Clinical laboratories are reimbursed for providing services to Medicare beneficiaries using either the Physician Fee Schedule (PFS) or the Clinical Laboratory Fee Schedule (CLFS), depending on the nature of the service. In addition, clinical laboratories provide services to beneficiaries of other government programs such as Medicaid, TRICARE and the Federal Employee Health Benefit Plan (FEHBP), as well as commercial plans.
Lab reimbursement in many of these programs has been reduced in recent years, and in the case of the Medicare program, annual cuts are scheduled in current law not only as a result of sequestration, but also through annual cuts built into the Affordable Care Act.
While payments for lab services are being slashed, the costs associated with providing critical laboratory services – including labor, supplies, and transportation – continue to climb.
Although many labs have managed to navigate changes in markets and reimbursement and while still continually improving quality, continued arbitrary and severe payment reductions will result in reduced access to essential tests for critically ill patients, less innovation, more closures or consolidation of businesses, and more people out of jobs.
