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Virginia Finalizing Private Lab Contracts to Expand COVID-19 Testing

A lab technician at Genetworx works on COVID-19 testing. The lab is one of three private labs Virginia is contracting with to expand testing. (Photo: Crixell Matthews, VPM)
A lab technician at Genetworx works on COVID-19 related testing. The lab is one of three private labs Virginia is contracting with to expand testing. (Photo: Crixell Matthews, VPM) 

Virginia is in the process of finalizing contracts with private labs to expand COVID-19 testing in Virginia. Gov. Ralph Northam has said that widespread testing of at least 10,000 people per day is key to reopening the government. State officials claim Virginia is doing enough testing to partially reopen this Friday, although new studies suggest otherwise. Supply shortages have also hindered expanded testing.

During Northam’s press briefing on May 1, Dr. Karen Remley said contracts with three private labs would help test an additional 3,000 people per day. No further details were provided at the time. Remley told VPM in an interview Tuesday that figure has since been adjusted to about 5,000 tests per week from the three private labs combined at an estimated cost of $500,000 each week. 

“Think about a rolling seven-day average,” Remley told VPM. “Because you may use 2,000 tests in one day, and none the next day, depending upon where testing needs to be done, and how it needs to be done.”

One of the labs, Glen Alen-based Genetworx, has a contract in hand. That’s according to laboratory director Dr. Sarah Jacob-Helber, who told VPM that negotiations were finalized last Friday, and a contract was signed Saturday. Jacob-Helber would not share a copy of the contract with VPM.

As of Monday, the other two labs -- North Carolina-based Mako Medical and Virginia-based Next Bio-Research Services LLC, also called Next Molecular Analytics,  say their contracts are still pending. Tom Reynolds, president of Next Bio-Research Services LLC, says state officials are “putting together a contract” based on negotiations last week. On Monday, John Nguyen, Mako Medical’s president in the Nutritional DNA Division, said the company was waiting to hear back from the state about a quote they’d submitted.

According to emails obtained by VPM through a Freedom of Information Act request, Virginia officials ordered 5,000 test kits from Mako Medical for $100 per test kit May 1. The order was flagged as “URGENT” in the email subject line, between state employees requesting these supplies. 

“We're basically buying the test kits from the labs and then the service for the lab to run the tests,” said Dr. Jeff Stern, state coordinator for the Virginia Department of Emergency Management. “And then we're providing these mainly to the Virginia National Guard to do the mass testing that they've been doing.”

Last Friday’s order went directly to the Virginia National Guard. Their teams have been helping ramp up testing in correctional facilities and nursing homes. Nguyen told VPM that the Virginia Department of Corrections would be using the bulk of this first shipment from Mako Medical. He said part of the order was also used during a two-day drive-through testing event in the Eastern Shore. However, Nguyen wouldn’t share details about the quantity and pricing of tests being negotiated with state officials.

“I can’t discuss what the Virginia price is, but understand that the Medicare reimbursement rate is $100 per test,” Nguyen said. “Our primary concern is to help get these states back up and running, get people tested. We're not charging anything additional. We're not adding any fees or anything back into it.”

Last month, the federal department of Medicare and Medicaid Services announced an increased Medicare reimbursement rate of $100 per test, to make “use of high-throughput technologies developed by the private sector that allow for increased testing. Capacity, faster results and more effective means of combating the spread of the virus.”

Medicare is strictly a federal program, not a cost-sharing program between states and the federal government, like Medicaid, according to Christina Nuckols, communications director for Virginia’s Medicaid agency, Department of Medical Assistance Services. That means the $100 reimbursement rate will go to the private labs, not states.

“I believe [the $100 per test rate] seemed to be about the going rate when we talked to the other companies,” said VDEM’s Stern. “I'm anecdotally saying that I've heard and seen tests cost in the $50 to $180 range, and it depends on the kind of tests, the materials for the tests, how the tests will be handled.”

Virginia is expected to receive federal funds through the CARES act to expand testing, which they can use to pay private companies for the tests. Meanwhile, companies are required to post the “cash price” for their tests online. The cash price for Next Bio-Research Services LLC is listed at $150 per test.

