Leslie Parks* was 34 and ready to start a family, but struggled for a year and a half to conceive. Before embarking on fertility treatments, her doctor required that she and her husband get screened to determine their carrier status for various genetic diseases. He recommended a Silicon Valley-based startup called Counsyl and assured her that the test would be fully covered by her insurance.

Weeks later, Parks received a bill for more than $1,494 after her insurer deemed the test "experimental." Parks was shocked. As she later learned, that is the rate that Counsyl charges insurance companies; by contrast, their fee for uninsured patients is $349.

Under Counsyl's guidance, Parks entered into a lengthy appeals process with her insurance company, writing letters and making phone calls for months. She asked Counsyl representatives if she could pay the uninsured patient rate of $349, but they declined and insisted she press ahead with the appeals process. More than six months later, her insurance company upheld their denial of the claim, and she was still faced with the $1,494 bill. She called Counsyl and asked again to pay the $349 uninsured patient fee instead. The representative finally agreed.

In the meantime, Parks got pregnant. Two months into her pregnancy, her ob-gyn recommended that she have an advanced version of the routine prenatal testing. While Parks didn't have any high-risk factors, she would be 35 years old by the mid-point of her pregnancy, putting her in the "advanced maternal age" category. Her doctor said this would qualify her for a blood test at 11 weeks to determine whether her unborn child was at high risk of genetic conditions like Down Syndrome. Again, she was informed by her doctor that her insurance company would pick up the tab, or at the very most she'd have to pay a "couple hundred dollars" if the test was out of network.

Yet a few weeks later, "basically the exact same thing happened again," she says. But this time, Parks received an $8,000 bill. The company, Natera, based in San Carlos, California, and founded in 2004, was a little more forthcoming when Parks called, distraught that she'd have to pay such a large sum. She says that Natera promised that they would handle the appeals process with her insurance company. If the claim was denied, however, they would send her another $8,000 bill but she could call and ask to pay the patient adjusted rate of $200. She asked if she would receive a bill for this adjusted amount. The representative said no, they wouldn't put that rate in writing.

Parks says that the bills she received from both Counsyl and Natera made no indication that there was another tier of pricing, and it was only after calling and pressing for alternatives that the lower price was revealed.

A Counsyl spokesperson says the company doesn't comment on individual patient cases, but that its goal is to offer transparency around billing. "Health care pricing is dynamic and complicated, but Counsyl is fully committed to providing patients with a clear and transparent assessment of screening costs," a statement reads. The company also pointed to its new billing section, which explains the process to patients. A Natera spokesperson says, "It is unfortunate that the patient . . . experienced shock at receiving such a big bill. However, in the health care industry, a company's "list price" is typically substantially higher than the price ultimately paid by a patient. The final amount paid by a patient is dependent upon the price for the testing that was negotiated by the insurance company, the patient's insurance plan's coverage, and the plan's associated copayment and deductible."

Stories like Parks's are becoming increasingly common as hundreds of genetic tests flood the market. Forums for new and expecting parents, like Babycenter.com, are now filled with endless comment threads of patients fighting their insurance company after a claim is denied, or sharing feelings like being "misled" or "used" by the genetics companies, their doctors, their insurance–or a combination of the three.

When Regulation Lags Behind Market Demand

The crux of the problem is that genetic testing has exploded, but regulation has been slow to catch up. The U.S. Food and Drug Administration is still finalizing its guidance for how it will oversee the category of lab-developed tests, which includes some 60,000 genetic testing products already on the market.

Furthermore, insurance companies are in the midst of determining whether to reimburse for all or part of the cost of genetic tests that do not offer clear diagnoses, but instead dabble in probabilities. Some insurers have opted to cover genetic tests in cases where the patient is deemed high risk (a common case is the breast cancer risk test, which insurers tend to pay for only when the patient has a family history of cancer). Other insurance companies will only reimburse for tests that it determines are "medically necessary."

"Insurance coverage of genetic testing is an underappreciated, but huge and important question," says Patti Zettler, an associate professor at Georgia State University College of Law, who specializes in health policy.

According to Zettler, coverage will vary depending on the person's medical history, their employer, and the state that they live in. The final bill is also dependent on the patient's deductible, whether they meet certain medical criteria, and whether the testing company is in-network or out-of-network.

In short, it's complicated.

"Private insurance companies can essentially make their own decisions about what are medically necessary services and what are not," Zettler explains. And these decisions aren't particularly clear cut to anyone, let alone patients.

"Too Frustrating For Everyone Involved"

"You've put your finger on why we got out of the reimbursement business," says Troy Moore, chief strategy officer for Kailos Genetics, in response to hearing Parks's story. "It was simply too frustrating for everyone involved."

For two years, Kailos offered a reimbursement model. The company pulled in higher revenues overall by filing claims to insurers, but it also meant dealing with calls from confused and angry customers. According to Moore, many would demand the lesser, out-of-pocket rate after their insurance company rejected their claim, but it wasn't always that simple.

Moore says many insurers don't have a problem with a genetics company offering a lower cash rate to patients who don't use insurance. The assumption is that it is cheaper to avoid insurance, as there's no administrative burden in filing and dealing with claims. But that doesn't apply to cases in which the claim has already been filed and rejected by the insurance company; in that case, it's harder to justify a vastly different cost for the patient. Moore says it might be considered fraudulent to overbill the government in cases where the patient is using Medicare or Tricare.

For these reasons, his team recently made the decision to offer all their tests for a flat rate of a few hundred dollars. No insurance. No angry phone calls. No tedious billing process, which might involve faxing forms to insurers that are filled out with the requisite blue ink. But that also meant taking a good portion of the company's revenues off the table, which had to somehow be replaced.

"Now, to make the same amount of money, we have to reach a lot of people and keep them happy," says Moore. "If they order once, we hope that they'll order again."

Other genetic-testing companies remain divided on the question of whether to accept insurance and the hassle that comes with it. Most have settled on a mix of insurance (with different rates for in-network and out-of-network), flat cash rates, and financial assistance for those who need it. In that category: Counsyl, Natera, Myriad Genetics, and Invitae. Others, like Color Genomics, are taking a similar approach to Kailos by refusing to take insurance altogether.

For her part, Parks just wishes the process was more clear. During one of her countless phone calls she expressed her frustration, saying, "Can you imagine how upsetting it is to be surprised with an $8,000 bill?" The representative replied, "Yes, I imagine so."

*Parks requested to use a pseudonym, as she is still in the negotiations process.