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CMS Medicare Part B Spending on Clinical Dx Lab Tests Declined 10 Percent in 2022, HHS OIG Finds

NEW YORK – The US Department of Health and Human Services' Office of the Inspector General released a report recently that found that Medicare Part B spending on clinical diagnostic laboratory tests decreased by 10 percent year over year to $8.4 billion.

Changes in spending were primarily driven by changes in the volume of tests, with decreases in spending and volume occurring for each category of laboratory tests, including COVID-19 tests, genetic tests, and chemistry and other tests, the report said. The report analyzed Medicare Part B claims data for laboratory tests performed in 2022 and reimbursed under the Clinical Laboratory Fee Schedule payment system.

Medicare Part B covers medically necessary and preventive services such as ambulance services, durable medical equipment, some outpatient prescription drugs, and diagnostic tests. Spending on diagnostic tests has experienced an upward trend since 2014, the first year OIG began its annual analysis of Medicare laboratory test spending as required by the Protecting Access to Medicare Act of 2014, the report said. 

Total Medicare Part B spending grew between 2014 and 2021, increasing to $9.3 billion in 2021 before falling to $8.4 billion in 2022, marking "the largest decrease in annual spending since 2014," the report found. COVID-19 test spending declined 14 percent to $1.7 billion in 2022 from $2.0 billion in 2021, and genetic test spending declined 26 percent to $1.4 billion from $1.9 billion. Spending on chemistry and other tests fell to $5.3 million from $5.5 billion. 

"Widespread availability of at-home COVID-19 tests and the overall decline in the number of COVID-19 cases may have led to a decrease in demand" for laboratory-based COVID-19 tests, the report noted. COVID-19 tests accounted for 20 percent of spending for laboratory tests in 2022, with 23.3 million tests performed. 

The decline in spending on genetic testing, meantime, was driven by a 69 percent decrease in spending on molecular pathology tests, from $829 million in 2021 to $259 million in 2022. High spending on genetic testing received scrutiny from OIG due to potential fraud, the report noted. Genetic tests accounted for 17 percent of lab test spending in 2022, and 1.7 million tests were performed, down from 2.8 million in 2021.

Total spending on the top 25 Medicare Part B lab tests decreased by 13 percent, according to the report. Code U0003, covering high-throughput COVID-19 nucleic acid detection tests, accounted for the largest spending among all laboratory tests covered by the Clinical Laboratory Fee Schedule in 2022 at $663.5 million. 

All four genetic tests in the top 25 had increased spending, despite relatively low volume, the report said. Of the top 25 tests, the volume for 15 assays decreased.