A Penn Chain Reportedly Charged Thousands of Dollars for Unnecessary Covid Tests


For most people, Covid is little more than a bad memory, but the cost of containing the virus is still being litigated. In Oregon, a Harvard-trained doctor has been accused of overcharging for tests — $2,500 for something worth less than $20.

In the early days of the pandemic, testing was the tool of choice to slow its spread. So, in an effort to get more people tested, federal officials made testing free through a provision in the massive $2 trillion stimulus package known as the CARES Act. That provision required insurers to reimburse providers for the full cost of COVID tests.

But there was a loophole in that law big enough to slip a Brink's truck full of cash through. It did not set any limits on price. Providers can, theoretically, charge whatever they want – and insurers would be forced to foot the bill.

No one noticed the flaw. “Unscrupulous actors will certainly 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 pitched the idea of ​​capping testing prices to policymakers, but the urgency to get testing out the door outweighed the desire for cost control. “We were trying to do it very quickly,” explains Adler. WW, “The best way to get supplies online was to pay more.”

So the unscrupulous actors got the work. Pain Care Specialists of Oregon, a chain of Willamette Valley pain clinics, tested patients and staff for COVID sometimes twice a day for a one-year period starting in February 2021, according to a pending lawsuit And billed the insurance $2,500 per test.

Adler says this is one of the most serious cases of COVID test overbilling he has seen. “These tests probably cost $18,” he explains. WW,

The scheme ultimately netted more than $1 million for the firm, according to Providence Health Plan, which is seeking its money back. Pain Care, controlled by Salem anesthesiologist Dr. Polly Chen, has refused.

State policymakers are struggling to rein in health care costs, which now account for 22% of Oregonians' household budgets. And while providing health care is certainly expensive, critics say much of the problem is simply inflated prices.

“It's unpleasant and really appalling,” Tony German, the Woodburn family doctor and vice president of Health Care for All Oregon, says of the allegations against Penn Care. “The CARES Act is a well-intentioned law and it gets people the care they need, but it's a flaw in the system.”


Now, the decision about who should pay is being played out in Marion County court.

Attorneys for Pain Specialists of Oregon say the transaction occurred as normal. Accountants deposited the bills. Providence paid them. Sure, the price was high. But COVID tests were in short supply and a valuable commodity in the early days of the pandemic. After all, they note, “the CARES Act is silent on the required reimbursement value.”

Providence's lawyers say Penn Care's “windfall” amounts to “unjust enrichment”, and argue they can prove that the markup violated consumer protection laws.

Providence's lawyers say the CARES Act would not have set a maximum price for the tests, but it did have another provision to keep prices down. Testing providers were required to post the “cash value” of tests on their website. The idea of ​​such price transparency laws is to entice consumers to choose providers with the lowest prices, thereby reducing cost pressures.

Providence says, but Pain Care did not disclose its price. Chen was not alone. Harvard researchers surveying hospitals in September 2020 found that two-thirds had not done so. Roy Xiao and Vinay Rathi wrote, “These findings may be partly explained by the relatively modest penalties for non-compliance ($300 per day).” (The U.S. Department of Health and Human Services, which is in charge of imposing those penalties, did not respond when asked whether it had looked into Oregon's pain care specialists.)

But what really upset Providence administrators was when they accidentally called Pain Care.

The chain updated its website in April 2022, posting a comparatively reasonable cash price of $289 for a COVID test — a fraction of what Providence was billing. Pain Care's attorneys argue that the prevalence of home testing has made tests cheaper. Providence's lawyers say Pain Care continued to bill at the old $2,500 price anyway.

Another issue: The CARES Act requires full reimbursement only if tests are “medically necessary.”

But Penn Care was billing for two tests at one time, “apparently for the purpose of increasing its billings by charging $5,000 or more for a test,” Providence's lawyers wrote. “There is no medical purpose in doing a rapid test and taking another sample on the same day,” he said.

Providence claims that Pain Care not only billed its customers, but also conducted tests on two dozen of its employees.

Providence declined to comment on the case. Dr. Pauly Chen, the Harvard-trained pain specialist who runs Pain Care, and attorneys for the clinic did not return calls.

Many details of the case remain unknown. Providence has outlined the alleged scheme in legal filings, but has not yet produced bills or other evidence to support its claims.

Despite this, Judge Sean Armstrong has sided with Providence so far, and in August rejected efforts by Paine Care's lawyers to dismiss the case. On May 6, Penn Care's attorneys once again filed documents denying all of Providence's allegations and demanding the insurer pay their fees. The case is moving towards trial. No date has been set.


The rift between Chen and the Sisters of Providence goes back almost a decade. The chain once contracted with Providence Health & Services, which runs eight hospitals in Oregon. Records show Providence severed the relationship. It is not clear when or why, and Providence will not tell. But the decision triggered an investigation by the Oregon Medical Board in 2015, threatening Chen's license to practice medicine.

Chen came to Oregon in 2009 after completing his fellowship in pain medicine at Harvard Medical School. He opened the first pain care clinic soon thereafter in a squat medical complex north of downtown Salem.

The business proved profitable. 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 Chen's doctors could operate nearby.

According to an investigation by the Oregon Medical Board, despite his success, Chen was in trouble. One of the clinics where he performed minor surgical procedures, it is unclear which one, was not accredited, in violation of state regulations. Worse, a review of the patient charts revealed that his notes “did not support his diagnosis.” Nor was he adequately evaluating patients before recommending treatment, the board found.

It reprimanded Chen, fined him $6,000, and placed him on probation for five years, during which he will have to review his pain management cases and approve any “invasive spinal procedures.” Another doctor was needed.

A former patient, Eugene Schur, who sued Chen after he allegedly botched a surgery, claimed he would not have chosen Chen if he had known the doctor had been placed on probation. Schur compromised and said he could not discuss the case.

Chen's probation, at his request, was lifted early in 2019. Since then, his business has expanded rapidly. There are now five doctors working under him, and five clinics, including one in a for-profit hospital at McMinnville.

But the chain is now under scrutiny again. The Oregon Medical Board voted to issue formal charges in October. However, the nature of those allegations is unclear. Six months later, the document explaining them has still not been made public. A spokesperson said the board's lawyers have retired and work on a replacement is still underway.



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