Medicare: Modifying Payments for Certain Pathology Services Is Warranted

GAO-03-1056 Published: Sep 30, 2003. Publicly Released: Sep 30, 2003.
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Highlights

In 1999, the Health Care Financing Administration, now called the Centers for Medicare & Medicaid Services (CMS), proposed terminating an exception to a payment rule that had permitted laboratories to receive direct payment from Medicare when providing technical pathology services that had been outsourced by certain hospitals. The Congress enacted provisions in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) to delay the termination. The BIPA provisions directed GAO to report on the number of outsourcing hospitals and their service volumes and the effect of the termination of direct laboratory payments on hospitals and laboratories, as well as on access to technical pathology services by Medicare beneficiaries. GAO analyzed Medicare inpatient and outpatient hospital and laboratory claims data from 2001 to develop its estimates.

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Recommendations

Matter for Congressional Consideration

Matter Status Comments
Congress may wish to consider not reinstating the provisions that allow laboratories to receive direct payment from Medicare for providing technical pathology services to hospital patients.
Closed – Implemented
Section 732 of the Medicare Modernization Act extended this provision for 2005 and 2006. Thus, certain independent laboratories can continue to bill the carrier for the technical component of physician pathology services to hospital patients for those years. When the MMA extension expires for 2007, independent laboratories will no longer be allowed to bill for the technical component of physician pathology services to hospital patients.

Recommendations for Executive Action

Agency Affected Recommendation Status
Centers for Medicare & Medicaid Services The Administrator of CMS should terminate the policy of permitting laboratories to receive payment from Medicare for technical pathology services provided to hospital patients.
Closed – Implemented
Section 732 of the Medicare Modernization Act extended this provision for 2005 and 2006. Thus, certain independent laboratories can continue to bill the carrier for the technical component of physician pathology services to hospital patients. When the MMA extension expires on December 31, 2006, CMS will discontinue allowing this billing.

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