HHS OIG Data Brief  September 2015  OEI-09-15-00210 
Medicare	Payments	for	Clinical	Laboratory	Tests	
in	2014:		Baseline	Data	
The Protecting Access to Medicare Act (PAMA) of 2014 
requires reform of the payment system for clinical laboratory 
AT A GLANCE  (lab) teststhe first such reform in 3 decades.1  The current 
payment rates, which are based on lab charges from 1984 
and 1985, will be replaced with recent rates paid by private 
In 2014, Medicare Part B 
payers.  PAMA calls for the Centers for Medicare & Medicaid 
paid $7.0 billion for 
Services (CMS) to begin collecting privatepayer rate data 
451 million lab tests 
from labs in 2016 and to begin paying new, potentially lower 
For the top 25 lab tests  rates for lab tests in 2017.  The Congressional Budget Office 
in 2014, based on  estimates that the new payment system will save the 
Medicare payments:  Government $2.5 billion over 10 years.2   
Medicare Part B  To provide oversight, PAMA mandated that the Office of 
payments totaled  Inspector General (OIG) monitor Medicare payments for lab 
$4.2 billion   tests and the implementation of the new payment system.3  
Specifically, PAMA requires OIG to publicly release an annual 
Independent labs 
analysis of the top 25 lab tests based on Medicare payments 
accounted for the 
and to conduct analyses that OIG determines appropriate 
majority of Medicare 
Part B payments   regarding the implementation and effect of the new payment 
system.   
A small portion of labs 
accounted for the  This data brief 
majority of Medicare 
  Presents initial, baseline analyses of the top 25 lab 
Part B payments   
tests in 2014, based on Medicare payments. 
The tests fell into seven    Introduces key statistics and metrics that OIG will use 
categories,  for ongoing monitoring of Medicares implementation 
predominantly the 
of the new payment system. 
chemistry category 
  Is the first in a series of congressionally mandated OIG 
Molecular pathology  products on Medicare lab test payments.  The series 
tests cost the most per  builds on previous OIG work on Medicares payments 
test  for lab tests.4     
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  1
 
   
BACKGROUND 
 
Lab Test Payment Rates:  19842016 
The system that Medicare currently uses to determine 
Lab Tests 
payment rates for lab tests has remained largely 
unchanged since 1984.  Each Medicare claims processing 
contractor established its own fee schedule of payment 
What are they? 
rates for lab tests based on local lab charges to Medicare  Lab tests are performed on 
in 1984 and 1985.5  This created a total of 57 fee  specimens taken from the human 
schedules, collectively known as the Clinical Laboratory  body.  The tests provide 
Fee Schedule.  The payment rates on the Clinical  information integral to 
Laboratory Fee Schedule are adjusted annually to  preventing, diagnosing, and 
treating disease. 
account for inflation.  However, the base rates have not 
been updated since 1984 to reflect changes in test 
Where are they performed? 
methods that affect test costs. 
Lab tests are usually performed 
To contain costs, Medicare also established a national  in independent labs, hospitals, 
and physicians offices. 
limitation amount that caps payment rates for each test.  
In each jurisdiction, Medicare pays the lower of lab 
How do lab tests differ? 
charges, the jurisdictions payment rate, or 74 percent of 
There are different categories of 
the median rate for each lab test across the 57 fee 
lab tests.  For example, 
schedules.  This last rate is known as the national  chemistry tests measure levels of 
limitation amount.6      specific substances, whereas 
molecular pathology tests 
Lab Test Payment Rates:  2017 and After 
analyze genetic material to 
Beginning in 2017, Medicare will update the Clinical  detect variants in genes. 
Laboratory Fee Schedule using data on rates paid by 
private payers.7  For each lab test, Medicare will use the  What does Medicare cover? 
Medicare Part B covers most lab 
median of private payer rates, weighted by the payers 
tests ordered by physicians and 
test volume, to set a new payment rate.  The payment 
pays 100 percent of allowable 
rates will apply nationally.  Medicare will update 
charges.  Beneficiaries do not 
payment rates for lab tests every 3 years using data 
have a copay, under the current 
reported by labs.8  Figure 1 compares the current and 
or new payment system. 
future payment systems for lab tests. 
 
