Medicare Dialysis Patients:

Widely Varying Lab Test Rates Suggest Need for Greater HCFA Scrutiny

HEHS-97-202: Published: Sep 26, 1997. Publicly Released: Oct 31, 1997.

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William J. Scanlon
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Pursuant to a congressional request, GAO examined the anomalous patterns of test rates among dialysis patients, focusing on: (1) the extent to which the rates for providing laboratory tests to Medicare patients varied among dialysis facilities; (2) the appropriateness of these rates; (3) reasons for the variation; and (4) the adequacy of the reviews that the Health Care Financing Administration (HCFA), the agency administering Medicare, performs to examine laboratory test claims.

GAO noted that: (1) despite the large volume of laboratory services provided to end stage renal disease (ESRD) patients, HCFA does not scrutinize the level of laboratory tests ordered for patients receiving dialysis; (2) GAO's study in 1994 showed that clinically similar patients received laboratory tests at widely disparate rates; (3) this variation suggests that Medicare may be paying for an excessive number of tests or that patients may not be receiving the tests needed to adequately monitor their condition; (4) renal disease experts GAO consulted found questionable usage rates for 20 of 34 individual laboratory tests identified in two data samples; (5) they determined that many of these tests provided to patients at 100 facilities with the highest average number of tests ordered per patient were either provided too often or ordered for an implausibly large proportion of patients; (6) low rates of laboratory tests for patients of some facilities were also found; (7) the nature of fee-for-service reimbursement does not give physicians adequate incentives to be judicious in ordering tests; (8) the likelihood of excessive testing may increase when a company owns both a dialysis facility and a laboratory and includes unnecessary tests in standing orders; (9) these and other physician-related factors, such as the physician's knowledge of the latest testing techniques and medical practice differences, help explain the wide variation in laboratory test rates; (10) neither HCFA nor its claims-processing contractors analyze claims data that would reveal the dramatic variation in test rates found in GAO's study; (11) neither knows if Medicare is paying for unnecessary tests for some patients or if other patients receive too few tests to ensure high-quality treatment; (12) because claims for tests are submitted by the laboratories performing the tests, contractors' reviews of claims data would likely identify the laboratories and not the test rate patterns found when the data are arrayed by the patient's ordering physician or dialysis facility; (13) without knowledge of these patterns, HCFA has no indication of whether laboratory claims made on behalf of ESRD patients receiving dialysis are for an appropriate level of tests; and (14) without a process for identifying the physicians who order tests for dialysis patients and for notifying contractors of providers whose test order rates are aberrant, HCFA is unable to identify physicians who order unneeded or inadequate numbers of tests.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: The Committee indicated that it has no plans to pursue this recommendation.

    Matter: The Congress may wish to consider making the ordering physician liable for the recovery of payments made to laboratories when the physician continues to order tests that are not medically necessary or are provided too frequently, after having been notified of a pattern of such inappropriately high testing rates.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to GAO's recommendation, on June 30,1999, HCFA directed its contractors, beginning in fiscal year 2000, to refine their data analysis approaches, methods and software to help identify overutilization and abusive billing practices. The directive suggests that the contractors consider reviewing utilization data based upon the ordering or referring physician, but does not make such analyses mandatory. As a result, the directive, while emphasizing the need for contractors to make greater use of available data to identify overutilization, does not require physician profiling as suggested in GAO's recommendation.

    Recommendation: To assist contractors in their efforts to determine the appropriateness of laboratory tests ordered for Medicare dialysis patients, the HCFA Administrator should profile physicians ordering laboratory tests for dialysis patients and notify the contractors of the providers whose test order rates are aberrant. The Administrator should instruct the contractors to review these cases and carefully scrutinize ordering physicians who order too many or too few tests.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration


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