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Medical Laboratory Testing Firm uBiome Raided by FBI for Alleged Insurance coverage Fraud and …

Following the raid, the company’s co-founders resigned
from the board of directors

Microbiome testing company, uBiome, a biotechnology developer that offers at-home direct-to-consumer (DTC) test kits to health-conscious individuals who wish to learn more about the bacteria in their gut, or who want to have their microbiome genetically sequenced, has recently come under investigation by insurance companies and state regulators that are looking into the company’s business practices.

CNBC
reported that the Federal Bureau of
Investigation
(FBI) raided the company’s San Francisco headquarters in
April following allegations of insurance fraud and questionable billing
practices. The alleged offenses, according to CNBC, included claims that
uBiome routinely billed patients for tests multiple times without consent.

Becker’s
Hospital Review
wrote that, “Billing documents obtained by The Wall Street
Journal
and described in a June 24 report further illustrate uBiome’s
allegedly improper billing and prescribing practices. For example, the
documents reportedly show that the startup would bill insurers for a lab test
of 12 to 25 gastrointestinal pathogens, despite the fact that its tests only
included information for about five pathogens.”

Company Insider Allegations Trigger FBI Raid

In its article, CNBC stated that “company insiders”
alleged it was “common practice” for uBiome to bill patients’ insurance
companies multiple times for the same test.

“The company also pressured its doctors to approve tests
with minimal oversight, according to insiders and internal documents seen by CNBC.
The practices were in service of an aggressive growth plan that focused on
increasing the number of billable tests served,” CNBC wrote.

FierceBiotech reported that, “According to previous
reports, the large insurers Anthem, Aetna, and Regence BlueCross BlueShield
have been examining the company’s billing practices for its physician-ordered
tests—as has the California Department of Insurance—with probes focusing on
possible financial connections between uBiome and the doctors ordering the
tests, as well as rumors of double-billing for tests using the same sample.”

Becker’s Hospital Review revealed that when the FBI
raided uBiome they seized employee computers. And that, following the raid,
uBiome had announced it would temporarily suspend clinical operations and not
release reports, process samples, or bill health insurance for their services.

The company also announced layoffs and that it would stop
selling SmartJane and SmartGut test kits, Becker’s reported.

uBiome Assumes New Leadership

Following the FBI raid, uBiome placed its co-founders Jessica
Richman
(CEO) and Zac
Apte
(CTO) on administrative leave while conducting an internal
investigation (both have since resigned from the company’s board of directors).
The company’s board of directors then named general counsel, John Rakow, to be interim CEO,
FierceBiotech
reported.

John Rakow (center) is shown above with uBiome co-founders Jessica Richman (lower left) and Zac Apte (lower right). In a company statement, Rakow stressed that he believed in the company’s products and ability to survive the scandal. His belief may be based on evidence. Researchers have been developing tests based on the human microbiome for everything from weight loss to predicting age to diagnosing cancer. Such tests are becoming increasingly popular. Dark Daily has reported on this trend in multiple e-briefings. (Photo copyrights: LinkedIn/uBiome.)

After serving two months as the interim CEO, Rakow resigned
from the position. The interim leadership of uBiome was then handed over to
three directors from Goldin
Associates
, a New York City-based consulting firm, FierceBiotech
reported. They include:

Four testing products remain available for in-home testing
on the uBiome website:

  • Explorer: allows consumers to learn about their microbiome through advanced DNA sequencing.
  • SmartGut: identifies microbes in the gut that affect health and detects micro-organisms associated with gut illnesses, such as irritable bowel syndrome (IBS), inflammatory bowel disease (IBD), ulcerative colitis, and Crohn’s disease.
  • SmartJane: a women’s health screening test that genotypes 19 strains of Human papillomavirus (HPV), four sexually-transmitted diseases (chlamydia, gonorrhea, syphilis, and mycoplasma genitalium), and the balance of vaginal flora.
  • SmartFlu: a nasal microbiome swab that detects bacteria and viruses associated with the flu, the common cold, and bacterial infections.

What Went Wrong?

Richman and Apte founded uBiome in 2012 with the intent of
marketing a new test that would prove a link between peoples’ microbiome and their
overall health. The two founders initially raised more than $100 million from
venture capitalists, and, according to PitchBook,
uBiome was last valued at around $600 million, Forbes
reported.

Nevertheless, as a company, uBiome’s future is uncertain. Of
greater concern to clinical laboratory leaders is whether at-home microbiology
self-test kits will become a viable, safe alternative to tests traditionally performed
by qualified personnel in controlled laboratory environments.

Dark Daily reported on the controversy surrounding
this trend in “At-Home
Microbiology Tests Trigger Concerns about Scientific Value and Impact from
Microbiologists and Clinical Laboratory Scientists
,” October 16, 2017.

It’s a trend worth watching.

—JP Schlingman

Related Information:

Insiders Describe Aggressive Growth Tactics at uBiome, the Health Start-up Raided by the FBI Last Week

FBI Investigating uBiome’s Billing Practices

Turmoil Persists at uBiome with New Management Overhaul Amid FBI Probe: Reports

uBiome Appoints John Rakow as Interim Chief Executive Officer

Another Shakeup at uBiome: Interim CEO Quits

Seven
Updates on the Ongoing uBiome Investigation

Microbiome Startup uBiome Cofounders on Administrative Leave after Reports of FBI Raid

Microbiome Testing Startup Under Scrutiny for Billing Practices

At-Home Microbiology Tests Trigger Concerns about Scientific Value and Impact from Microbiologists and Clinical Laboratory Scientists


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