That promise of free preventive care including free diagnostic testing seems to be more fantasy than reality. In an about face, the Obama administration is denying Medicare coverage for diagnostic testing.
At issue is the way that Medicare reimburses everyone from the big laboratory companies such as the Laboratory Corp of America (LH:NYSE) and Quest Diagnostics Inc. (DGX:NYSE), to the molecular diagnostic labs inside academic hospitals, and especially smaller firms that make proprietary tests used by doctors to more effectively target treatments to patients with conditions like cancer.
Some of these proprietary tests — focused around the more accurate diagnosis of prostate cancer — are profiled in today’s edition of the New York Times. The incompetent manner in which Medicare has handled a change in the reimbursement of similar tests has the potential to stymie one of the most important and potentially cost-saving technologies in the pipeline.
Mismanagement of Medicare funds has the Obama administration looking for ways to cut their losses, and denying claims for diagnostic testing is just one way to save money . . . for them, not you.
Every claim denied by Medicare is a claim that is potentially YOUR responsibility. Their idea of saving money is to make YOU pay for it.
Moreover, private insurers that reflexively piggy backed on the Medicare payment scheme complained that the bills they got only identified a series of molecular testing steps. These bills didn’t pinpoint the actual test that was being performed. So insurers often didn’t know what they were paying for.
The private health plans could have fixed this on their own, by demanding that labs provide more information. But many health plans, looked to Medicare to fix the billing system. Under pressure, the agency said it would develop a new scheme.
This approach is typical. If Medicare denies payment for services, so will private insurance.
Instead of fixing the problem, Medicare simply punted by denying payment for diagnostic testing.
But instead of coming up with a new system, CMS took the full year to do largely nothing. The agency sat on its hands. Then, only after winding down the clock, the agency announced that it would let the local Medicare carriers figure out what prices to assign to each of the different diagnostic codes
It basically means that the local carriers, which contract with CMS to administer the Medicare program for different regions of the country, now have wide discretion to come up with their own prices. The entire punt gave the local Medicare contractors no time – and no clear direction – on how to assign prices to the different diagnostic codes. The result is that no prices have been established for the vast majority of the marketplace. And so many tests simply aren’t being paid for.
For those who don’t know it, Medicare does not pay their own claims. Instead, they farm out those services to insurance carriers and third party administrators. But without direction from Medicare, a carrier on one region may approve a claim that would be denied in another.