CMS may start paying less for laboratory testing

The OIG just released the results of a study that compared the rates the federal government and private insurers pay for select lab services. What it found may lead to a more aggressive policy by the federal government to ensure it pays significantly less for laboratory testing. Medicare is the largest payer of clinical laboratory (lab) services in the Nation.  It paid approximately $8.2 billion for lab tests in 2010, which accounted for 3 percent of all Medicare Part B payments.  The OIG looked at 20 lab tests on the Clinical Laboratory Fee Schedule (CLFS) and compared how much Medicare, Medicaid and three Federal Employees Health Benefits (FEHB) plans paid for the tests versus what private insurers paid in 2010. These 20 tests amounted to 47% of the total volume and 56% of Medicare lab expenditures that year. OIG found, for just these 20 tests, Medicare could have saved $910 million in 2010 had it paid the lowest price labs charged private insurers. As a result of these findings, OIG is recommending CMS “seek legislation that would allow it to establish lower payment rates for lab tests and consider seeking legislation to institute co-payments and deductibles for lab tests.” OIG stated CMS could institute competitive bidding programs or contract with a “small number of providers” to get discounted rates for high volume tests.