Dive Brief:
- Medicare spending on clinical lab tests rose just slightly to $7.1 billion in 2017, the last year before a new market-based payment schedule took effect on Jan. 1, HHS’ Office of Inspector General said in a new report. CMS estimates the reimbursement changes could save the government $670 million in 2018.
- The new payment system has drawn the ire of the laboratory industry and is being challenged in a lawsuit by the American Clinical Laboratory Association (ACLA).
- OIG said the top 25 tests accounted for 60% of spending in 2017; about 30% of payments were for five tests.
Dive Insight:
CMS began to base its Clinical Laboratory Fee Schedule on private health insurance rates on January 1 as a result of legislation passed in 2014 known as the Protecting Access to Medicare Act (PAMA).
The ACLA, American Hospital Association, AdvaMedDx and the American College of Physicians have urged Congress to take legislative action to modify PAMA to mitigate the payment cuts that ACLA has said could cause serious financial harm to thousands of hospitals and small independent laboratories.
In December, the ACLA challenged CMS' implementation of the new fee schedule in a lawsuit filed in U.S. District Court in Washington, arguing the payment policies will make it harder for Medicare beneficiaries to get access to medical tests, especially seniors in rural areas and in nursing homes.
The lab lobby contends the new payment system fails to comply with congressional intent and uses flawed data in the transition to a market-based payment system, collecting rates from just 1% of laboratories nationwide.
OIG is required to monitor the implementation and impact of the new payment system. The latest report is the fourth data set establishing a baseline for future analyses of the effects of the fee changes.
The inspector general said the $7.1 billion Medicare paid under Part B for lab tests in 2017 has changed little from the prior three years. The 2017 total was up slightly from $6.8 billion in 2016 and $7.0 billion in both 2015 and 2014.
The top 25 tests covered by Medicare payments totaled $4.5 billion and represented 64% of all Medicare payments for lab tests in 2017. The top five tests — four common blood tests and a test for Vitamin D3 levels — totaled $2.2 billion in 2017.
Spending on the top 25 tests was concentrated among a few labs: 1% of labs received 55% of payments for the top 25 lab tests in 2017, OIG said.
