Be Careful Payers, You May Get What You Wish For!

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Few clinical laboratory executives and pathologists would disagree with the assertion that both government and private payers would like to see the prices they pay for medical laboratory testing and the amount of money they spend reimbursing labs to stay flat or shrink from one year to the next.

Certainly the actions taken by Medicare officials and private health insurers in recent years support that assertion. Collectively, the nation’s payers have reduced substantially the amount of money they pay laboratories for tests. In this issue of The Dark Report, we feature intelligence briefings on two new developments that mean less reimbursement paid to labs.

The first development is UnitedHealthcare’s (UHC) new policy—effective May 1—that prohibits a hospital lab from submitting claims for a non-inpatient test to UHC under the hospital’s facility participation agreement. (See New UnitedHealthcare Policy For Hospital Reference Tests).

The second development is presented in Insurers Are Rejecting Many PLA, MAAA Codes. We report on the fact that many health insurers refuse to recognize clinical lab test claims submitted with PLA codes (proprietary laboratory analyses) or MAAA codes (multi- analyte assays with algorithmic analyses). This happens even after Medicare may have made a favorable coverage and reimbursement decision for a specific assay. Use of these codes was authorized under the Protecting Access to Medicare Act (PAMA) of 2014.

Government and private payers may see short-term financial benefits in their steady stream of slash-and-burn policies intended to greatly reduce what they reimburse labs for tests. But the collective clinical lab industry is quickly approaching the point where many community labs—including hospital labs that do outreach testing—fail to receive enough revenue to cover the basic costs they must pay to continue operating.

It will happen slowly and without much public notice. But as one community lab after another ceases operation, patients and physicians in those cities will lose access to accurate and speedy testing services. In turn, that will adversely affect physicians’ ability to accurately diagnose and select therapies. If these situations cause a deterioration in patient care, that will mean higher medical expenses for payers—likely much more expensive than whatever savings they realized from cutting lab test reimbursement to below the cost of lab testing. Thus, payers may get what they wished for!


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