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CMS proposes $5 billion cut in lab test fees

The CMS will begin paying the same as private insurance rates for clinical diagnostic laboratory tests starting January 1, 2017, according to a proposed rule announced Friday. The move could result in a large cuts in payments to laboratories.

Medicare paid between 18% and 30% more than other insurers for some lab tests, an HHS Office of Inspector General report found.

The agency projects savings of $360 million for clinical diagnostic laboratory tests in 2017 as a result of the change, and a $5.14 billion savings within the first 10 years of the rule's implementation, according to the proposed rule.

Medicare's current fee schedule for lab tests has been in place since 1984 and remains largely unchanged, according to the agency. Under the current system, each lab determines its own payment rates on the basis of prevailing charges for lab tests in its region.

The program pays approximately $8 billion a year for clinical diagnostic laboratory tests.

The change was called for in the Protecting Access to Medicare Act of 2014 (PAMA), which also requires clinical laboratories to report on private insurance payment amounts and lab test volumes.

“Modernizing Medicare's payment for clinical lab tests is another example of our commitment to spending health care dollars more wisely,” said Dr. Patrick Conway, deputy administrator and chief medical officer at CMS. “This demonstrates CMS' dedication to collaborating with private payers to improve the delivery system.”

Medicare-enrolled laboratories are a mix of national chains that perform a large menu of tests and small regional operations that concentrate on a specific population, such as nursing home residents. Physician offices also perform some tests that are reimbursed by Medicare.

Laboratories would collect private payer data from July 1, 2015 through Dec.31, 2015 with reports due CMS by March 31, 2016. CMS will post the new Medicare rates by Nov. 1, 2016; these rates will take effect on January 1, 2017.

CMS will take comments until November 25, 2015.


Virgil Dickson

Virgil Dickson reports from Washington on the federal regulatory agencies. His experience before joining Modern Healthcare in 2013 includes serving as the Washington-based correspondent for PRWeek and as an editor/reporter for FDA News. Dickson earned a bachelor's degree from DePaul University in 2007.

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