EXECUTIVE SUMMARY:
A prior audit report disclosed that Medicare, which pays for laboratory tests based on fee schedules, was paying nearly twice as much as physicians pay for the same tests. Much of the difference was attributable to the way in which Medicare reimbursed groups of tests ordered as a package by physicians. While laboratories offered groups of tests to physicians at greatly reduced prices, Medicare usually paid the fee schedule rates for the individual tests. Our follow-up audit showed that Medicare continues to pay clinical laboratories more than physicians pay for the same tests. However, recent legislation will reduce Medicare fees for clinical laboratory tests to 76 percent of the national average in 1996. We are, therefore, recommending that the Health Care Financing Administration periodically evaluate the national fee schedule to ensure that it is in line with the prices physicians pay for clinical laboratory services.