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Reimbursement Trends: OIG Report Shows Slight Uptick in 2017 Medicare Part B Lab Payments

by | Oct 10, 2018 | CMS-nir, Essential, National Lab Reporter, Reimbursement-nir

On Jan. 1, 2018, the new Medicare Part B PAMA Clinical Laboratory Fee Schedule (CLFS) in which lab test reimbursements are based on a single national fee lab schedule for lab tests rather than 57 separate local fee schedules took effect. To gather baseline pricing data, the PAMA law requires the OIG to analyze Medicare payments for the top 25 lab tests under the previous system. On Sept. 25, OIG released the results for 2017, the fourth and final year of baseline data. 2017 Medicare Lab Payments by the Numbers In 2017, CLFS payments for lab tests totaled $7.1 billion, up slightly from the $6.8 billion Medicare paid in 2016 but little changed over the entire four years of the baseline period. The table below shows where that money went. How Medicare Spent Its $7.1 Billion for Lab Tests in 2017 Tests Beneficiaries Labs Providers 433 million: total tests billed 3.4: average number of tests received by beneficiaries per day 17: average number of tests per day for top 1% of beneficiaries 28 million: beneficiaries that received at least one test 16: average number of tests per beneficiary 86: average number of tests per beneficiary among top 1% of beneficiaries […]

On Jan. 1, 2018, the new Medicare Part B PAMA Clinical Laboratory Fee Schedule (CLFS) in which lab test reimbursements are based on a single national fee lab schedule for lab tests rather than 57 separate local fee schedules took effect. To gather baseline pricing data, the PAMA law requires the OIG to analyze Medicare payments for the top 25 lab tests under the previous system. On Sept. 25, OIG released the results for 2017, the fourth and final year of baseline data.

2017 Medicare Lab Payments by the Numbers
In 2017, CLFS payments for lab tests totaled $7.1 billion, up slightly from the $6.8 billion Medicare paid in 2016 but little changed over the entire four years of the baseline period. The table below shows where that money went.

How Medicare Spent Its $7.1 Billion for Lab Tests in 2017

TestsBeneficiariesLabsProviders

433 million: total tests billed

3.4: average number of tests received by beneficiaries per day

17: average number of tests per day for top 1% of beneficiaries

28 million: beneficiaries that received at least one test

16: average number of tests per beneficiary

86: average number of tests per beneficiary among top 1% of beneficiaries

56,859: labs that received Medicare payments

$125,388: average payments per lab

$1.1 billion: payments to top 3 labs

655,771: providers that ordered lab tests

466: average tests ordered per provider

5,964: average tests ordered by top 1% of providers

Source: OIG, "Medicare Payments for Clinical Diagnostic Laboratory Tests in 2017"
* Note: For a comparison to 2016 data, see NIR, Oct. 2017, page 1

What Medicare Paid for Top 25 Lab Tests
As required by PAMA, the OIG report includes detailed analysis of the 25 most frequently ordered lab tests. While the top 25 tests always generate the lion's share of payments, that trend was even more pronounced in 2017:

Payments for Top 25 Lab Tests 2014-2017

YearTotalPercentage of All CLFS Payments
2017$4.5 billion64%
2016$4.3 billion63%
2015$4.1 billion58%
2014$4.2 billion59%

Other Report findings for the top 25:

  • 17 of the top 25 tests have been in the top 25 for all four years of the review;
  • The top five tests accounted for $2.2 billion, or 30% of all payments for lab tests in 2017;
  • The rankings of the top five tests haven't changed in four years;
  • One percent of labs (272 out of 27,171 labs) received 55% of all Medicare payments for the top 25 lab tests in 2017.

Top 10 Lab Tests Based on Medicare Part B Payments in 2017

RankTest Description and Procedure CodeNational Limitation AmountNumber of Tests (in millions)2017 Medicare Payments (in millions)Changes from 2016 Payments (in millions)
1Blood test, thyroid-stimulating hormone (TSH) (84443)$23.0521.5$484+$1.6
2Blood test, comprehensive group of blood chemicals (80053)$14.4941.6$473+$3.0
3Complete blood cell count (red blood cells, white blood cells, platelets) and automated differential white blood cell count (85025)$10.6641.5$432-$1.3
4Blood test, lipids (cholesterol and triglycerides) (80061)--28.9$415+$4.4
5Vitamin D-3 level (82306)$40.618.9$348-$1.9
6Drug test(s), definitive, 22 or more drug class(es), including metabolite(s) if performed (G0483)$253.871.3$307+65.3
7Hemoglobin A1C level (83036)$13.3219.7$257+$6.2
8Testing for presence of drug (80307)$79.813.3$240New code in 2017
9Drug test(s), definitive, per day, 15-21 drug class(es), including metabolite(s) if performed (G0482)$204.340.8$162+$35.8
10Blood test, basic group of blood chemicals (80048)$11.6013.2$130-$3.7
Source: OIG, "Medicare Payments for Clinical Diagnostic Laboratory Tests in 2017"

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