Medicare Part B Spending on Laboratory Tests Totaled $9.3B in 2021

Medicare Part B spending on laboratory tests increased by 17 percent between 2020 and 2021, resulting from high volumes of COVID-19 tests, genetic tests, and chemistry tests, a report from the Office of Inspector General (OIG) found.

The Protecting Access to Medicare Act of 2014 (PAMA) aligned Medicare payment rates for lab tests with private payer rates. The new, lower Medicare payment rates for lab tests went into effect in 2018. PAMA also required OIG to publicly release an annual analysis of the 25 tests with the highest Medicare spending.

The report reflects claims data for lab tests performed in 2021 that CMS paid for under the Clinical Laboratory Fee Schedule (CLFS). OIG identified the top 25 tests based on spending and other statistics, including spending by procedure code and test category.

The report found that Medicare Part B spending on lab tests increased by $1.3 billion (17 percent), rising from $8 billion in 2020 to $9.3 billion in 2021. This increase was the most significant spending change since OIG started monitoring payments in 2014.

The growth was primarily attributed to higher spending on COVID-19, genetic, and chemistry tests.

Medicare Part B spent $2 billion on COVID-19 tests, signifying a 29 percent increase ($440 million) from 2020. Medicare paid for COVID-19 tests across 26 procedure codes, including antibody tests, panel tests, high-throughput tests, and a new code that incentivized faster test turnaround times.

In addition, the volume of COVID-19 tests that Medicare Part B paid for increased by 37 percent from 18.8 million tests in 2020 to 25.8 million in 2021. More than 10 million people received at least one COVID-19 test paid for by Medicare Part B in 2021, compared to 8.5 million in 2020.

Between 2020 and 2021, spending on genetic tests increased by 56 percent from $1.2 billion to $1.9 billion. Genetic tests include four categories: molecular pathology tests, genomic sequencing procedures, multianalyte algorithmic assays, and proprietary lab analysis tests. Spending on genetic tests was responsible for 20 percent of all Medicare spending on lab tests in 2021.

The volume of genetic tests paid for by Medicare Part B grew by 55 percent from 1.8 million tests in 2020 to 2.8 million in 2021. The tests had an average payment of $666 per test. There were 365 procedure codes used to bill for genetic tests, up from the 334 codes used in 2020.

Medicare Part B spending on chemistry tests reached $2.1 billion in 2021, compared to $1.9 billion in 2020. Chemistry tests are among the most common types of tests and measure chemical levels like proteins, electrolytes, or hormones in a specimen.

The volume of chemistry tests rose from 153 million tests in 2020 to 165 million in 2021, perhaps due to Medicare beneficiaries resuming healthcare they had postponed during the beginning of the pandemic. However, both volume and spending were below pre-pandemic levels, the report noted.

Medicare Part B spent $5.5 billion on the top 25 tests in 2021, accounting for 59 percent of total spending on tests. The top procedure code paid for by Medicare was a COVID-19 test that used high-throughput technology, and there were five procedure codes for high-priced genetic tests in the top 25.

“The COVID-19 pandemic continued to have an impact on Medicare Part B spending on lab tests. Spending on COVID-19 tests increased in 2021, driven by more people receiving more tests,” OIG concluded.

“However, the decline between pre-pandemic levels for chemistry tests and the 2020 and 2021 levels could indicate that people are not seeking the routine or preventive care appointments where these tests are ordered. The second year in a row of low volume for chemistry tests raises questions about the pandemic’s long-term impact on Medicare enrollee health.”