Natera: Pioneers In Deceptive Medical Billing

• Natera Inc. is an Austin-based genetic testing company providing DNA screening services. Its core product business is largely in women's health and non-invasive prenatal testing (NIPT), which comprised approximately 91% of the company’s 2021 revenue.
• After being relatively late to the industry, the company has quickly become the market leader for NIPT by volume. The rapid revenue growth has fueled its stock, now trading at a ~7x forward sales multiple.
• Based on more than 2 dozen interviews with former Natera employees, patients and industry experts, a review of hundreds of online complaints, FOIA requests to state Medicaid offices and state Attorneys General, and the company’s financial filings, we show how Natera’s revenue growth has been fueled by deceptive sales and billing practices aimed at doctors, insurance companies and expectant mothers.
• The company has never generated a profit and posted a $468.2 million loss from operations in 2021 compared to $216.3 million in 2020. It has an accumulated deficit of $1.4 billion and currently has $914.5 million in cash and equivalents and $330.4 million in debt.
• Natera has no significant “moat.” While it has a patent portfolio for its NIPTs, the process is dependent on DNA sequencers from a direct competitor. Rival NIPTs have comparable accuracy for the most common tests and are frequently cheaper.
• In 2018, Natera paid $11 million to settle Department of Justice fraud allegations relating to improper sales & billing of Panorama, its key NIPT test, between 2013 and 2016.
• In late 2017, payors imposed “prior authorization” requirements for Natera’s tests to curb excessive billing. Natera’s risk disclosures warned that the additional step could severely hamper revenue growth.
• Just 3 months after the warning, a new, opaque, and supposedly non-profit entity called “My Genome My Life” (MGML) appeared. Natera’s sales reps suddenly began pitching doctors on free prior authorization help through the entity.
• Since its formation, MGML claims to have provided prior authorization assistance for over 1.8 million tests, representing up to 44% of Natera’s total test volume in that time frame.
• Despite the massive volume, MGML has just 3 employees on LinkedIn and claims to operate out of a virtual office address in Washington D.C. Its "President", according to people familiar with its operations, is a woman named “Vickie Seth.”
• We found that “Vickie Seth” is a pseudonym for a woman who shares a mailing address and a close personal relationship with Natera’s former VP of sales at the time MGML was created.
• A former employee recounted to us how the Natera sales VP “realized that his sales operation was up against the wall” just as MGML was surreptitiously created with his support.
• MGML masks that it is a third party by submitting information to insurance companies under practitioners’ login credentials, according to a person we interviewed familiar with MGML’s operations. This practice is in direct contravention of longstanding HHS anti-kickback guidance calling for transparency by third party prior authorization providers.
• To facilitate this deception, Natera sales reps help doctors’ offices access insurance prior authorization portals, then share the passwords with MGML. Some doctors refuse to work with MGML because of this type of arrangement.
• Outside of MGML, Natera lures patients in with promises of low testing costs and the prospect of learning a child's gender early, leading many expectant mothers to unknowingly agree to an expensive added screen for “microdeletions” that is rarely covered by insurance.
• Natera surreptitiously pushes screening for microdeletions by requiring providers to specifically opt-out of the screen, defying industry group policy recommendations.
• Microdeletion testing was recently featured in a scathing New York Times exposé that reported how high rates of false positives result in tragic consequences, such as termination of pregnancies later found to be healthy.
• Around 75%-80% of Natera’s key Panorama screenings include microdeletions, with the company hyping the potential revenue opportunity to investors. Virtually no payors cover the test for the above reasons.
• Natera more than doubles the bill for screenings to $8,000 by adding microdeletions, despite patients often being unaware they are even taking the added screen, and practitioners unaware of the surging bills.
• Natera then “unbundles” the microdeletion screen from the primary screen, and apparently bills BOTH insurers and expectant mothers, often collecting cash from both, then obfuscating the double billing.
• These opaque and deceptive billing practices have unleashed a tsunami of social media and Better Business Bureau (BBB) complaints from patients, who have called the company’s business practices "pure stealing" and "absolute fraud."
• Former employees told us that Natera would regularly resolve these complaints by discounting patient’s required insurance deductibles and not telling the insurers, a practice that raised questions of insurance fraud.
• According to FOIA requests, Natera faces a regulatory inquiry from the Michigan AG. We have seen no disclosure of the Michigan AG investigation. The company also faces a new class action lawsuit.
• All told, Natera has employed a dizzying array of billing deceptions to fuel sales growth. Despite it all, the company is starkly unprofitable. We expect its “growth” and prospects will rapidly fizzle as payors and patients wise up to its practices.