OIG: Medicare could have saved $910M on lab tests

Medicare could have saved $910 million--38 percent--on lab test payments if it would have paid providers at the lowest established rate in each geographic area, according to a report from the Office of the Inspector General.

The study, aiming to figure out if Medicare is a prudent buyer of lab services, notes that no prior evaluations compared Medicare payment rates to those of other healthcare service payers.

The OIG collected data from 50 state Medicaid programs and three Federal Employees Health Benefits (FEHB) plans that pay for fee-for-service lab tests in 2011. For 20 lab tests, Medicare paid claims were compared with the state Medicaid program fee schedule amount and FEHB plan medium claim payment amounts.

The study found Medicare paid between 18 percent and 30 percent more than other insurers for a total of 20 high-volume or high-expenditure lab tests. FEHB programs incorporate competitor information, changes in technology and provider requests in their payment rates--Medicare does not.

The OIG suggests the Centers for Medicare & Medicaid Services "seek legislation that would allow it to establish lower payment rates for lab tests and consider seeking legislation to institute copayments and deductibles for lab tests."

The report comes after a mid-May announcement that CMS would spend up to $1 billion to fund awards and evaluations of projects that test new payment and delivery models designed to cut costs and improve patient care.

To learn more:
- see the report (.pdf)

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