 
Figure 1.  Comparison of Medicare Payment Systems for Lab Tests  
  Current   Future 
Year Implemented  1984  2017 
Lab charges in 19841985,  Private payer rate data, updated 
Basis of Payment Rates  adjusted annually to account for  every 3 years using then-current 
inflation   data 
Number of Fee Schedules   57 regional fee schedules  Single national fee schedule 
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  2
 
   
RESULTS  
 
It is common for Medicare beneficiaries to 
receive lab tests.  As shown in Figure 2, just 
In	2014,	Medicare	paid	
over half of Medicare beneficiaries (27 million) 
$7.0	billion	for	lab	tests	that,	 received at least one lab test in 2014.9  On 
beginning	in	2017,	will	be	 average, these beneficiaries each received 
17 tests, and 1 percent of beneficiaries each 
subject	to	the	new	payment	
received 95 or more tests.  Lab tests accounted 
system	 for about 3 percent of total Medicare Part B 
payments in 2014.10, 11 
Tens of thousands of labs received payment from Medicare for performing tests in 2014.  Medicare 
paid 63,730 different labs an average of $109,898 each.  The top three labs, by volume, performed a 
combined 69 million tests in 2014.  For these tests, they received more than $250 million each
almost $1 billion combinedfrom Medicare Part B.  Each of the 3 labs performs tests at multiple 
locations1 lab performs tests at more than 100 locationswhich may account for their high 
volume.  In contrast, half of all labs received less than $1,019 each. 
In 2014, Medicare Part B paid for 451 million tests using 1,146 procedure codes from Medicares 
Clinical Laboratory Fee Schedule.12  These procedure codes include many categories of lab tests, 
from common chemistry tests (such as a thyroidstimulating hormone test) to less frequently used 
but more complex molecular pathology tests (such as a gene analysis test).  In addition to including 
codes for lab tests, the Clinical Laboratory Fee Schedule includes two procedure codes for 
venipuncture (drawing blood from a patient).  In 2014, Medicare paid a total of $239 million for 
80 million venipuncture services. 
 
 
Figure 2.  Use of Lab Tests Covered by Medicare Part B in 2014  
 
es  27 million  ss  63,730 labs  ts  1,146 procedure 
ri beneficiaries  b received Medicare  s codes billed
a a e
ci received a lab test L payments  T
efi ab  451 million lab 
n  17 lab tests per   $109,898 in  L tests performed
e beneficiary, on  Medicare 
B
average payments per lab,   $7.0 billion in 
on average Medicare 
payments
 
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  3
 
   
 
Almost all lab tests paid under Medicare Part B 
Figure 3.  Medicare Payments for 
occurred in one of three settings:  independent 
Lab Tests by Setting in 2014  
labs, hospitals, and physicians offices.  As shown 
in Figure 3, over half of Medicare Part B 
payments for lab tests went to independent 
labs (i.e., labs that are independent of an 
institution or a physicians office).   $1.3 billion
19%
Hospitalbased labs accounted for about a 
quarter of the total payments.  This amount 
does not include the majority of lab tests  $1.7 billion $4.0 billion
57%
performed in hospitals, which are part of a  24%
packaged payment for the beneficiarys 
hospital services.13  Physicianbased labs 
Independent lab
accounted for the remaining 19 percent of the 
Hospital-based lab
total Medicare Part B payments.   
Total: $7.0 billion*  Physician-based lab
 
Source:  OIG analysis of Medicare Part B lab test payments, 2015. 
 
* The total payment also includes $32.0 million that Medicare paid 
for lab tests that were performed in other settings, such as skilled 
  nursing facilities and dialysis facilities. 
 
