FOR SEVERAL YEARS NOW, officials at the federal Centers for Medicare & Medicaid Services (CMS) have signaled their unhappiness with the status quo in how coverage guidelines and prices must be established for clinical laboratory testing and anatomic pathology services.
These pages have chronicled some of the analyses and reports commissioned by CMS over the past 24 months. Each had one thing in common: they concluded that Medicare pays too much for clinical laboratory testing.
Let me remind you of two examples. One is the study of national competitive bidding for Part B Clinical Laboratory Tests. This was published in May 2012 and authored by RTI Technologies of Research Triangle Park, North Carolina. The conclusion was that substantial savings would be realized.
The second was made public this spring. It was a study by the Office of the Inspector General and determined that, if Medicare charged the lowest price paid by any state Medicaid program for each lab assay, Medicare could save $910 billion annually over what it currently pays. (See TDR, June 17, 2013.)
So should anyone be surprised at how boldly Medicare officials acted when they released their proposed rules in the 2014 Medicare Physician Fee Update draft that was published in the Federal Register on July 19?
However, this time, our public servants at CMS may be guilty of a serious overreach in their effort to slash what Medicare pays for clinical lab tests and anatomic pathology services. Now, less than 90 days after publishing these proposed reductions in lab test reimbursement, we see the first round of lab company sales, along with the bankruptcy filing of a sizeable lab company.
More financial blood will soon be spilled on the streets of the laboratory testing industry. Many small lab companies will close their doors for good. I expect a substantial number of private pathology group practices will cease to exist and their pathologists will end up in other practice settings.
Who will be the loser in all of this? CMS, definitely. It will see beneficiary access to lab testing diminish significantly. This will be particularly true for patients in nursing homes, because it is small, independent labs that serve this sector. Ultimately, however, if CMS persists in its actions to substantially reduce lab test fees from current levels, it will be the physicians and patients across the nation who must cope with reduced access to lab testing services in their cities.