Statement Regarding OIG Report on Medicare Spending on Clinical Lab Services

Washington, D.C. (June 12, 2013) – The Department of Health and Human Services (HHS) Office of Inspector General (OIG) yesterday released a report, “Comparing Lab Test Payment Rates: Medicare Could Achieve Substantial Savings.” The report examined 20 of the 1100 laboratory test codes (HCPCS) and concluded that Medicare paid “more than other insurers” for these codes.

The American Clinical Laboratory Association (ACLA) saw the study for the first time when it was released on June 11, 2013. By comparing Medicare Clinical Laboratory Fee Schedule (CLFS) “prices” for these 20 codes to Medicaid and, in particular, three Federal Employee Health Benefit (FEHB) plans in 56 areas, there appear to be more than 4000 comparisons in the report. As we examine all of the comparisons in “Appendix C” of the report, we find that Medicare is sometimes the lowest payer in comparison to Medicaid, and/or some or all FEHB plans.
We also note that there is an extremely wide variation in prices in the FEHB plans. For instance, for one code – 81003, for urinalysis, automated — in one state the FEHB plan prices for the same test were $2.85, $5.21, and $29.00. For code 80061, the lipid panel, the same national FEHB plan price ranged from $8.20 in some states to $52.50 in another. These variations raise questions about what these prices represent and how they were determined.

Despite clinical labs only accounting for 1.6% of annual Medicare spending, payment for lab services have been cut by over 11% since 2010 and face double the amount of cuts already scheduled for the next 9 years. The OIG study used Medicare payment data from 2011. In 2013 alone, Medicare payment for lab services was cut by 5 percent.

Clinical lab tests provide invaluable information used to diagnose and treat patients for everything to cancer and infectious disease to diabetes and heart disease – influencing 70% of all medical decisions. These cuts to life-saving testing are occurring while labs, most who are independent and community-based, still must meet demand to provide quality lab services critical for early detection of disease and preventative care.

As our lawmakers continue to debate Medicare spending and how to make our health system more efficient, ACLA will continue to urge lawmakers to consider the value of lab services and the overall impact on the delivery of quality care.

Given the complexity of the comparisons in the OIG report, ACLA is thoroughly analyzing the data and methodology that was used. ACLA will officially respond to the report after we have completed a thorough analysis of the report.

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