Comparing Lab Test Payment Rates: Medicare Could Achieve Substantial Savings

HHS: June 10, 2013

WHY WE DID THIS STUDY

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. Prior to this evaluation, there had not been a comparison of Medicare payment rates to those of other health care service payers. Such a comparison will help ensure that Medicare is a prudent purchaser of lab services.

HOW WE DID THIS STUDY

We collected payment data from 50 State Medicaid programs and 3 Federal Employees Health Benefits (FEHB) plans that pay for lab tests on a fee-for-service basis. We requested the payment rates in effect from January 1 through March 31, 2011, for 20 lab tests. For each lab test in each geographic area represented on the Medicare Clinical Laboratory Fee Schedule (CLFS), we compared Medicare paid claims with the State Medicaid program fee schedule amount and FEHB plan median claim payment amounts. We surveyed State Medicaid programs and FEHB plans to determine how their lab test fee schedules or payment rates were formulated, whether a copayment was charged to the patient, and whether lab test charges counted towards a member’s deductible.  Read more