Medicare’s Latest Attack on Lab Test Prices

MANY OF YOU KNOW ABOUT THE PROPOSED NEW MEDICARE RULE by the Centers for Medicare & Medicaid Services (CMS) that it would use to initiate a review of the prices it pays for 1,250 clinical laboratory tests under the Medicare Part B Clinical Laboratory Fee Schedule (CLFS).

However, I’ll bet that most of you are unaware of the other two proposed new rules that CMS also published in July. For services covered by the Physician Fee Schedule (PFS), the agency proposes to lower the price paid for non-hospital services to no more than the hospital outpatient department rates. A number of pathology services would see a fee reduction of between 4% and 80% if this rule is implemented as currently written.

The third rule involves the Hospital Outpatient Department Prospective Payment System (OPPS). The proposed rule would allow CMS to bundle both clinical laboratory tests and pathology services into the payments the agency makes to hospital outpatient departments. This is causing great concern because of fears that CMS will not use a transparent process and will not engage the industry as it proceeds to establish the prices of the bundles for individual outpatient services.

In this issue of THE DARK REPORT, we provide you a clearer picture of these proposed new rules and the negative financial impact they may have if implemented as currently written. In particular, the fact that these actions by CMS may be a challenge to the authority of Congress and its power to establish the budgets for the Medicare program—including Part B clinical lab test fees—is something that you will not read anywhere else.

Further, this information is actionable business intelligence you can use. Whether you decide to become more involved in your lab association, college or society; or whether you decide its time to contact your elected officials in Congress, the insights and analyses provided on the pages that follow can help you make your points with clarity and vigor.

What comes next is anyone’s guess. CMS closed the comment period on the proposed rules last Friday. In coming weeks, there is certain to be intense discussions in Washington involving Medicare officials and lab and pathology leaders. Not until CMS publishes its final rules for 2014 in early November will anyone know if these unprecedented proposals will take effect on January 1, 2014.