The Clinical Laboratory Coalition is urging key senators on the Finance Committee to reject a proposed 14 percent cut in Medicare lab fee schedule rates over 10 years. The proposal is contained in the president’s budget request to Congress for fiscal year 2014, which begins this Oct. 1. It calls for reducing test reimbursement by an additional $9.46 billion over 10 years. In an April 16 letter to Finance Committee chairman Sen. Max Baucus (D-Mont.) and the ranking minority member, Orrin Hatch (R-Utah), the coalition argued that “such reductions gravely threaten laboratory providers’ ability to serve their communities, provide access to Medicare lab services, and be a vital partner in supporting health care providers in delivering appropriate, cost-effective, and high-quality health care services to the Medicare population.” Clinical laboratory testing represents only about 1.6 percent ($8.9 billion) of all Medicare spending and accounts for 70 percent of clinical decisionmaking, the letter pointed out. Yet it has been subject to significant freezes in payments and cuts over the last two decades. Since 2010, Medicare lab spending has been repeatedly cut as follows:

• 1.75 percent every year for five years (2010-2015);
• A productivity adjustment every year through the Affordable Care Act (ACA);
• A 2 percent rebasing of lab test fees as required by the Middle Class Tax Relief and Job Creation Act of 2012; and
• Another 2 percent in FY 2013 through sequestration.

“Adding in the President’s budget proposal, the price of an average test on the clinical lab fee schedule in 2010 would be cut by 29 percent by 2023,” the coalition said. “The proposal would more than double the annual cuts imposed by the ACA, the 2012 rebasing, and sequestration. “For clinical labs, especially those serving rural communities or nursing home populations, 60 percent or more of their patient base consists of Medicare beneficiaries. A significant number of small and midsize independent clinical labs operate on very low margins, with profit margins that do not exceed 3 percent. Additional cuts are not an option if they are to retain their ability to serve Medicare beneficiaries.”