Bio-Reference Laboratories, the rapidly growing Elmwood Park, N.J.-based firm that is aiming to become a national player, is engaged in a nasty spat with the Blues plan in its home state. Bio-Reference took the highly unusual step of describing the conflict in detail as part of its quarterly earnings report that was released late last month. It was part of an explanation as to why its days sales outstanding (DSO) had increased by three days during the reporting period. Marc Grodman, M.D., Bio-Reference’s chief executive officer, made it clear in the statement that the increase in DSO was purely the company’s own choice and is “attributable to an issue with Horizon Blue Cross Blue Shield of New Jersey (Horizon) pursuant to which we have elected temporarily to suspend billing.” According to Grodman, “over the past several months, we have come to believe that we should have been paid for certain services rendered to Horizon under our agreement to service their PPO subscribers. We believe Horizon has mischaracterized these services as managed care and therefore not payable under our PPO agreement. Based on Horizon’s characterization of these services, we had not previously billed or recognized revenues for these services. After BioReference […]
Bio-Reference Laboratories, the rapidly growing Elmwood Park, N.J.-based firm that is aiming to become a national player, is engaged in a nasty spat with the Blues plan in its home state.
Bio-Reference took the highly unusual step of describing the conflict in detail as part of its quarterly earnings report that was released late last month. It was part of an explanation as to why its days sales outstanding (DSO) had increased by three days during the reporting period.
Marc Grodman, M.D., Bio-Reference’s chief executive officer, made it clear in the statement that the increase in DSO was purely the company’s own choice and is “attributable to an issue with Horizon Blue Cross Blue Shield of New Jersey (Horizon) pursuant to which we have elected temporarily to suspend billing.”
According to Grodman, “over the past several months, we have come to believe that we should have been paid for certain services rendered to Horizon under our agreement to service their PPO subscribers. We believe Horizon has mischaracterized these services as managed care and therefore not payable under our PPO agreement.
Based on Horizon’s characterization of these services, we had not previously billed or recognized revenues for these services. After BioReference began to bill and was initially paid by Horizon for a fraction of these previously unbilled claims, Horizon ceased paying for these disputed services and sought to recoup those payments from monies due to us for unrelated and undisputed services rendered. As a result, we suspended billing Horizon for most services while this dispute is ongoing.”
Grodman added that negotiations were continuing with Horizon through its legal counsel but that litigation was a possibility.
Bio-Reference officials declined to comment further. Horizon officials did not respond to requests seeking comment.
Observers say the dispute is unique and likely tied to Bio-Reference’s way of doing business.
“I am not surprised,” said Michael Snyder, president of Clinical Labs Business Solutions, a New York City-area consulting firm. “Bio has had good discipline (regarding) holding the payers to their contractual obligations, as opposed to the majority of the industry.”
Dottie Miller, chief executive officer of Miller Consulting Services near Philadelphia, also believes that the dispute is unique. She added that Bio-Reference has been working hard in recent years to shed the negative publicity associated with a former vice president of sales who allegedly pocketed nearly $2 million through abuses of his expense account and that it would not be picking public fights with payers without a specific reason.
“Marc Grodman is a very up-and-up guy,” Miller said.
Takeaway: Bio-Reference’s public fight with a large payer is symptomatic of the tense relationship between labs and health plans these days and indicative of the company’s corporate culture.
