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Medicare Paid $7.1B for Lab Tests in 2017, HHS OIG Report Says

NEW YORK (360Dx) – Just three laboratories received 15 percent of $7.1 billion in Medicare reimbursements for laboratory tests paid under the program's Part B in 2017, according to a data brief issued this week by the US Department of Health and Human Services Office of Inspector General.

The brief, mandated by Congress, is the fourth set of annual baseline analyses of the top 25 lab tests published by OIG as part of new rules that went into effect on Jan. 1, 2018, changing the method by which labs are reimbursed for tests they perform.

The new rules implemented under the Protecting Access to Medicare Act, or PAMA, resulted in significant cuts to reimbursement rates to labs for some tests. Using a market-based method, PAMA represented the first change to how Medicare reimbursed labs for tests in three decades.

The data briefs, OIG said, serve as "baseline statistics" that it will use to measure the effects of the new PAMA rates. "We will continue to monitor Medicare payments for lab tests and to identify emerging trends in these payments and vulnerabilities to potential cost savings," it said.

Among the takeaways from the most recent brief: In 2017, Medicare paid more than $7.1 billion under its Part B program for lab tests. Part B is the payment system through which Medicare pays for medically necessary services and supplies, including lab tests, needed for the diagnosis or treatment of a beneficiary's health condition.

According to the data brief, while nearly 57,000 labs received Medicare payments last year, just three labs received $1.1 billion, or 15 percent, of the total that Medicare paid for lab tests.

OIG did not name the three labs, though Quest Diagnostics and Laboratory Corporation of America are the two largest labs in the US.

The top 25 tests by Medicare payments totaled $4.5 billion in 2017, representing 64 percent of all Medicare payments for lab tests. Spending on the 25 tests were concentrated on just a few labs, however, the brief said — 1 percent of the labs received 55 percent of Medicare payments for the top 25 tests.

The test that received the most amount in Medicare payment in 2017 was blood testing for thyroid-stimulating hormone, for which Medicare paid $484 million. Blood tests for a "comprehensive group of blood chemicals" followed with $473 million in Medicare payments, and complete blood cell count and automated differential white blood cell count testing was third with $432 million in Medicare payments.

In 2017, 433 million lab tests were billed to Medicare. Based on the number of tests that Medicare paid for, the top test was blood testing for a comprehensive group of blood chemicals (41.6 million tests), followed by complete blood cell count and automated differential white blood cell count (41.5 million tests), and blood tests for lipids (28.9 million tests).

Among genetic tests, gene analysis for colorectal cancer received the most Medicare payments, $117 million last year, with 200,000 tests billed. Medicare paid $60 million for 20,000 tests for detecting genes associated with breast cancer, while the program paid $52 million for 20,000 tests associated with the genetic analysis of BRCA 1 and BRCA2 gene mutations.