How many consecutive 10% and 15% cuts to the prices Medicare pays for clinical laboratory tests can smaller community labs absorb before they are forced to shut their doors and go out of business? This nation is about to find out. As this happens, Medicare beneficiaries (and their physicians) in small towns and rural areas will lose access to the quality lab testing services they have relied on for decades.
The first round of 10% price cuts to the Medicare Part B Clinical Laboratory Fee Schedule took place on Jan. 1 of this year. In the 11 months since those lower prices took effect, several clinical lab companies closed their doors and went out of business.
The National Independent Laboratory Association (NILA) says that its members are experiencing significant financial erosion as a result of this year’s 10% fee cuts. When the 10% fee cuts for 2019 and 2020 are implemented (representing a collective 30% price cut from Medicare Part B lab test prices in 2017), NILA predicts that the reduced revenue from Medicare for the same volume of Medicare patients will push many of these community labs into financial collapse.
Because the nation will lose these community labs one at a time, in different regions at different times, no one in the media is likely to notice. Nor will there be a groundswell of unhappy Medicare beneficiaries contacting their senators and representatives to complain about losing the reliable lab provider they have used in their town or region for decades.
Within the clinical lab industry, the largest lab companies will manage to absorb the Medicare fee cuts. They will survive even as smaller clinical labs disappear. But what will be gone are the local laboratories that have faithfully served their small towns and rural areas.
Who will provide this testing when these labs go out of business? Physicians and nursing homes in these communities are the same ones abandoned by the public lab companies in the 1990s when they determined these clients were unprofitable. History tells us that today’s national lab companies won’t fill that void because of the high costs of serving providers in those communities. Thus, as CMS moves ahead with its plan to enact deep price cuts uniformly across all labs and all regions, it is Medicare beneficiaries who will suffer because they will lose access to quality lab testing provided locally.