COVID-19 Tests Drove an Increase in Total Medicare Part B Spending on Lab Tests in 2020, While Use of Non-COVID-19 Tests Decreased Significantly

WHY WE DID THIS STUDY

The Protecting Access to Medicare Act of 2014 (PAMA) changed the way the Medicare program sets payment rates for clinical diagnostic laboratory (lab) tests by aligning Medicare payment rates with private payment rates. CMS calculated new rates that took effect in 2018. As part of PAMA, Congress also mandated that OIG publicly release an annual analysis of the top 25 tests based on Medicare Part B spending and conduct analyses that OIG determines appropriate. This data brief provides an analysis of Medicare payments for lab tests in 2020.

HOW WE DID THIS STUDY

We analyzed claims data for lab tests performed in 2020 that CMS paid for under the Clinical Laboratory Fee Schedule (CLFS). These tests are covered under Medicare Part B and do not include COVID-19 tests provided by community testing programs or tests that Medicare paid for under other payment systems, such as the payment system for critical access hospitals or the Hospital Outpatient Prospective Payment System. We identified the top 25 lab tests based on Medicare spending for tests performed in 2020. We also identified key statistics and emerging trends, including Medicare spending by procedure code and test category.

WHAT WE FOUND

Medicare Part B spending on lab tests in 2020 was affected by significant new spending on COVID-19 tests, a type of test that did not exist before the pandemic. Overall spending increased from $7.7 billion in 2019 to $8.0 billion in 2020. This increase in spending was driven by $1.5 billion in new spending on COVID-19 tests, including $1.0 billion on a rapid COVID-19 test, which was the number 1 test by spending.

Aside from COVID-19 tests, spending for all other tests, as a group, decreased by about $1.2 billion in 2020. The decline in spending was driven by a sharp decline in non-COVID-19 tests during the early months of the pandemic, as well as further reductions in payment rates for some of these tests, as required by PAMA.

WHAT WE CONCLUDE

The decline in volume for non-COVID-19 tests raises questions about the potential impact on beneficiary health and the COVID-19 pandemic will continue to have an impact on Medicare Part B spending on lab tests beyond 2020. We will continue to monitor annual payments for lab tests, including COVID-19 tests.