ST. PAUL — The state paid a fraction of what two COVID-19 saliva testing groups billed for services, saving hundreds of thousands of dollars, a legislative auditor's report concluded.

The Minnesota Legislative Auditor's Office in a special review released Wednesday, July 14, said it had received reports that testing companies Vault Medical Services and BiologiX LLC overbilled the Minnesota Department of Human Services for their tests. But auditors determined that at least through late April, state programs and contractors had not made "excessive payments" to the testing companies.

"Managed care organizations — acting on behalf of the state — scrutinized the claims submitted by Vault and IBX and paid a fraction of the amounts billed by the companies," the auditors wrote in their report. "In no instance did a managed care organization agree to pay Vault or IBX for the full amount that the company had billed for an individual test. In fact, the managed care organizations typically agreed to pay well under half of the billed amount."

The office targeted its review to include those on state-subsidized health plans like MinnesotaCare and Medicaid, as well as plans for state employees and their families.

Private insurance companies might have paid more for the testing services if they didn't challenge the rates handed down by the two testing groups, the report found. But that was outside the scope of what the auditors took on in their review.

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Minnesota in November of 2020 brought in Vault to run saliva testing services in the state and IBX set up an Oakdale, Minnesota-based lab to process the tests. As part of an emergency contract, the state is on the hook to pay for testing costs not covered by the state-contracted health groups or private insurers.

As of June, the Department of Health had paid out $3.1 million to Vault for direct testing costs, according to the legislative auditor's office. The department had not paid out anything to IBX for individual tests at that time. MDH could be on the line for $74.96 million as part of that contract if private insurance companies or other state health plans don't fully cover the bills for testing.

Representatives for the state-contracted health care providers said Vault and IBX had incorrectly billed for services they provided earlier this year but accepted lower rates or refiled billing requests once the errors were pointed out.

Vault and IBX officials said they charged the same rates for services across private and public insurance providers and the varied rates between amounts charged and paid "are consistent with the health care reimbursement process across the industry."

State Sen. Michelle Benson, R-Ham Lake, said the review was a good first step in probing the relationship between the state and the testing companies but she still had qualms about building out long-term investments for short-term testing. State lawmakers are set to be briefed on the findings on Thursday.

"I will continue to press for more answers about how MDH handled negotiations with Vault/IBX when other entities were the ones receiving the bills," Benson said.

Follow Dana Ferguson on Twitter @bydanaferguson, call 651-290-0707 or email dferguson@forumcomm.com