 
Examination of Medicare Part B payments for 
lab tests performed in 2014 shows that 
The	top	25	lab	tests,	based	on	
25 tests represented over half (60 percent) of 
Medicare	payments,	totaled	
payments for all lab tests.  Once the new 
$4.2	billion	in	2014		 marketbased pricing goes into effect in 2017, 
potentially lower payment rates for these tests 
could have a significant impact on overall 
Medicare payments for lab tests.  
The top three lab tests based on Medicare paymentsall three of which are blood testseach 
accounted for over $400 million in 2014, or a combined 19 percent of total Medicare Part B lab test 
payments:   
  blood test for thyroidstimulating hormone (procedure code 84443):  $477 million 
  blood test for a group of blood chemicals (procedure code 80053):  $453 million 
  complete blood cell count automated test (procedure code 85025):  $431 million 
Figure 4 on the next page lists the top 25 lab tests based on Medicare Part B payments in 2014, along 
with a description and key statistics for each test.   
   
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  4
 
   
 
Figure 4.  Top 25 Lab Tests Based on Medicare Part B Payments in 2014 
 
  National  Total Number  Total Medicare 
Procedure  Limitation  of Lab Tests  Payments 
Test Description  Code*  Amount**  (Millions)  (Millions)*** 
1.  Blood test, thyroid-stimulating hormone (TSH)  84443  $22.93  21.3  $477 
Blood test, comprehensive group of blood 
2.  80053  $14.41  40.1  $453 
chemicals 
Complete blood cell count (red blood cells, white 
3.  blood cells, platelets) and automated differential  85025  $10.61  41.5  $431 
white blood cell count  
4.  Blood test, lipids (cholesterol and triglycerides)  80061  $18.27  27.9  $386 
5.  Vitamin D-3 level  82306  $40.40  8.3  $323 
6.  Hemoglobin A1C level  83036  $13.24  18.1  $236 
Drug screen, qualitative; multiple drug classes 
by high-complexity test method (e.g., 
7.  G0431  $99.20  2.1  $193 
immunoassay, enzyme assay), per patient 
encounter 
8.  Opiates (drug) measurement  83925  $26.54  2.5  $173 
Gene analysis (cytochrome P450, family 2, 
9.  81226  $451.59  0.4  $166 
subfamily D, polypeptide 6) common variants 
10.  Blood test, basic group of blood chemicals  80048  $11.54  14.1  $137 
11.  Blood test, clotting time  85610  $5.37  23.9  $128 
Chemical analysis using chromatography 
12.  82542  $24.63  2.0  $122 
technique 
13.  Parathormone (parathyroid hormone) level  83970  $56.31  2.0  $110 
14.  Cyanocobalamin (vitamin B-12) level  82607  $20.56  5.3  $108 
Gene analysis (cytochrome P450, family 2, 
15.  81225  $291.80  0.4  $106 
subfamily C, polypeptide 19) common variants 
16.  PSA (prostate specific antigen) measurement  84153  $25.09  4.2  $104 
17.  Bacterial colony count, urine  87086  $11.01  7.3  $79 
18.  Thyroxine (thyroid chemical) measurement  84439  $12.30  6.6  $79 
Natriuretic peptide (heart and blood vessel 
19.  83880  $46.31  1.5  $68 
protein) level 
20.  Benzodiazepines level  80154  $25.23  2.1  $67 
21.  Ferritin (blood protein) level  82728  $18.59  3.5  $63 
Complete blood cell count (red cells, white blood 
22.  85027  $8.83  6.8  $58 
cell, platelets), automated test 
23.  Folic acid level  82746  $20.06  2.8  $55 
24.  Methadone level  83840  $22.28  1.9  $52 
Evaluation of antimicrobial drug (antibiotic, 
25.  87186  $11.80  3.9  $50 
antifungal, antiviral) 
TOTAL MEDICARE PART B PAYMENTS  $4,226 
 
Sources:  OIG analysis of Medicare Part B lab test payments, 2015.  National limitation amounts are from the 2014 Clinical Laboratory Fee Schedule.   
* See endnote 12 for the American Medical Association (AMA) copyright notice. 
** The national limitation amount for a given lab test is 74 percent of the median rate orfor new tests performed after 2000 for which no limitation 
amount has been established100 percent of the median rate for that test across the 57 fee schedules.   
*** Figures do not sum to total because of rounding. 
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  5
 
