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Implementation of New Rates May Lead to Billions in Excess Payments

November 30, 2018

Pursuit's Take

A GAO report found that a new methodology to establish payment rates for laboratory tests could lead Medicare to payout billions in excess payments. In 2017, Medicare paid $7.1 billion on 433 million lab tests and paid a higher rate than private insurers. GAO found that the new methodology starting in 2018 has two problems that could lead to over $11 billion in excess payments over a 3 year period: 1)The maximum payment rate was used for the baseline instead of the average payment rates potentially causing $733 million in excess payments and 2)stopping a bundled payment rate for certain panel tests that usually go together would lead to $10.3 billion in extra spending for the unbundled fees.

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