Grassley Presses HHS, CMS for Medicare Overpayments for Lab Services

Following recent a Government Accountability Office (GAO) report, Senate Finance Committee Chairman Chuck Grassley is pressing the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) to explain the potential for a striking increase in costs to Medicare for laboratory services.

 

“The Administration ought to be doing all it can to ensure fiscal responsibility prevails when it comes to Medicare payments. It’s the right thing to do for patients, taxpayers and for the preservation of Medicare for future generations,” Grassley said.

 

A November 2018 GAO report found that recent changes made by CMS to implement a 2014 law to establish a national fee schedule for laboratory services may result in hundreds of millions of dollars in increased payments because of its decision to use maximum, in lieu of average, payment rates as a baseline, leading to potentially ballooning costs to the program and taxpayers.

 

The report also found that Medicare changed the way it processed some laboratory tests and, as a result, has often paid the individual rate for panel tests that could have been paid at a lower, bundled rate. This failure to bundle lab tests could increase the cost to taxpayers by more than $10 billion through 2020, according to the GAO.

 

In the oversight letter to HHS Secretary Alex Azar and CMS Administrator Seema Verma, Grassley seeks information about progress being made to increase data reporting thereby improving the payment rate calculation and whether HHS will take steps to phase in payment rate reductions based on average rather than maximum rates. Grassley also presses Azar and Verma to explain the practice of paying individual, rather than bundled, rates for panel tests, why they couldn’t detect that this was happening when it could have paid the lower rates and what’s being done to improve CMS’ ability to detect such circumstances.