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Medicare Part B Spending Increased 4 Percent in 2020 Thanks to COVID-19 Testing, Report Finds

NEW YORK – A new report from the US Department of Health and Human Services' Office of Inspector General released on Tuesday found that Medicare Part B spending increased 4 percent year over year in 2020, driven by high volumes of COVID-19 testing.

Overall spending during the year increased to $8 billion in 2020 from $7.7 billion in 2019, driven by $1.5 billion in new spending on COVID-19 tests. COVID-19 tests accounted for about 19 percent of total Medicare Part B spending in 2020, OIG noted.

Meantime, spending for non-COVID-19 tests decreased by 16 percent, or approximately $1.2 billion, to $6.5 billion, the OIG found. That decline was driven by a sharp decrease in non-COVID-19 tests in the early months of the pandemic, as routine testing fell off significantly. The decline was also affected by reductions in payment rates for some of the tests as required by the Protecting Access to Medicare Act, which also mandates the release of OIG's annual claims analysis report.

Medicare Part B covers medically necessary services and preventive services, including services or supplies needed to diagnose or treat a medical condition or healthcare to prevent or detect illness at an early stage.

The decline in volume for non-COVID-19 tests "raises questions about the potential impacts on beneficiary health," OIG said. Pandemic-related delays of routine or preventive tests "could have a long-lasting impact on the health of some Medicare Part B beneficiaries," it added.

OIG noted that its analysis only includes tests covered by Medicare Part B, omitting COVID-19 tests covered by community testing programs or covered by Medicare under other payment systems, such as the Hospital Outpatient Prospective Payment System.

The increase in total spending marks the fifth straight year of Medicare Part B spending increases, although OIG said spending on non-COVID-19 tests in 2020 was the lowest it has been in the five-year period. Medicare Part B paid for fewer tests in total during the year, with the number of tests declining by 12 percent. Chemistry tests, which are the largest category by both volume and spending, declined 12 percent by volume to 153 million in 2020 compared to 2019.

Medicare Part B spent nearly $5 billion on the top 25 tests, an increase of 8 percent. Four COVID-19 tests were in the top 25, including a rapid COVID-19 test, which drove $1 billion in spending. Only one non-COVID test saw a spending increase: a microbiology test using nucleic acid to detect an infection, which was likely used in conjunction with COVID-19 tests, OIG said.

The agency said it plans on conducting an audit "looking more closely at which lab tests had declines in volumes in 2020" to measure the impact of the pandemic.