   
 
Just as they did for Medicare lab test payments 
overall, independent labs received the majority 
Independent	labs	accounted	for	
of Medicare payments for the top 25 lab tests 
the	majority	of	Medicare	Part	B	
in 2014.  Specifically, they received 55 percent 
of Medicare lab test payments.  Labs based in 
payments	for	the	top	25	lab	
hospitals and labs based in physicians offices 
tests		
accounted for the remaining payments 
(25 percent and 20 percent, respectively).  
Figure 5 shows how Medicare Part B payments 
for the top 25 lab tests are distributed among the different types of settings. 
Notably, several of the top 25 tests were performed primarily at independent labs.  Independent labs 
accounted for 99 percent of two molecular pathology tests (procedure codes 81226 and 81225).  
They accounted for over 70 percent of 4 other tests in the top 25 (procedure codes 83925, 83840, 
82542, and 80154).  Three of those four tests (procedures codes 83840, 82542, and 80154) are tests 
for drugs with the potential for abuse.   
 
Figure 5.  Medicare Payments for the Top 25 Lab Tests by Setting in 2014 
 
1.    84443
2.    80053
3.    85025
4.    80061
5.    82306
6.    83036
7.   G0431
8.    83925
9.    81226
10.   80048
e
d11.   85610
o
C12.   82542
e  Independent lab
ur13.   83970
d
e14.   82607 Hospital-based lab
c
o15.   81225
r
P Physician-based lab
16.   84153
17.   87086
18.   84439
19.   83880
20.   80154
21.   82728
22.   85027
23.   82746
24.   83840
25.   87186
$0 $100 $200 $300 $400 $500
Medicare Payments (Millions)
Source:  OIG analysis of Medicare Part B lab test payments, 2015. 
Note:  The total payments also include $19.1 million that Medicare paid for lab tests in the top 25 that were performed in other settings,  
such as skilled nursing facilities and dialysis facilities. 
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  6
 
   
Figure 6.  Concentration of 
A	small	portion	of	labs	
Medicare Payments for 
Top 25 Lab Tests Among Labs 
accounted	for	the	majority	of	
in 2014 
Medicare	Part	B	payments	for	
100%
the	top	25	lab	tests		
90% 19%
80%
Labs varied widely in terms of the total payments 
70% 24%
they received for performing the top 25 lab tests.  
60%
As shown in Figure 6, 1 percent of labs (309 out of 
95%
30,816 labs) received 57 percent of all Medicare  50%
Part B payments for the top 25 lab tests in 2014.   40%
These labs each received an average of 7.8 million 
30%
57%
in 2014 for performing these tests.  The next 
20%
4 percent of labs accounted for 24 percent of the  4%
payment for the top 25 lab tests.  These labs each  10%
1%
received an average of $813,250 for these tests.   0%
The remaining 95 percent of labs accounted for  Labs Medicare Payments
(30,816) ($4.2 billion)
the remaining 19 percent of payments for the top 
25 lab tests.  These labs each received an average of  Source:  OIG analysis of Medicare Part B lab test payments, 2015. 
Note:  Includes only labs that performed any top 25 lab test. 
$28,030 for these tests.  
 
 
Figure 7.  Top 25 Lab Tests in 2014 
 The	top	25	lab	tests	fell	into	 by Category 
 7	categories,	predominantly	the	
 
chemistry	category	
 
Chemistry 
 
Thirteen of the top 25 lab tests were in the 
chemistry category.  Medicare paid $2.0 billion for 
Organ or Disease- 
these 13 tests in 2014.  As shown in Figure 7, each  Oriented Panels 
of the other categories had no more than 3 tests in  Hematology and   
the top 25.  Tests in the chemistry category  Coagulation 
measure the level of a specific substance such as a  Molecular 
Pathology 
protein, hormone, or drug.  Some of these 
substances can also be tested for by using tests in  Microbiology 
categories other than chemistry.  For example, 
Therapeutic Drug 
among the top 25 lab tests, levels of methadone 
Assay 
can be measured using a test within the chemistry 
Drug Screen 
category, and the presence of methadone can be 
detected using a test within the drugscreen  Source:  OIG analysis of Medicare Part B lab test payments, 
2015.
category.14   
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  7
 
