Labs Hoping to Avoid Additional Payment Cuts

Additional Medicare payment cuts in 2014 and beyond may be looming for clinical and anatomic pathology laboratories. To date, labs have already seen Medicare payment cut by more than 11% since 2010 and it looks like they will continue to feel the pinch unless the Centers for Medicare and Medicaid Services (CMS) is able to successfully adjust how it determines payment for lab services provided by independent laboratories and reduces payment under the clinical laboratory fee schedule (CLFS) to reflect technological advancements.

Section 1833(h)(2)(A)(i) of the Social Security Act grants the secretary of the Department of Health and Human Services (HHS) the authority to factor in technological changes when adjusting the fee schedule for clinical laboratory tests and CMS is invoking the secretary to do just that.

According to the Office of the Inspector General of HHS, CMS has been paying 18-30% more than other insurers for the exact same 20 high volume tests on the CLFS. The annual cost of this for CMS stacks up to a whopping $910 million for just those 20 tests. Because of this, CMS is now looking to evaluate all 1,250 tests on the CLFS over the next 5 years, hoping to come up with initial rate adjustments by 2015.

Since most contracts today are based on a percentage of the CLFS the ramifications of these cuts within the industry will be far reaching. The truth of the matter is that it is imperative for the lab industry to cut costs while retaining high quality service while seeking ways to improve service.

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By Kevin Hunter