In December 2021, the United States Department of Health and Human Services Office of Inspector General (HHS OIG) released a data brief that found COVID-19 tests drove an increase in Medicare Part B spending on lab tests in 2020. At the same time, use of non-COVID-19 tests decreased significantly.
According to the brief, Medicare Part B spent $1.5 billion on COVID tests in 2020 while spending on non-COVID tests declined by almost the same amount ($1.2 billion). Overall, there was a net spending increase of 4%, from $7.7 billion in 2019 to $8 billion in 2020.
Spending on COVID-19 Tests Increased Throughout the Year
Of the $1.5 billion spent on COVID-19 tests, $1 billion of that was spent on a rapid COVID-19 test procedure code (the number one test by spending). Medicare Part B payment rates for COVID-19 tests ranged from $18.09 per test to $100 per test. More than 8.4 million unique Medicare Part B beneficiaries received at least 1 COVID19 test paid under the CLFS in 2020. On average, each unique beneficiary received two COVID-19 tests paid for by Medicare Part B. As one might expect, Medicare Part B spending on COVID-19 tests increased throughout 2020, from just $33,000 in January up to $308 million in December.
Total spending has increased annually since 2016, with the annual increase in payments about 4.3% each year. However, in 2020, spending on non-COVID-19 tests was the lowest since prior to 2016.
Non-COVID-19 Test Spend Decreased
The decline in non-COVID test spending was driven by a sharp decline in non-COVID tests during the early months of the pandemic, coupled with reductions in payment rates for some of the tests as required by the Protecting Access to Medicare Act of 2014 (PAMA).
Non-COVID-19 diagnostic test volume declined drastically in spring 2020, before returning to more typical utilization patterns in the summer. For example, the number of non-COVID-19 tests paid for in April 2020 was 53% lower than the number of non-COVID-19 tests given in April 2019.
While the rapid COVID-19 test was the number one test by payments in 2020, the number 2 test was the comprehensive group of blood chemicals test (procedure code 80053), which had previously been the top test since new payment rates took effect in 2018. Utilization of the blood chemicals test declined by 10 percent from 2019 to 2020, from 42.2 million in 2019 to 37.8 million in 2020, and payments declined by 18 percent.
There was only one non-COVID-19 test in the top 25 that increased from 2019 to 2020: a microbiology test that uses nucleic acid to detect an infectious agent. Volume increased by 92 percent and spending increased by 78 percent. This test was likely used in conjunction with COVID-19 tests.
How HHS OIG Collected the Relevant Data
HHS OIG analyzed claims data for lab tests performed in 2020 that were paid for by CMS under the Clinical Laboratory Fee Schedule (CLFS). These tests are covered under Medicare Part B and do not include COVID-19 tests provided by community testing programs or tests that Medicare paid for under other payment systems, such as the payment system for critical access hospitals or the Hospital Outpatient Prospective Payment System.