Sustained Growth in Medicare Advantage Plans Threatens Financial Health of Smaller Pathology Groups and Local Medical Laboratories
Surging enrollment in Medicare Advantage moves patients out of Medicare Part B and thus reduces the ability of regional clinical labs to have access to these Medicare beneficiaries
Smaller clinical laboratories and pathology group practices are facing an inauspicious trend. It is the fast growth of enrollment in Medicare Advantage plans that has reached record high numbers each year since 2010.
This is not a positive development because it moves Medicare Part B patients out of the fee-for-service program and shifts them into Medicare Advantage plans. These plans tend to sign contracts with the national laboratory companies, such as Quest Diagnostics Incorporated (NYSE: DGX) and Laboratory Corporation of America (NYSE: LH) because of their lower lab test prices while excluding most local medical laboratories and pathology groups from their provider networks. The net effect of this trend is that local labs lose access to those patients who were formerly in the Medicare Part B program, but are now enrolled in Medicare Advantage. (more…)