Ensuring Access to Laboratory Services for Medicare Beneficiaries

Clinical Laboratories: Weve Bled Enough Already While less than 2 percent of all Medicare spending, clinical laboratory testing has been subject to significant freezes in payments and cuts over the last decade: Medicare payment amounts for clinical laboratory services have been reduced by about 40 percent in real (inflation-adjusted) terms over the past 20 years. The Patient Protection and Affordable Care Act (PPACA) included a direct and immediate cut to the Medicare Clinical Laboratory Fee Schedule of 1.75% each year for 5 years. This 9% cut is the largest cut among all Part B providers. In PPACA, clinical laboratories also received another cut through the productivity adjustment one of only a few providers subject to an immediate adjustment in 2011 resulting in an additional 11% cut over 10 years. The laboratory-specific cut and the productivity adjustment will result in a cumulative 20% cut over 10 years. In some independent clinical laboratories, especially those serving rural communities or nursing home populations, 80% or more of their patient-base consists of Medicare beneficiaries. The cuts being faced threaten their practices existence and no additional cuts big or small can be absorbed without adversely impacting patient care.

Clinical Laboratory Services: Critical for Patient Care and Health Outcomes Though a small percent of Medicare revenue is spent on clinical laboratory testing, it is estimated that clinical laboratory tests inform up to 70 percent of doctors medical decision-making. As the first point of intervention, laboratory tests serve as the foundation for the diagnosis and clinical management of conditions like heart disease, cancer, diabetes, kidney disease, and infectious diseases. Medicare beneficiaries in nursing homes rely upon the services provided by independent clinical laboratories that can deploy medical professionals to their place of residence. On-site blood draw services for a non-ambulatory patient save the patient the trip (often via ambulance) to a hospital or laboratory draw center, potentially reducing costs and avoiding travel-related clinical risks for such patients.

Clinical Laboratory Coinsurance: Co-pay = No pay There is currently no cost sharing for clinical laboratory tests paid for under Medicare Part B. Cost sharing for laboratory services has been rejected by Congress multiple times over the past ten years, most recently during health reform. Cost sharingwhether a uniform coinsurance or a direct co-pay for beneficiarieswould have a negative consequence for patients and the providers that perform their laboratory testing: Lab and patient interaction is minimal. Most labs collect specimens from a doctors office or other health care facility, meaning that billing for lab co-pays would happen after the testing is done and without ever directly interacting with the patient. Laboratories would have to generate approximately 214 million new bills each year to seniors and attempt to collect from them. According to the Institute of Medicine, it costs a lab about $5.00 to send a bill to a patient to collect a co-pay.1 In most cases a this co-pay would be impossible to collect. The cost of collecting the co-pay would almost always exceed the amount of the co-pay itself. For several of the most commonly ordered laboratory tests a $1.00 co-pay would amount to more than 30 percent of the total cost of the test. Imposing cost sharing on clinical laboratory services will have no impact on utilization. The patient does not initiate this use, usually has no contact with the laboratory, often has supplemental insurance that meets the cost impact, and is unlikely to challenge the physicians order.2 In cases where a lab does physically see a Medicare patient, many patients are homebound or in a skilled nursing facility and likely dually eligible for Medicare and Medicaid. In this case the lab is prohibited from billing the patient directly. Medicare requires that beneficiaries be billed for the co-pay, no matter how small the amount. Laboratories would bear the cost of billing, collection, and bad debt incurred through unpaid co-pay amounts. A new co-pay requirement for laboratory services does not save our health care system money because it merely shifts billions in costs from the government to the nations most vulnerable seniors. Charging seniors a co-pay for laboratory services is at odds with demonstrated congressional intent to encourage more prevention and early detection of chronic diseases such as diabetes, heart disease, kidney disease, and cancer laboratory tests are at the center of prevention and early detection.

1 2

Medical Laboratory Payment Policy, Institute of Medicine, 2000. Ibid., page 155.

-2-