophole is “clearly a gap that unscrupulous operators could take advantage of, swoop in quickly, scoop up a bunch of money from Medicare and hit the road before anybody’s the wiser,” Scanlan said.

Health Resources and Services Administration officials said the agency employs program integrity and oversight measures to ensure claims to the $1 billion COVID-19 uninsured program claims are legitimate. Labs and testing providers also must collect information from the person getting tested, including name, birth date and gender.  

“The program’s oversight also includes pre- and post-payment controls such as reviewing and adjudicating claims for services provided to uninsured individuals, and monitoring and evaluating claim anomalies,” HRSA spokesman Scott Kodish said. 

HRSA can suspend reimbursements and take corrective actions to recover funds from labs or providers that don’t meet terms of the uninsured program. HRSA officials did not immediately say whether the agency has suspended funds to any providers, including the Chicago labs.

Nationwide complaints continue

People across the U.S. are continuing to report coronavirus testing issues to a hotline run by the U.S. Department of Health and Human Services’ Office of the Inspector General.

“We are seeing an uptick in COVID-19 testing complaints,” said Yvonne Gamble, spokesperson for the office.

Some consumers continue to claim price gouging and delayed turnaround times, according to public health, consumer protection and justice departments across the U.S.

“We’ve just been getting more complaints about COVID testing in general. It’s not necessarily they think it’s fake. It’s just taking a long time,” said Bailey Parker, spokesperson for the South Carolina Department of Consumer Affairs.

Maryland has received 16 complaints related to coronavirus testing since November, the attorney general’s office said. Most of the complaints concern the cost of an over-the-counter test, the out-of-pocket cost of a facility-provided test or the patient being billed for an office visit in addition to testing, spokesperson Aleithea Warmack said.

Iowa has received five complaints of price gouging since November, regarding three different coronavirus testing providers, the attorney general’s office said. Two people said they were later charged more than $800 for coronavirus tests at a lab now facing two lawsuits that claim price gouging.

In Hawaii, the department of health issued cease and desist orders to two companies toward the end of 2021 that were operating numerous testing sites without CLIA certificates and state permits. The department levied a $207,000 penalty on one company and $58,000 on the other.

Since December, New York State has issued warning letters to at least five different testing sites and labs that “failed to meet promised turnaround times,” spokesperson Halimah Elmariah said. One of the testing sites, LabWorq, set up small tents on street corners in New York City last year. Online records appear to show the owner previously ran an upstate New York company that did interior seat work for automobiles.

Another testing chain in New York City, CareCube, has drawn scrutiny from local news outlets and is now under investigation by the New State Attorney General’s Office “over reports that the company wrongfully billed” residents for tests.

“As New Yorkers brace for a continued surge in Omicron cases through the winter, we cannot create harmful financial barriers that keep our communities from seeking testing,” Attorney General Letitia James said in a statement last month. “CareCube and all COVID-19 test providers have a responsibility to be accurate and transparent in their billing process.”

How to avoid scam testing sites

Numerous organizations, agencies and officials have offered guidance on how to avoid a fake testing site.

Dr. Emily Volk, president of the College of American Pathologists, said people can be comfortable in a setting they are familiar with, such as a chain drugstore or their doctor.

Consumers who are unfamiliar with a pop-up site should ask how long the provider has existed, which lab will be used to process tests and whether the site is accredited by an independent organization, she said.

“If it looks a little sketchy, they should ask them more questions,” Volk said. “Consumers can ask, ‘Where are you sending my specimen?'”

The U.S. Federal Trade Commission recommends getting a referral from your doctor or state or local health department’s website or checking with your local police or sheriff’s office to make sure a site is legitimate. “In other words, don’t trust a random testing site you see around town,” the agency said in an online post last month.

The Better Business Bureau recommends researching a location first to see if the testing site has good reviews and if there are complaints or scam reports associated with the business. The organization recommends reviewing the warnings from the FBI, Federal Trade Commission, attorney general’s office and BBB ScamTracker.

In guidance issued last month, the attorney general of Florida said “signs of illegitimate, pop-up testing sites” include sites not delivering results, having no affiliation with local medical providers or government entities, workers seeming uninformed about the testing process and volunteers that are unmasked or not following current federal guidelines.

“The system largely works,” Volk said. “There are always going to be people who find a way to exploit these small loopholes .. I would hate for there to be a push for government regulations that were overly burdensome for the (majority of) labs that are really doing a lot of good to try to deal with the handful of bad actors.”

Ken Alltucker is on Twitter as @kalltucker or can be emailed at alltuck@usatoday.com. Reach out to Grace Hauck for tips at ghauck@usatoday.com or on Twitter @grace_hauck.