GAO acknowledges recent report projected lab spending based on hypothetical framework

February 28, 2019 Categories: ACLA Blog, Reimbursement and Coverage, Featured News

The U.S. Government Accountability Office (GAO), often referred to as the “congressional watchdog,” is supposed to examine how taxpayer dollars are spent, and then provide Congress and federal agencies with objective, reliable information to help save money and work efficiently. And yet, following growing pushback to a recent report on laboratory billing practices in the Medicare program, James Cosgrove, GAO health care director and author of the report, shared that the GAO’s findings are not actually reflective of current industry practice – but rather are based on a hypothetical scenario.

“We weren’t analyzing what labs are or aren’t doing,” Cosgrove said. “We were analyzing what the exposure to Medicare would be.”

In November of last year, the GAO released a report on the Centers for Medicare & Medicaid Services’ (CMS) implementation of new laboratory payment rates under PAMA. As part of its report, the GAO was supposed to analyze 2016 Medicare claims data and assess the future financial impact of the implementation of PAMA – which aims to establish a market-based payment system for lab tests – on CMS.

The report claims that Medicare costs could increase by as much as $10.3 billion by 2020 due to the unbundling of certain laboratory panel tests. This accusation, however, is based entirely on a fundamental misunderstanding of how labs bill and are reimbursed for panel testing and suggests that labs are receiving “excess payments” by no longer charging Medicare reduced rates for bundled tests – a claim that is inaccurate and unfounded.

In reality and according to standard industry practices, clinical laboratories are required to bill Medicare for panel tests according to guidelines outlined by the American Medical Association (AMA) CPT codes. Recent survey data of more than 20 million claims for the comprehensive metabolic panel found that labs consistently billed panel tests as required.

Rather than acknowledge the practices currently carried out by the vast majority of labs across the country, the GAO concocted a hypothetical scenario that suggests labs are unbundling certain panel tests and receiving larger reimbursements for individual tests. This assumption is grossly inaccurate and runs counter to standard, demonstrated industry practice.

James Cosgrove went on to say, “It’s not about what the lab industry was or wasn’t doing. It’s about the need to have controls in place.”

It’s clear that the GAO overlooked standard industry practices and instead concocted hypothetical scenarios to inform its recommendations and conclusions. In the process, the report neglects the dangers that CMS’ year-over-year cuts pose to the clinical laboratory industry and the patients they serve.

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