   
 
Two of the top 25 lab testsprocedures codes 
81226 and 81225were molecular pathology 
Among	the	top	25	lab	tests,	
tests.  Although these 2 tests were not billed 
molecular	pathology	tests	cost	
for as often as other tests in the top 25
the	most	per	test	 in 2014, Medicare Part B paid for fewer than 
400,000 of each testthey were the most 
expensive on a pertest basis, with national 
limitation amounts of $452 and $292, respectively.  In contrast, the other 23 lab tests in the top 25 
had national limitation amounts ranging from $5 to $99 per test (see Figure 4 on page 5).    
 
CONCLUSION
 
Lab tests are integral to the provision of health care for millions of Medicare beneficiaries, as 
physicians rely on these tests to help prevent, diagnose, and treat disease.  In 2014, more than half 
of all Medicare beneficiaries received lab tests paid under the Clinical Laboratory Fee Schedule, 
costing $7.0 billion in Medicare Part B payments.   
The new system of payment required by PAMA 
calls for a major undertaking by CMS, with 
Key Dates in the  significant implications for the lab industry.  
Implementation of the New  Implementing the new marketbased approach 
Payment System  will require CMS to collect data from labs about 
the rates paid by private payers for all lab tests.  
We found that in 2014, Medicare paid 
April 2014:  Congress passes PAMA 
63,730 different labs for lab tests billed under 
1,146 procedure codes; however, not all labs will 
January 2016:  Applicable laboratories 
be required to report privatepayer payment rates 
must begin reporting payment rates for 
private payers  to CMS. 
This data brief provides baseline analyses of the 
January 2016:  CMS must assign a 
top 25 lab tests for 2014, 3 years before the new 
unique procedure code to existing 
advanced diagnostic lab tests (ADLTs)  payment system goes into effect.  As required by 
PAMA, in addition to issuing an annual analysis of 
January 2017:  Market-based payment  the top 25 lab tests, we will conduct analyses that 
system for lab tests takes effect 
we determine appropriate regarding the new 
payment systems implementation and effect.  
   
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  8
 
   
METHODOLOGY
 
We based this data brief on our analysis of Medicares claims data for lab tests performed in 2014 
and reimbursed under the Clinical Laboratory Fee Schedule.  The claims data were from the National 
Claims History Physician/Supplier Part B claims files and National Claims History Outpatient files.  The 
Physician/Supplier Part B files primarily include lab test claims from independent labs and labs based 
in physicians offices.  The Outpatient files primarily include lab test claims from hospitalbased labs.   
 
Our analysis included only lab tests paid under Medicares Clinical Laboratory Fee Schedule.  We did 
not include lab tests paid under other payment systems, such as the Outpatient Prospective Payment 
System or the Critical Access Hospital payment system.15  We also did not include claims for 
physicians interpretations of tests.   
 
We analyzed the claims data to identify key statistics for Medicare Part B payments for lab tests.  We 
analyzed the claims data by procedure code, beneficiary, lab, setting, and category.  We identified 
the top 25 lab tests on the basis of total payments for each procedure code in 2014, and then 
performed a similar analysis for each of the top 25 tests.  
 
Analysis by lab.  We used different variables to identify individual labs that billed Medicare.  For lab 
tests in the Physician/Supplier Part B claims files, we identified a unique lab based on the Tax 
Identification Number (TIN).  We chose the TIN because each TIN represents all locations for a lab.  
For tests in the Outpatient claims files, we identified a unique lab based on the organizations CMS 
Certification Number.  The Outpatient claims files do not include a variable for a providers TIN. 
 
