Advocacy - Lab Advocate

HHS OIG Report Finds Lab Expenditures Rose Despite PAMA Reductions

In early August, the Department of Health and Human Services’ Office of Inspector General (HHS OIG) released its annual report on Medicare spending for laboratory testing. The report entitled, Medicare Laboratory Test Expenditures Increased in 2018, Despite New Rate Reductions, finds that government spending for laboratory services increased by $459 million in 2018 even with the cuts mandated by the Protecting Access to Medicare Act (PAMA). Overall spending for laboratory testing reached $7.6 billion-a six percent increase over 2017.

OIG asserts that the higher spending is largely driven by higher costs and volume associated with genetic testing. Genetic testing accounts for 13 percent of Medicare spending for laboratory services, an increase from 7 percent in 2017. During this same period, the number of genetic tests covered by Medicare increased from 110 to 199. Overall payment rates for 75 percent of all tests decreased because of the new payment system, however.

AACC and its allies are concerned that the current cuts are larger than anticipated because of the inclusion of the discounted fees provided by large commercial laboratories. In 2019, the laboratory community succeeded in getting Congress to direct the Medicare Payment Advisory Commission (MedPAC) to assess the current methodology and make recommendations for improvement. AACC will report on these findings once the study is completed.