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For most people, COVID is little more than a bad memory, but the costs of taming the virus are still being litigated. In Oregon, a Harvard-trained doctor stands accused of grossly overcharging for tests—$2,500 for something worth less than $20.
In the early days of the pandemic, testing was the preferred tool to slow its spread. So, in an effort to get more people tested, federal officials made the tests free, through a provision in the sprawling $2 trillion stimulus package known as the CARES Act. That provision required insurers to reimburse providers for the full price of COVID tests.
But that law had a loophole big enough to drive a Brink’s truck full of cash through. It set no limit on the price. Providers could, in theory, charge whatever they wanted—and insurers would be forced to foot the bill.
The loophole did not go unnoticed. “Unscrupulous actors will surely find ways to exploit the new CARES Act provision,” Loren Adler, associate director of the Brookings Institute’s Center on Health Policy, wrote at the time.
Adler floated to policymakers the idea of capping test prices, but the urgency to get tests out the door trumped the desire for cost controls. “We were trying to do this super rapidly,” Adler explains to WW. “The best way to get supply online was to overpay.”
So unscrupulous actors got to work. According to one pending lawsuit, a chain of Willamette Valley pain clinics, Pain Care Specialists of Oregon, tested patients and employees for COVID, sometimes twice a day, for a yearlong period beginning in February 2021 and billed insurance $2,500 per test.
Adler says it’s one of the more egregious cases of COVID test overbilling he’s encountered. “These tests probably cost $18,” he tells WW.
The scheme ultimately raked in more than $1 million for the firm, according to Providence Health Plan, which is demanding its money back. Pain Care, controlled by Salem anesthesiologist Dr. Poly Chen, has refused.
State policymakers are struggling to rein in health care costs, which now make up 22% of Oregonians’ household budgets. And while health care is certainly costly to provide, critics say much of the problem is simply bloated prices.
“It’s obnoxious and really appalling,” Tony Germann, a Woodburn family doctor and vice president of Health Care for All Oregon, says of the allegations against Pain Care. “The CARES Act is a well-intentioned law and got people the care they needed, but that’s a flaw in the system.”
Now, the decision over who should pay is playing out in a Marion County courtroom.
Attorneys for Pain Specialists of Oregon say the transactions were business as usual. Bookkeepers submitted bills. Providence paid them. Sure, the price was high. But COVID tests were in short supply and a valuable commodity back in the early days of the pandemic. After all, they note, “the CARES Act is silent on the required reimbursement price.”
Attorneys for Providence say Pain Care’s “windfall” amounts to “unjust enrichment,” and they argue they can prove the markups violated consumer protection laws.
The CARES Act might not have set a maximum price for the tests, Providence’s attorneys say, but it did have another provision meant to keep prices down. Test providers were required to post the “cash price” of the tests on their website. The idea of such price transparency laws is to entice consumers to choose providers with the lowest prices, putting downward pressure on costs.
But Pain Care didn’t post its price, Providence says. The chain wasn’t alone. Harvard researchers who surveyed hospitals in September 2020 found two-thirds hadn’t done it. “These findings may be partially explained by the relatively modest penalties ($300 per day) for noncompliance,” Roy Xiao and Vinay Rathi wrote. (The U.S. Department of Health & Human Services, which is in charge of levying those penalties, didn’t respond when asked whether it had looked into Pain Care Specialists of Oregon.)
But what really annoyed Providence administrators was what happened when they called out Pain Care on the oversight.
The chain updated its website in April 2022, posting the comparatively reasonable cash price of $289 for COVID testing—a fraction of what it was billing Providence. Pain Care’s attorneys argue the tests got cheaper thanks to the prevalence of home testing. Providence’s attorneys point out Pain Care kept submitting bills with the old $2,500 price, anyway.
Another issue: The CARES Act required full reimbursement only if tests were “medically necessary.”
But Pain Care was billing for two tests at a time, “apparently for the purpose of increasing its billings by charging $5,000 or more for testing,” Providence’s attorneys wrote. “There is no medical purpose for doing a rapid test and taking a second sample on the same day,” they note.
Pain Care billed not just for its clients, but also tests done on two dozen of its employees too, Providence claims.
Providence declined to comment on the case. Dr. Poly Chen, the Harvard-trained pain specialist who runs Pain Care, and the clinics’ attorneys did not return calls.
Many details of the case remain undisclosed. Providence has outlined the alleged scheme in legal filings, but has yet to produce bills or other evidence to back up its claims.
Regardless, Judge Sean Armstrong has so far sided with Providence, in August rejecting Pain Care’s attorneys’ efforts to throw out the case. On May 6, Pain Care’s attorneys filed documents once again denying all of Providence’s allegations and demanding the insurer pay their fees. The case is inching toward a trial. No date has been set.
Bad blood between Chen and the Sisters of Providence goes back nearly a decade. Chen once contracted with Providence Health & Services, which runs eight hospitals in Oregon. Records show Providence severed the relationship. It’s not clear when or why, and Providence won’t say. But the decision triggered an investigation by the Oregon Medical Board in 2015 that threatened Chen’s license to practice medicine.
Chen came to Oregon after completing his fellowship in pain medicine at Harvard Medical School in 2009. He opened the first Pain Care clinic in a squat medical complex just north of downtown Salem shortly thereafter.
The business proved lucrative. By 2013, federal records show, he was being paid nearly $1 million a year by Medicare alone. Soon, Chen expanded, opening an outpatient surgery center so the chain’s doctors could perform operations nearby.
Despite his success, Chen had been cutting corners, according to the investigation by the Oregon Medical Board. One of the clinics where he performed minor surgical procedures, it’s not clear which one, wasn’t accredited, a violation of state regulations. Worse, a review of patient charts showed that his notes didn’t “support his diagnoses.” Nor was he adequately assessing patients before recommending treatments, the board found.
It reprimanded Chen, fined him $6,000, and put him on probation for five years, during which he was required to have a second physician review his pain management cases and approve any “invasive spinal procedure.”
One former patient, Eugene Schurr, who filed a lawsuit after Chen allegedly botched a surgery, claimed he wouldn’t have chosen Chen if he’d known the doctor had been put on probation. Schurr settled and says he can’t discuss the case.
Chen’s probation was lifted early, at his request, in 2019. Since then, his business has rapidly expanded. He now has five doctors working under him, and five clinics too, including one at a for-profit hospital in McMinnville.
But Chen is now under investigation again. The Oregon Medical Board voted to issue formal charges in October. The nature of those charges, however, is unclear. Six months later, the document explaining them has yet to be made public. A spokesperson said the board’s attorney had retired and the replacement was still getting up to speed.