Medicare Part B Lab Test Prices Versus Budgeted Payment

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THERE IS AN IMPORTANT QUESTION THAT lab industry magazines and news sources have failed to address: How many years are left before Medicare officials drop fee-for-service payment for clinical lab testing?

On January 26, 2015, the Department of Health and Human Services (HHS) issued a press release declaring an ambitious target. “HHS has set a goal of tying 30% of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as accountable care organizations (ACOs) or bundled payment arrangements by the end of 2016 and tying 50% of payments to these models by the end of 2018,” stated the agency.

In March of this year, HHS announced that it had achieved the goal of moving 30% of fee-for-service payments to quality or value a full year ahead of schedule. It said the 30% goal was met at the end of 2015 instead of 2016.

One way that Medicare officials can minimize Part B fee-for-service payments to providers is to encourage Medicare beneficiaries to enroll in Medicare Advantage plans (Part C). Currently almost one in three Medicare beneficiaries are in Medicare Advantage plans. That is 17.6 million people, up from 9.7 million in 2008. The Medicare program pays the health insurers operating Medicare Advantage plans a budgeted payment for each enrollee. The health insurer then contracts with hospitals, physicians, clinical labs, and other providers, often using capitated arrangements to reimburse those providers.

Meanwhile, Medicare officials are working to convert more Part B services away from fee-for-service and over to bundled reimbursement. This winter, it rolled out the Comprehensive Care for Joint Replacement (CJR) model in 67 markets. Medicare pays a bundled fee which must be split among all the providers. Another example is the Comprehensive Primary Care Plus program. When implemented, this initiative will start with 20,000 primary care physicians who will be paid monthly fees for selected patient management services, and they will get reduced fee-for-service payments.

The actions by officials at HHS and the Medicare program make it timely for pathologists and lab administrators to begin giving this question more attention: How much time remains before Medicare officials drop fee-for-service payment for clinical lab testing?


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