Co-insurance

In May of 2009, during the health reform debate, the United States Senate Finance Committee released a report entitled, “Financing Comprehensive Health Care Reform: Proposed Health System Savings and Revenue Options.”  As the name implies, the report detailed a number of legislative options to generate savings in order to help finance health reform legislation.  That report included a proposal for a uniform 20% co-insurance for all Medicare Part B services, including preventive and diagnostic clinical laboratory services.

On May 27, 2009, ACLA submitted comments to the Committee expressly opposing the proposal on the basis that a) it was at odds with the Finance Committee’s previously stated goals to emphasize prevention and wellness; and b) it would shift an entirely new cost burden to Medicare beneficiaries.  In a July 31st letter to Senate Finance Committee Chairman Max Baucus and Ranking Member Charles Grassley, ACLA and members of the Clinical Laboratory Coalition expressed support for the Committee’s efforts to expand health care coverage and prevention & wellness measures yet strongly opposition to the implementation of a Medicare clinical laboratory co-payment.  The AARP also explicitly rejected the proposal.  Ultimately, the Senate Finance Committee withdrew the proposal.

In 1984, Congress enacted legislation that created the Medicare Clinical Laboratory Fee Schedule including language expressly removing co-payments from the laboratory setting.  In subsequent years Congress has previously considered and rejected the idea of co-payments.  The rationale supporting that decision is as relevant today as it was when the fee schedule was created in 1984:

• A 20% Medicare laboratory co-payment is not a cost savings to our health care system, but rather, staggering new $20 billion cost shift to seniors -- seniors already burdened under higher Part B premiums and other out of pocket costs. Congress has previously rejected and the Institute of Medicine has recommended against co-pays for laboratory services.
• Seniors in rural areas and in nursing homes and home health settings would be hardest hit. These patients are served primarily by small, local independent and hospital laboratories that specialize in serving these most vulnerable populations. These local, small laboratories have tight operating margins and could ill-afford what is, in essence, a 20-25% cut in their reimbursement. This co-pay provision will quickly put many or most of these small laboratories out of business with no one to replace their services for these most vulnerable seniors.
• A 20% Medicare laboratory co-pay will ultimately harm beneficiary access to critically important laboratory services – especially for preventive services – contrary to the goals of health reform.
• Growth in Medicare costs for laboratory tests have not kept pace with inflation.  Overall, Medicare payment amounts for clinical laboratory services have been reduced by about 40 percent in real (inflation-adjusted) terms between 1984 and 2004.  Congress has acted to completely eliminate the CPI update for clinical labs in 10 of the last 12 years, and over the past 21 years, clinical labs have only received five full CPI updates.