New analysis challenges GAO Report’s assumptions on lab billing

A new analysis from Braid-Forbes Health Research exposes the Government Accountability Office’s (GAO) flawed assumptions about lab billing practices by presenting survey data on more than 20 million actual clinical laboratory claims.

Braid-Forbes’ analysis of publicly available data demonstrates that the GAO’s claim – that labs are receiving “excess payments” by charging Medicare for individual component tests in greater numbers rather than charging reduced rates for a test panel – is flat out wrong.

In order for the GAO’s “unbundling” assumption to be true, the volume of organ and disease panel tests – such as the comprehensive metabolic panel – billed to Medicare should have decreased and in turn the volume for all of the individual component tests that make up organ and disease panels should have skyrocketed. Instead, analysis of Medicare data show that volume for both the comprehensive metabolic panel and its individual component tests have fallen on average. Comparing the first two quarters of both 2017 (pre-PAMA) and 2018 (post-PAMA), shows the comprehensive metabolic panel’s Medicare volume dropped by 2%, and the individual component tests also decreased  volume by an average of 5%, disproving the GAO’s hypothetical claim of widespread inappropriate billing by labs and overpayments by the Medicare program.

Since the report was first released in November 2018, other industry leaders and stakeholders have raised questions about the GAO’s puzzling conclusions. In response, the GAO has conceded that the assumptions used to draw their conclusions were not based on real lab practices. In a recent interview, GAO director of healthcare, James Cosgrove admitted, “We weren’t analyzing what labs are or aren’t doing. We were analyzing what the exposure to Medicare would be.”

Given that the GAO’s analysis was not grounded in real analysis of actual lab practices and that the full consequences of PAMA harm have yet to be honestly evaluated, Congress should delay PAMA data reporting for one year. Doing so would allow time for a more representative share of labs to report private market data and provide valuable time for stakeholders and policymakers to determine how to reform PAMA, ensuring a truly market-based system that will protect Medicare beneficiaries’ laboratory access.

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