Non-COVID Part B Lab Spend Declined by 15.9% in 2020

OIG says 2020 Medicare Part B CLFS spending for non-COVID tests was $6.5 billion, lowest since 2016

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MEDICARE PART B CLINICAL LABORATORY FEE SCHEDULE CUTS mandated by PAMA continue to bite deeply. A new government report shows that during fiscal 2020, the Medicare program spent 15.9% less for lab tests, when COVID-19 test payments are excluded. 

The federal Department of Health and Human Services Office of Inspector General (OIG) recently released a report examining test spending for Medicare Part B patients in 2020. “Aside from COVID-19 tests, spending for all other tests as a group decreased by 15.9% from 2019, to $6.5 billion,” the OIG wrote in its report. “The decline in spending was driven by a decline in overall healthcare utilization during the pandemic, as well as a further reduction in payment rates for some tests, as required by PAMA.”

Medicare shelled out $1.5 billion for COVID-19 tests in 2020. That helped overall spending for Part B clinical lab testing rise in 2020 to $8 billion, up 4.2% from 2019.

The reductions in non-COVID test spending reflect a wider pandemic theme: Americans avoided routine healthcare tests while providers triaged their services to better respond to urgent COVID-19 cases, particularly in spring 2020.

“The monthly volume of non-COVID-19 tests did not … increase during the second half of 2020, suggesting that many Medicare beneficiaries did not make up the tests they may have missed in the spring during the rest of 2020,” the OIG noted. “Research suggests that delays in diagnostic testing, such as cancer screening, could have long-term effects on beneficiary health and well-being.” 

Wide Range of Payments

The OIG report had one interesting insight into the extent of COVID-19 testing for the Medicare population. The OIG determined that more than 8.4 million unique Medicare Part B beneficiaries received at least one COVID-19 test in 2020. Federal payment rates for these tests ranged from $18.09 to $100 for high-throughput assessments.

For the time being, demand will remain healthy for COVID-19 tests as Americans manage virus variants. 

If SARS-CoV-2 becomes endemic, similar to seasonal flu, it’s possible that related testing reimbursement will help clinical laboratories endure upcoming PAMA reductions.

Taking the pandemic out of the equation, however, the reduction in test spending is alarming—but not unexpected—news for clinical laboratories and pathology groups. The Protecting Access to Medicare Act of 2014 (PAMA) has hit labs hard since 2018 by requiring Medicare to reduce test payments under the Clinical Laboratory Fee Schedule to reflect private payer rates.

Clinical laboratories avoided PAMA cuts in 2021 and 2022 due to COVID-19 concerns, but these lab test price cuts are scheduled to resume in 2023. (See TDR, Dec. 20, 2021.) 

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