Medicare: Payments for Clinical Laboratory Test Services Are Too High

Highlights

Pursuant to a legislative requirement, GAO reviewed the appropriateness of Medicare fee-schedule payments for clinical laboratory test services, focusing on laboratory costs and revenues.

Recommendations

Matter for Congressional Consideration

Matter	Status	Comments
The Senate Committee on Finance, the House Committee on Ways and Means, and the House Committee on Energy and Commerce should propose legislation capping Medicare payments for clinical laboratory test services at a level that will reduce those payments so that Medicare's contribution to laboratories' profits do not exceed their overall profit rate. GAO data indicate that capping fees at 76 percent of the median of all fee schedules would accomplish this goal.	Closed – Implemented	OBRA 1993 implemented the recommendation.
The Senate Committee on Finance, the House Committee on Ways and Means, and the House Committee on Energy and Commerce should propose legislation capping Medicare payments for clinical laboratory test services at a level that will reduce those payments so that Medicare's contribution to laboratories' profits do not exceed their overall profit rate. GAO data indicate that capping fees at 76 percent of the median of all fee schedules would accomplish this goal.	Closed – Implemented	OBRA 1993 implemented the recommendation.
The Senate Committee on Finance, the House Committee on Ways and Means, and the House Committee on Energy and Commerce should propose legislation capping Medicare payments for clinical laboratory test services at a level that will reduce those payments so that Medicare's contribution to laboratories' profits do not exceed their overall profit rate. GAO data indicate that capping fees at 76 percent of the median of all fee schedules would accomplish this goal.	Closed – Implemented	OBRA 1993 implemented the recommendation.
The Senate Committee on Finance, the House Committee on Way and Means, and the House Committee on Energy and Commerce should propose legislation giving the Secretary of the Department of Health and Human Services (HHS) the authority to adjust the cap rates for individual test procedures where relative rate inequities are apparent.	Closed – Implemented	GAO made a similar recommendation in recent testimony and will follow up on that assignment.
The Senate Committee on Finance, the House Committee on Way and Means, and the House Committee on Energy and Commerce should propose legislation giving the Secretary of the Department of Health and Human Services (HHS) the authority to adjust the cap rates for individual test procedures where relative rate inequities are apparent.	Closed – Implemented	GAO made a similar recommendation in recent testimony and will follow up on that assignment.
The Senate Committee on Finance, the House Committee on Way and Means, and the House Committee on Energy and Commerce should propose legislation giving the Secretary of the Department of Health and Human Services (HHS) the authority to adjust the cap rates for individual test procedures where relative rate inequities are apparent.	Closed – Implemented	GAO made a similar recommendation in recent testimony and will follow up on that assignment.

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Health Care

Cost analysisHealth insurance cost controlLaboratoriesMedical feesMedical services ratesMedicarePaymentsProfitsProposed legislationPhysicians