What did it actually happen during a raid on the FBI health center?

Marc Harris, a resident of South Carolina, began being bombed last year by a start-up company in the health sector called uBiome. Harris, who is in his fifties, suffers from a rare gastrointestinal disorder. He often looks for new information about his illness. He badumed that the company had targeted him based on the history of his searches or other information sought.

Harris went ahead and commissioned the SmartGut test from uBiome, which promised to provide new information on the bacterial composition of his gut so that he could improve his health. Harris thought he was getting a test. Instead, uBiome sent six kits by mail, with an email notifying that the company would follow its "changes in the microbiome over time".

After that, he says, uBiome sent him more than three emails each week urging him to return the samples. He ended up returning two and received an Amazon Gift Card in return. He did not finish the six complete ones. His doctor did not understand the benefit of the test and he did not learn anything again.

Harris was therefore surprised to see the test billed to his insurance five times, at a cost of $ 2970 per test. He shared a copy of his insurance claims history with CNBC, as well as multiple e-mail communications from UBiome.

This is a common practice at uBiome, a health sector start-up invested last week by the FBI, according to insiders of the company. uBiome routinely billed patients such as Harris without their consent, prompting insurance plans to start rejecting these claims. The company has also pressured the doctors of its staff to approve tests with minimal supervision, according to insiders and internal documents seen by CNBC. The practices were in the service of a dynamic growth plan focused on increasing the number of billable tests served.

Direct-to-consumer, venture-backed healthcare companies such as Ubiome have been criticized for failing to provide adequate support to patients before prescribing medical tests. Many health experts worry about so-called "doc in a box" practices, according to which companies approve medical tests without contacting patients outside of a checklist type survey. Critics argue that this practice means that patients are less likely to be diagnosed with underlying conditions and that some of these companies go beyond current regulations, which aim to protect their users. The prescription of tests without sufficient medical supervision can also lead to unnecessary tests that weigh down an already overburdened health system.

Proponents argue that most patients do not spend more than a few minutes with their doctor, even in person, and that many of them do not have access to a medical clinic. These services can therefore help underserved patients. uBiome says its tests provide consumers with unprecedented health information and help them "better control their health".

UBiome's billing practices peaked last week when the FBI searched the company's offices in San Francisco and seized the computers of its employees. An FBI spokesman confirmed that the attack at the company's 360 Langton Street offices was part of a "court-authorized law enforcement activity."

On Wednesday, uBiome said that its co-CEOs and founders, Jessica Richman and Zac Apte, were on "administrative leave", and that the board would launch an independent investigation into the ubiome's billing practices. John Rakow, General Counsel of the company, badumed the role of Interim Executive Director.

uBiome declined to comment, beyond the press release announcing the investigation and appointment of Rakow. Rakow did not respond to requests for comments.

uBiome was founded in 2012 by Richman, computer scientist, and Apte, biophysicist, who first turned to crowdfunding to finance their work. The initial goal was to put on the market a new test to discover the link between human health and the microbiome – all microorganisms in the gut, some research suggests that it plays a role in human health. The start-up has raised more than $ 100 million in venture capital funds from companies such as 8VC and Y Combinator, and was valued at around $ 300 million during its last fundraiser in September last, according to Pitchbook.

According to many insiders, the founders used billable samples, not the claims reimbursement rate, as the main indicator of business growth, and regularly reported these numbers to investors.

As part of its growth strategy, people close to the company UBiome would repeatedly encourage patients, like Harris, to send multiple samples and bill their insurance each time. The company "would also upgrade" their samples, often without the patient's knowledge, and then bill them again. It was not unusual for an insurance company to be billed two or three times for the same set of tests, officials said. That includes Medicare patients whose insurance is provided by the government, said the people.

uBiome has been pressuring the doctors of its staff to approve the tests with minimal supervision, although some have tried to contact the patients. A 2016 internal document intended to show an example of a software workflow badumed that 100% of SmartGut commands would be approved "because historically, all SmartGut commands were created via the Doctor Pilot – all commands are approved by default".

A person familiar with the relationships with ubiome doctors said the doctors had been trained to approve the tests received, including for patients with no symptoms. Another example of aggressive tactics from ubiome: at least one doctor was fired and replaced for not having approved the tests fast enough, according to insiders.

Any automatic approval of expensive experimental tests is problematic, according to health investor and physician Bob Kocher.

"Today, we do not really know who will benefit from this type of screening, so we do not know the appropriate population for this test," he said. "Many doctors will say that if you do not have a lot of symptoms, it would be useless or unethical to recommend a $ 3,000 test."

Staff Care, a unit of AMN Healthcare, has been providing medical staff to uBiome from 2017 and doctors have been paid up to $ 180 per hour to approve uBiome tests, according to a paper consulted by CNBC.

Staff Care says this relationship ended last year. "uBiome was a customer served by Staff Care, but we chose to terminate this relationship last year when questions regarding ubiome billing practices surfaced," said a spokesman. from Staff Care.

The spokesman added: "Health care organizations such as uBiome are required to submit all claims for services provided by temporary clinicians, in accordance with current legislation and requirements. "Neither the health department nor the doctors it submits submit requests to cooperate fully with any government investigation and adhere rigorously to the highest standards of our industry."

Several insurers continue to review the practices of the company, including Anthem, according to insiders of both companies. According to the Wall Street Journal, Regence Blue Cross and Blue Shield units of Regency Blue Cross of Cambia Health Solutions are also investigating the company's billing.

Kocher noted that insurance companies often have systems in place to report any supplier who charges more than $ 500 on several occasions and in a short period of time, without a clear reason.

In a statement, Mr. Makow of UBiome pointed out that UBIome would cooperate with government authorities and insurance plans.

"We will take all necessary corrective measures to ensure we become a stronger company, better able to serve patients and healthcare providers," he said.