APM Reports
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Lax oversight, no-bid contracts and mysterious pricing: Inside the black box of Covid testing
by Tom Scheck
More than a year into the pandemic, many details about Covid testing remain unclear to the public, including how much the tests will cost taxpayers and how effective they really are. Nowhere is that more evident than in Minnesota.
An APM Reports investigation has found that the testing program in Minnesota — and in states around the country — relied on no-bid contracts for companies backed by private equity, regulatory shortcuts, and a complicated payment structure that will eventually pass tens of millions of dollars in testing costs on to the public, either through tax hikes or higher health insurance costs. The state-contracted lab that conducted surveillance testing on tens of thousands of Minnesota schoolchildren and parents who were asymptomatic hadn’t obtained federal authorization for such tests.
The tab for Covid-19 testing has so far totaled more than $130 million in Minnesota. Most of the money has been dedicated to paying for spit tests administered by New York-based Vault Health and its lab partner, IBX. The companies signed a no-bid, emergency contract with Minnesota last year. Vault had previously specialized in men’s health care, and IBX was a Rutgers University-affiliated lab that was spun off into a private company less than two months before it inked a deal with Minnesota. The companies’ expansion into Covid testing was backed financially by private equity.
In the sprint to expand testing, IBX never obtained authorization from the Food and Drug Administration to conduct tests for asymptomatic Covid cases, a regulatory shortcut that federal officials have chosen to encourage.
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