According to the firm’s president, Reynolds, that $150 includes supplies for one test, transportation and lab analysis. Jacob-Helber of Genetworx said her lab’s “cash price” is $100. She referred VPM to a public relations contact for details about what that figure includes, but did not receive an immediate response.

Stern told VPM Friday morning that officials are in the “final stages” of contracting with both Genetworx and Next Bio-Research Services to purchase 15,000 tests from each. That would provide a total of 30,000 tests over a period of 30 days. At the end of May, Stern says they’ll reevaluate whether or not they need to adjust those numbers going forward.

“We’ll order more if we need more,” Stern said. “But the goal is to maximize the number of tests being done and not have the test kits -- or lack of test kits -- be a limiting factor, especially for National Guard soldiers and airmen who are going out doing the testing around the state.”

Reynolds says Next Bio-Research has a test capacity of 3,000 per day. He says they expect to be able to double that figure in the next four weeks if materials and instruments are available. Genetworx has a capacity of 5,000 per day according to Jacob-Helber, although the lab expects to double that in the next few weeks. Mako’s Nguyen said Mako’s daily test capacity is currently 25,000, and can expand to accommodate additional demand. 

VPM is inquiring with other health departments surrounding Virginia, including Maryland, Delaware, North Carolina, and Washington D.C., to see how they’re handling and negotiating pricing with private labs. West Virginia's health department says the state hasn’t -- and doesn’t plan to -- contract with private labs to expand testing.

Virginia Still Struggling to Obtain Testing Swabs

Stern said Friday he hasn’t heard about any additional swab shipments from FEMA beyond the two orders totaling 29,000 they’ve received so far. “They've actually been very good partners,” Stern said. “When they can get stuff they are distributing it out to the states. And they've been open with us about what they have and what they don't.”

Meanwhile, Virginia providers are seeing shortages of supplies. Sandy Chung runs a private pediatric practice in Northern Virginia, with 18 providers across three locations. She’s also president of the Virginia Chapter the American Academy of Pediatrics and a member of the executive committee for the Medical Society of Virginia.

Chung says her practice has had to be selective about who to give COVID-19 tests to, even turning away people who’ve requested tests. Since she’s considered a large practice, she’s been given a total of 100 swabs from commercial labs she works with a few weeks ago. She’s already used about half of them, and isn’t sure when she’ll get more.

“Most practices that are smaller have 10 or fewer [swabs], and can only get 10 at a time,” Chung said. So we are limited in the number that we're allowed to get from the commercial labs.” 

While the CDC has loosened restrictions about what types of swabs labs can use to test for COVID-19 due to a national shortage of nasopharyngeal swabs, Chung says that doesn’t mean labs and health systems can switch over automatically to nasal swabs.

“And unfortunately, what that means is that now we have some tests that have not been fully validated,” Chung said. “And it is up to the providers to know whether or not the tests that they happen to have in their offices are still considered reliable.”

During a briefing with reporters last week, Dr. Denise Toney, director of Virginia’s Division of Consolidated Laboratory Services, said labs will have to individually validate tests if they end up using different swabs.

“We still have to validate those in our laboratory so that we can accept them,” Toney said. “Just because the FDA says now you can accept sterile saline as a transport media...it doesn't mean that a laboratory can automatically begin accepting that media type.”

VCU Health says they have supplies of both nasopharyngeal (sometimes referred to as NP) swabs, as well as nasal swabs.

“Anticipating nasal swabs would become necessary for testing, we had already begun ordering these alternative swabs in preparation for the CDC’s revised guidance on April 29,” a spokesperson wrote in an email to VPM last Thursday. “We have formal relationships with most major manufacturers that provide swabs, and order from those sources. We are also exploring non-traditional sources for swabs such as working with the State Laboratory of Virginia.”

Chung says she hopes officials will think carefully about supply shortages -- not just of swabs and test kits, but of gowns and masks -- that her office and other private practices are still experiencing.

“If Virginia is able to reopen, we're going to need a lot more swabs and a lot more tests and a lot more PPE in the doctor's offices,” Chung said. “Otherwise, this will be very challenging for them.”

Editor's note: this story has been updated with comments from Dr. Karen Remley.