Document leak earlier this week pulls curtain back on potential cuts to Medicare/Medicaid spending

Spending cuts of between $334 billion and $353 billion over the next 10 years are on the table in the negotiations over the federal debt ceiling. The bad news for the clinical laboratory industry is that restoration of the Medicare patient co-pay for medical laboratory tests is not only on the list of proposed spending cuts, but represents a significant chunk of money—as much as $16 billion during the next decade!

Typical of beltway politics, it was only because of a leak that the list of proposed Medicare and Medicaid spending cuts became public knowledge. On Tuesday this week, Kaiser Health News was one of the first to report the leak of the documents. It also posted a copy of the briefing documents on its website.

This revelation is definitely unwelcome news for all clinical laboratories and pathology groups. The inclusion of co-pays for lab tests in the ongoing federal debt ceiling negotiations means it is likely to be challenging—and maybe impossible—for the medical laboratory testing industry to get politicians to pay attention to the significant disadvantages of re-instituting the co-pay. That’s because a deal is being cut at the highest levels of government and behind closed doors.

Spending cuts of between $334 billion and $353 billion over the next 10 years are on the table

Spending cuts of between $334 billion and $353 billion over the next 10 years are on the table.

From the leaked documents, it became clear that the federal debt ceiling negotiations include proposals to chop one-third trillion dollars from Medicare and Medicaid spending over the next 10 years. There were 27 specific items listed in the leaked briefing documents.

Each of the 27 potential federal healthcare budget cuts had a dollar amount attached to it showing how much the government would save. In the list below, Dark Daily ranks the top six sources of Medicare/Medicaid cuts. The restoration of the Medicare patient co-pay for medical laboratory tests idea ranks sixth on the list. It was estimated that this proposal would generate a low of $8.5 billion and a high of $16 billion in terms of potential savings over the coming decade.

Here are the top six potential federal budget cuts, ranked by Dark Daily from highest potential savings to lowest:

1. Reform Medicaid FMAP (a payment formula)
$100 billion

2. Institute income-related premiums
$38 billion

3. Medigap
up to $53 billion

4. Post-acute care payments/cost sharing for skilled nursing facilities and home health
$50 billion

5. Reduce Medicare bad debt payments
$14 billion to $26 billion

6. Clinical lab Medicare payments/co-payments, etc,
$8.5 billion to $16 billion

Total for top six items:  $283 billion
Total for all 27 items:  $334 billion to $353 billion

In its coverage about the leak, The Wall Street Journal reported that the potential cuts to Medicare and Medicaid would shift federal healthcare costs to public hospitals, states and individuals, but would not actually do much to slow the rise of healthcare costs.

This leak was considered to be significant, because it allowed news reporters to identify the types of cuts that are being discussed behind closed doors. House and Senate negotiators have been in discussions with Vice President Joe Biden, Kaiser reported. The healthcare summary comes from House Majority Leader Eric Cantor (R-VA) who outlined changes to Medicare and Medicaid, saying the 27 ideas would save $353 billion over 10 years, according to a report in The Hill.

Just one day before the leaked documents became public, Alan Mertz, President of the American Clinical Laboratory Association (ACLA), discussed the issue of the lab test co-pay that has surfaced in the normal budget process in both houses of Congress. Mertz said that the ACLA, the American Association of Bioanalysts (AAB), the National Independent Laboratory Association (NILA), and members of the Clinical Laboratory Coalition oppose any effort to have patients pay co-insurance at the time of service.

Mertz also noted that members of these organizations and representatives from some of the nation’s labs have met with members of Congress to express opposition to such a provision, he added.

The history of the Medicare patient co-pay for medical laboratory tests goes back to 1988. That’s the year when the lab test industry agreed to reduced prices on the lab test fee schedule in exchange for the dropping of the lab test co-pay requirement.

In the 23 years since then, re-institution of the laboratory test co-payment requirement has been considered. However, Congress rejected the proposal each time because the cost of collecting such small amounts would be $1 to $2 per service, exceeding the amount collected, said NILA and ABB.

Related Information:

List of Potential Medicare and Medicaid Cuts Stirs Washington

Cantor outlines $353B in Medicare, Medicaid savings during debt talks

Cuts Would Only Shift Health-Care Costs