New CMS Budget-Cutting Proposals Slap Clinical Labs in the Face. But Who's Complaining?

By Kirell Lakhman

Clinical labs nationwide could soon face shrinking testing volumes and bigger "administrative hassle[s]" courtesy of a new CMS budget-cutting proposal from Congress that would demand co-payments from Medicaid and Medicare patients.

The result could cause elderly Medicare and low-income Medicaid patients to avoid footing co-payments, which would cause them to recoil at the thought of even setting foot in a clinical lab.

On the bright side, at least labs could save some money on tourniquets, alcohol swabs, latex gloves, Vacutainers, improving infrastructure, new technologies, lab techs ...

Mind the Gap

Hoping to avoid a government default, Congressional budget negotiators have floated this latest idea, which includes tests performed at every clinical lab that accepts CMS-backed patients. Raise your hand if you're not in that category. Yeah, not very many.

The proposal was presented this week at the White House by House Majority Leader Eric Cantor. Among the cuts, which as always are spun as "savings" by the legislators who propose them, are 27 components that Cantor said would save the federal government as much as $353 billion over 10 years.

For instance, one facet seeks to increase premiums and co-payments for beneficiaries with "relatively high incomes," while another requires millions of patients to pay more for tests covered by private payors that supplement Medicare reimbursement.

For their part, labs "were surprised to learn" of the proposed cuts, announced yesterday, which would also charge Medicare patients a $1 co-payment for "each lab test." Currently, lab tests are exempt from such "cost-sharing" schemes.

If you're not angered yet, consider the number of tests performed annually on elderly patients and indigent individuals with chronic illnesses and multiply that sum with by one big, bad idea. Then write your state legislator to stop this idiocy. The path of least resistance — cutting costs by shifting them to the elderly and indigent — is never the only option.

Indeed, Cantor's proposal has already drawn "howls of protest" from patients, industry lobbyists, and Democrats, who en masse vowed not to support Medicare cuts that would reduce benefits by increasing out-of-pocket costs. For their parts, Republicans have backed Cantor's cuts because the alternative — raising taxes — would never see the light of day. Which, don't get me wrong, is good. Still, other options must be considered.

Speaking for clinical labs, ACLA President Alan Mertz said that collecting co-payments from Medicare and Medicaid beneficiaries would be “a huge administrative hassle.”

His rationale is that the average lab test costs between $12 and $13, and because labs typically “do not have a face-to-face relationship with patients,” in many cases they “will not be able to collect the money, or the cost of collecting it will be more than the amount of the co-payment.”

To be frank, I expect more from Mertz, who has always been an aggressive advocate for the lab community. Defining the current issue as a mere "administrative hassle" is hiding the bigger issue: reduced testing volumes and revenue.

Indeed, describing potential harm to clinical labs last week from a similar proposal, Mertz at least hinted at the bigger issue. "Many [elderly Medicare patients] live on fixed or limited incomes or reside in long term care facilities with no ability" to foot the bill for co-payments," he'd said in a statement.

Getting it almost right out of the gate this time around was Howard Bedlin, vice president of the National Council on Aging, a service and advocacy group, who cried the cuts would “significantly increase out-of-pocket costs for many low-income [patients] with multiple chronic conditions." He didn't equate that with the resulting fewer lab visits, but at least his comment intimates it.

'Pushing the Limits'

It's not yet clear how much traction Cantor's proposal has gained in Congress, but the Majority Leader, a Republican from Virginia, said Tuesday the ideas had all been "seriously discussed" and yielded "varying levels of Democratic support" during negotiations led by Vice President Joe Biden.

My prediction is that Cantor's concoctions will eventually die in utero. Adding some insight today was The Wall Street Journal, which writes that "health-care analysts on the left and right say negotiators are pushing the limits of what can be cut without more-fundamental structural changes to [Cantor's] programs."

For its part, the Obama administration on Tuesday suggested that "instead of cutting benefits or increasing co-payments, Congress should increase the power of a [currently phantom] independent agency, created by the new healthcare law" — the Affordable Care Act, which is meant to bring near-universal coverage and screening and preventive medicine — "to make sweeping cuts in the growth of Medicare spending."

Though linking these two discordant goals is Obama's problem, his fix, whatever it becomes, will directly affect clinical labs. So keep an eye on his suggestions.

Got a tip? Click my byline above to send it along or submit it as a comment below. Follow my headlines on Twitter or subscribe to my RSS feed. Learn more about me or become a source via Linkedin, where all conversations are confidential.