Customer complaints show $600 million health startup uBiome has been surprising patients and insurers with bills for years

uBiome; Yutong Yuan/Business Insider

UBiome founders Zac Apte and Jessica Richman. Apte and Richman were co-CEOs before being placed on leave.

• UBiome has faced complaints over surprise bills and billing mistakes for several years.
• The Federal Trade Commission has received 28 complaints about uBiome between July 2017 and March 2019, according to records obtained by Business Insider.
• The complaints detail instances of surprise bills as high as $3,000 and of bills sent to insurers for tests that weren't delivered.
• UBiome sells tests that sequence the microbiome, which is the assortment of bacteria and other microbes that live in our bodies. To date, the company has raised $105 million from investors.
• The company's offices were raided by the FBI on April 26, and its cofounders and co-CEOs Jessica Richman and Zac Apte have been placed on administrative leave, the company said on Wednesday.
• Visit Business Insider's home page for more stories.

Late last month, the FBI raided the headquarters of $600 million Silicon Valley healthcare startup uBiome, reportedly as part of an investigation into questionable billing practices.

Even before the FBI raid, customers had been experiencing billing problems at the startup for more than a year, according to a review of complaints by Business Insider. The complaints, obtained under a Freedom of Information Act request, haven't been previously reported.

UBiome began as a citizen science project and sought to create a large public database on the microbiome, the rich assortment of bacteria that thrive in our bodies and appear to influence everything from our mood to our risk of certain diseases.

In recent years, however, the company had been significantly raising its profile, raising $105 million from investors, collecting thousands of samples, publishing scientific research, and inking research partnerships with major brands like L'Oreal.

In late April, the FBI raided uBiome's headquarters. On the heels of the raid, the company placed cofounders and co-CEOs Jessica Richman and Zachary Apte on administrative leave. General Counsel John Rakow is acting as interim CEO.

Complaints reviewed by Business Insider show that uBiome customers were experiencing billing problems for more than a year before the FBI raid. The Federal Trade Commission received 28 complaints about the startup between July 2017 and March 2019, according to records obtained by Business Insider.

Read more: Microbiome-testing company uBiome has placed its founders on leave following an FBI raid

Of the 28 complaints sent to the FTC, 22 related to billing, either cases in which patients got an unexpected bill, or instances in which insurers were billed for tests that weren't delivered. Others mention instances in which users didn't get their test results after sending in their samples.

Customers faced unexpected bills of as much as $3,000

Many of the complaints point to instances in which users were told their insurance was approved. Some had signed up under uBiome's pilot program, which told potential test takers in big letters "No cost to you." If the health insurers didn't pay, the individuals thought they wouldn't be on the hook for the costs. But instead, the individuals say in the complaints that they were left facing bills of as much as $3,000.

"I ordered a kit and was not disclosed the cost of using the service. Company only stated they will process it through insurance," one complaint says. "My insurance company only covered some of the bill and it left me to pay over $2,000 for testing."

The FTC removed the names and other identifying information of the individuals who made the complaints before providing them to Business Insider. The agency said it can't verify the claims, and that it can't confirm or deny whether it's currently investigating uBiome.

A representative of UBiome declined to comment on the FTC complaints. The representative deferred to a previous statement in which uBiome said it would conduct an independent investigation of its billing practices and cooperate with government authorities and health insurers.

One complaint from April 2018 stated that the patient's spouse had mistakenly been billed for the test the patient had taken. In the course of sorting out the mistake, uBiome billed both the patient and the spouse, charging an additional $2,970 for a test that wasn't taken.

One patient complained that his or her insurer had been billed for a test in which the patient never got the result. Another in April 2018 was notified by their insurer that the insurer had overpaid uBiome for a test. The insurer now wanted a refund of more than $600. Others had funds directly taken out of special savings accounts that they had set up to pay for medical services.

UBiome stopped selling two of its tests

On Monday, uBiome halted sales of SmartGut and SmartJane, which were tests that had to be ordered by a doctor. The company will still sell its "Explorer" test, which doesn't require a prescription.

The Wall Street Journal, which first reported the FBI raid, reported that the FBI is investigating uBiome's billing practices.

CNBC reported in May that people who used uBiome's testing kits say they were encouraged by the company to take more than one test - sometimes as many as six. In some cases, they were reportedly sent multiple tests; in others, the company reached out via email to enourage them to order another test.

The idea is that by taking several tests over time, you can get a better picture of how your microbiome is changing.

On its website, UBiome said that the tests "insurance-reimbursed," and says "uBiome clinical tests are fully or partially covered by most health insurance companies under "out-of-network" healthcare benefits," the company's website states.

Some health insurers don't cover the tests

Some large insurers don't cover the tests.

Anthem in its medical policy considers uBiome's tests "investigational and not medically necessary," and Aetna considers the tests "experimental and investigational because their role in clinical management has not been established."

Insurers including Aetna and Cambia Health Solutions' Regence Blue Cross Blue Shield are looking into the company's billing practices, according to people familiar with the matter.

Want to tell us about your experience with uBiome? Email the authors at lramsey@businessinsider.com and ebrodwin@businessinsider.com.