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Clinical Laboratory Testing:Providing Clinical Evidence for
Diagnosis and TreatmentAlan Mertz
PresidentAmerican Clinical Laboratory Association
2
Most Medicare Beneficiaries Receive Lab Services from Hospitals or Independent Labs National Labs Make Up Only 20% of Total Medicare Spending
Data Sources: MedPAC, 2011 Data Book. G2 Intelligence, Lab Industry Strategic Outlook 2011 Market Trends and Analysis. ACLA internal analysis.
Medicare Spending on Clinical Lab Fee Schedule in 2010 ($8.1B Total)
LabCorp $0.73 Billion
9%
Quest Diagnostics Inc $0.90 Billion
11%
Hospitals $3.20 Billion
40%
Physician Office Labs $0.32 Billion
4%
Other Independent Labs $2.94 Billion
36%
Medicare Beneficiaries Living in Rural Areas are Primarily Served by Small Clinical Laboratories
Quest & LabCorp
21%
All Other Labs79%
Urban Counties: Laboratory Market Share in 2006
Quest & LabCorp
11%
All Other Labs89%
Rural Counties:Laboratory Market Share in 2006
Source: The National Market for Clinical Laboratory Testing, Medicare & Medicaid Research Review, 2012
Laboratory Test Reimbursement
• Most lab services are reimbursed under the Clinical Laboratory Fee Schedule (CLFS)– Small subset that require physician interpretation
reimbursed under Physician Fee Schedule• CLFS allows direct billing of labs for laboratory
services– Separates ordering clinician from entity getting paid
for the test• Protects beneficiaries and health care system from
incentive-driven overutilization of lab services
Clinical Lab Fee Schedule (CLFS) Created in 1984 with Annual Update for Inflation… But Payments Have Increased Only 7 Times in Past 30 Years
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$10.00
$8.32
$21.81
Year
Medicare Payment for Lab Test ($10 in 1984)
Updated for Inflation
1984 2010
Congress Passed Cuts to CLFS in 2010, 2011 and 2012…
Current Law Calls for 8% Cut Over Next 5 Years*
* Includes impact of sequestration
-3% on1/1/2013-5% on 4/1/2013 -8% over
5 years
Productivity Adjustment (2010)
-1.75% Cut to Labs (2010)
-2% “Re-Basing” (2012)
Sequestration (2011)
Cuts to CLFS Payments
Projected Payments, Next 10 Years… With Inflation Updates
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $8.00
$8.50
$9.00
$9.50
$10.00
$10.50
$11.00
$11.50
$12.00
$12.50
$13.00
$10.00
$10.67
$12.87
Test Paid at $10 in 2010Updated Annually for Inflation
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $8.00
$8.50
$9.00
$9.50
$10.00
$10.50
$11.00
$11.50
$12.00
$12.50
$13.00
$10.00
$12.87
$9.88
2010 Baseline, pre-ACA
2013 Baseline, 2% Rebasing + Sequestration
Projected Payments for a Test Paid at $10 in 2010
Projected Payments, Next 10 Years… NO Inflation Updates
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $8.00
$8.50
$9.00
$9.50
$10.00
$10.50
$11.00
$11.50
$12.00
$12.50
$13.00
$10.00
$12.87
$9.88
$9.33
2010 Baseline, pre-ACA
2013 Baseline, 2% Rebasing + Sequestration
CBO Uniform Cost-Sharing, Restrict Medigap
Projected Payments for a Test Paid at $10 in 2010
Proposals for Combined Deductible & Uniform Coinsurance: Lab Test Payments Cut 20%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $8.00
$8.50
$9.00
$9.50
$10.00
$10.50
$11.00
$11.50
$12.00
$12.50
$13.00
$10.00
$12.87
$9.88
$9.33
$8.98
2010 Baseline, pre-ACA2013 Baseline, 2% Rebasing + SequestrationCBO Uniform Cost-Sharing, Restrict Medigap20% Lab Coinsurance
Projected Payments for a Test Paid at $10 in 2010
20% Lab Coinsurance: Even Bigger Cuts, Since No Catastrophic Coverage
When Compared to Payments Adjusted for Inflation, Coinsurance Proposals Could Cut by Additional 20 – 30% Over Next 10 Years
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $8.00
$8.50
$9.00
$9.50
$10.00
$10.50
$11.00
$11.50
$12.00
$12.50
$13.00
$10.00
$10.67
$12.87
$9.88
$9.33
$8.98
2010 Baseline, pre-ACA
2013 Baseline, 2% Rebasing + Sequestration
CBO Uniform Cost-Sharing, Restrict Medigap
20% Lab Coinsurance
2013-12%
2015-20% to -24%
2022-27% to -30%Projected Payments for a Test Paid at $10 in 2010
Sources of Supplemental /Secondary Coverage for Medicare Beneficiaries
Employer, 13.9M, 35%
Medicare Advantage, 7.6M, 19%
Medigap, 7.2M, 18%
None, 4.4M, 11%
Other Public, 0.4M, 1%
Medicaid, 6.4M, 16%
Source: Examining Sources of Coverage Among Medicare Beneficiaries, Kaiser Family Foundation 2009
