Medicare spending on laboratory testing increased in 2020 because of new spending on COVID-19 tests, while spending on other laboratory testing decreased significantly, Health and Human Services inspectors said in a report released Tuesday.
These findings raise questions about whether some of these non-COVID-19 tests can be skipped in the future and how these skipped tests will impact beneficiary outcomes in 2022, said Gretchen Jacobson, vice president of Medicare at the Commonwealth Fund.
Overall, Medicare spending on lab tests through the program’s Part B—which covers outpatient visits, lab tests and more—increased about 4% in 2020, which is consistent with growth levels over the last five years.
But COVID-19 tests, which didn’t exist before 2020, accounted for about 19% of all Medicare outpatient spending on lab tests in 2020, at $1.5 billion. When COVID-19 tests are discounted, Medicare outpatient spending on lab tests was $6.5 billion, $1.2 billion less than overall spending in 2019 and the lowest amount in the last five years, the HHS Office of Inspector General said.
Medicare paid for fewer tests total in 2020 than in the previous year. OIG said providers administered 53% fewer non-COVID-19 tests—including cancer screenings and drug tests—to Medicare beneficiaries in April 2020 than in April 2019.
Typical use patterns resumed in the summer, even increasing in June relative to the previous year, OIG said. However, that increase didn’t sustain itself throughout the rest of the year, indicating that skipped tests in the spring of 2020 weren’t made up later in the year.
Jacobson wonders whether these skipped tests were actually necessary. On the other hand, she also questions if there will be poorer beneficiary health this year as a result.
“We saw Medicare spending and use of services return relatively quickly beginning in June of 2020 but it will be interesting to see if care changed at all after people started to become vaccinated,” Jacobson wrote in an email.
Over $1 billion of Medicare outpatient spending on lab tests in 2020 was for rapid COVID-19 tests alone, OIG said. The top test in 2019—the comprehensive group of blood chemicals test—decreased by 10% in 2020, and payments decreased by 18%. The only non-COVID-19 test that increased from 2019 to 2020 was a microbiology test used to detect an infectious agent, which OIG said was probably used together with COVID-19 tests.
The spending decline for non-COVID-19 tests is also due in part to reduced Medicare payment rates for some tests, as required by a 2018 law, OIG said.
OIG plans to examine even more closely which lab tests and declines in volume in 2020, and it will also continue to monitor annual payments for lab tests.