GAO denounces direct payment for laboratory services

Healthcare Financial Management, Dec, 2003

Allowing hospitals to outsource technical pathology services and requiring laboratories to seek payment from Medicare eliminates the incentive to provide these services efficiently, and will lead to overpayment, according to recent GAO report. For this reason, the GAO says, paying laboratories directly is an inappropriate means of providing financial assistance to hospitals,

According to the GAO, terminating direct laboratory payments would reduce Medicare expenditures and beneficiary cost-sharing obligations for technical pathology services, with little effect on beneficiary/access to those services. The GAO estimates that Medicare spending would have been $42 million less and beneficiary cost-sharing obligations for inpatient and outpatient services would have been reduced by $2 million in 2001 if laboratories had not received such direct payments. The GAO recommends that Congress consider not reinstating the provision that allows laboratories to receive such direct payment from Medicare.

To read the GAO study, go to www.gao.gov/atext/d031056.txt.>

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