Consequences of Underfunding Lab Test Services

HOW LONG CAN IT TAKE FOR A HEALTHCARE SYSTEM to underfund clinical lab testing and anatomic pathology services before this ongoing financial erosion becomes visible in the form of systemic quality problems with lab tests?

I believe the United States is now on the path to learning the answer to this question. As you will read on pages 3-5, within the federal government, the Joint Select Committee on Deficit Reduction is mandated to recommend $1.5 trillion in specific cuts. It is known that Medicare Part B lab testing fees are one prime target for major spending cutbacks by this committee. Meanwhile, the normal budget process in the House and Senate has also put laboratory testing in the budget-cutting cross hairs. In both cases, restoration of a patient co-pay or coinsurance for Medicare Part B lab tests is under consideration.

It is a well-established fact that Medicare pays less today for laboratory tests, in inflation-adjusted dollars, than it did in 1984! I don’t believe any other medical service has seen a similar sustained erosion in the purchasing power of its Medicare reimbursement over this same period of time.

To this ongoing reduction in reimbursement, one must add the lab test funding cutbacks that were part of the ObamaCare legislation of 2010. The Patient Protection and Affordable Care Act (PPACA) mandates that, for a five-year period beginning in fiscal 2011, there will be a yearly, across-the-board 1.75% fee cut to the Medicare Part B laboratory fee schedule. And don’t forget to add the impact of the 2.3% federal tax on medical devices that takes effect on January 1, 2013, and which is expected to cover in vitro diagnostic analyzers and laboratory equipment. (See TDR, March 29, 2010.)

The point here is that the nation’s medical testing laboratories have not seen fees and reimbursement keep pace with inflation over a multi-decade period. Thus, is the time approaching when the most financially-squeezed laboratory organizations will be discovered to have produced inaccurate lab tests for some period of time, causing patients to be misdiagnosed?

This is not an idle question. It is often asked in Canada now. (See pages 16-18.) Problems in anatomic pathology testing in several provinces in recent years have put a spotlight on the issue of adequate funding for laboratory tests in those provinces. Given the ongoing erosion in laboratory reimbursement in this country during the past 25 years, will this current round of cost-cutting be what tips the quality scales for lab testing in the United States?


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