Mertz: Medicare Cuts Will Hurt People and Economy

Posted October 5, 2011 at 5:37pm

Clinical laboratory testing guides 70 percent of health care decisions. Yet such testing — to identify and manage diseases ranging from cancer to diabetes — amounts to less than 2 percent of Medicare spending. Why, then, would the government want to slap a new co-pay on Medicare recipients for their lab tests — plus jam their mailboxes with millions of new bills, forms and confusion?

Just such a proposal has been under serious consideration in Congress, and may well be on the table as it decides how to slash billions of dollars of federal spending as part of the debt ceiling agreement. This proposal is penny-wise and pound-foolish.

First, it will cost Medicare a lot more money in the long run. Forcing older Americans with chronic illnesses such as diabetes, kidney disease and heart disease to pay more could lead them to delay or skip routine lab tests.

That means diseases will be discovered later, complications will already have set in and the federal government will be stuck with higher medical expenditures as a result.

The Congressional Budget Office got it right when it stated in its December 2008 Budget Option report regarding lab co-insurance: “Because of those costs, some Part B enrollees might forego valuable or needed laboratory testing, potentially hindering timely and effective clinical decision-making.”

Second, this policy contradicts past efforts by Congress to encourage cost-effective preventive care. The 2010 health care overhaul fully recognized the cost-effectiveness of laboratory and diagnostic testing by eliminating co-insurance and cost-sharing for preventive services, including clinical laboratory tests for cholesterol, diabetes, colorectal cancer and cervical cancer, among others. The benefits of these provisions, however, would be wiped-out under the proposed co-insurance.

To put the power of preventive testing into perspective, consider this: A lab test for diabetes costs about $7.50, whereas a heart attack that can result from uncontrolled diabetes pushes $30,000. Chronic disease already accounts for 75 percent of all health spending. And 70 percent of Medicare beneficiaries have at least one chronic condition, while 38 percent have two to four.

Under this proposal, Medicare beneficiaries would also have to shoulder at least $24 billion in additional payments for clinical laboratory tests alone. Many beneficiaries are already struggling to make ends meet. In the case of advanced molecular diagnostics for cancer and other serious diseases, the co-share could run into hundreds of dollars causing an additional unnecessary barrier to life-saving care.

And seniors would be swamped with millions of new bills for Medicare services — and the hassles involved with figuring them out. This proposal alone would mean some 214 million new Medicare bills each year. Each of those new bills would cost about $3.50 to process and collect — and about half of them would cost more to collect than the cost-sharing would save.

One more point must be added about the effect of this proposal on patient access to lab tests. In the past year or two, the laboratory community has accepted a reduction in Medicare reimbursement for laboratory services that totals about 19 percent over the next 10 years. That’s massive, especially for clinical laboratories serving rural communities or nursing home populations, where as many as 80 percent of the patient-base consists of Medicare patients. In some cases, these cuts already threaten the existence of these labs.

Why is this important? Because in many rural areas, there is only one lab service around, and samples from nursing home patients are drawn at the bedside. If this lone facility closes and there is no service for this population, seniors would have to be transported — often by ambulance — to the nearest lab patient center. In emergencies, patients would have to go to the emergency room, pushing costs even higher.

We all need to do our part to help trim the deficit. But cuts that do more damage — to people and the economy at the same time — belie common sense. If the ultimate goal is to reduce Medicare expenditures, we should be doing everything we can to help people prevent and better manage chronic illness by improving access to needed laboratory tests. Co-insurance would be an unfortunate roadblock in that effort.

Alan Mertz is president of the American Clinical Laboratory Association.