Analysis by setting.  We identified the setting for a lab test using either the place of service or the 
type of bill.  For lab tests in the Physician/Supplier Part B claims files, we identified the setting 
according to the place of service variable.  For lab tests in the Outpatient claims files, we identified 
setting according to the type of bill variable, which indicates the type of facility and service.  
 
Analysis by category.  We categorized a lab test according to its subsection within the CPT 
(2014 edition).  Each lab test that has a Level I HCPCS code is assigned to a CPT subsection.  One lab 
test in the top 25procedure code G0431is billed using a Level II HCPCS code; we used this tests 
description to assign it to a drug screen category. 
Standards  
This study was conducted in accordance with the Quality Standards for Inspection and Evaluation 
issued by the Council of the Inspectors General on Integrity and Efficiency. 
   
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  9
 
   
ACKNOWLEDGMENTS 
 
This report was prepared under the direction of Blaine Collins, Regional Inspector General for 
Evaluation and Inspections in the San Francisco regional office, and Michael Henry, Deputy Regional 
Inspector General.  
 
Sarah Ambrose and China Tantameng served as the team leaders for this study.  Other Office of 
Evaluation and Inspections staff who provided support include Mandy Brooks, 
Berivan Demir Neubert, Evan Godfrey, David Graf, Joyce Greenleaf, Althea Hosein, and 
Christine Moritz. 
   
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  10
 
   
ENDNOTES 
 
1 The Protecting Access to Medicare Act of 2014 (PAMA), P.L. No. 11393,  216(a). 
2 The estimate is for total savings between fiscal years 2014 and 2024.  Congressional Budget Office, Cost Estimate 
for the Protecting Access to Medicare Act of 2014, March 26, 2014, p. 2. 
3 PAMA,  216(c)(2).  
4 See:  OIG, Questionable Billing for Medicare Part B Clinical Laboratory Services, OEI031100730, August 2014; 
OIG, Comparing Lab Test Payment Rates:  Medicare Could Achieve Substantial Savings, OEI071100010, June 2013; 
OIG, Coverage and Payment for Genetic Laboratory Tests, OEI071100011, June 2012; and OIG, Variation in the 
Clinical Laboratory Fee Schedule, OEI050800400, July 2009. 
5 The Deficit Reduction Act of 1984, P.L. No. 98369  2303(d). 
6 Social Security Act,  1833(h)(4)(B)(viii), 42 U.S.C.  1395l(h)(4)(B)(viii).  For new tests performed on or after 
January 1, 2001, for which no limitation amount has been established, the limit is 100 percent of the median.  
7 PAMA,  216(a)(1). 
8 In the case of advanced diagnostic lab tests (ADLTs), Medicare will update the payment rates annually.  PAMA 
established advanced diagnostic lab tests as a new category of test.  The category includes tests that are performed 
by a single lab and either (1) analyze multiple biomarkers combined with a unique algorithm to yield a single patient
specific result, (2) are cleared or approved by the Food and Drug Administration, or (3) meet other similar criteria 
established by the Secretary of Health and Human Services. 
9 U.S. Department of Health and Human Services, 2014 CMS Statistics, page 6.  Available online at 
http://www.cms.gov/ResearchStatisticsDataandSystems/StatisticsTrendsandReports/CMSStatisticsReference
Booklet/Downloads/CMS_Stats_2014_final.pdf.  The average projected enrollment in feeforservice Medicare in 
2014 was 53.6 million beneficiaries.   
10 Ibid., p. 29.  According to this source, Medicare Part B benefit payments are projected to be $256.2 billion for 
fiscal year 2014. 
11 For lab tests and other Medicare feeforservice claims dated on or after April 1, 2013, Medicare paid 2 percent 
less than the payment rate in accordance with the Budget Control Act of 2011, P.L. No. 11225, Section 302, and the 
American Taxpayer Relief Act of 2012, P.L. No. 112240, Section 901 (i.e., sequestration).   
12 Labs bill for each test on the Clinical Laboratory Fee Schedule using a Healthcare Common Procedure Coding 
System (HCPCS) code, which we refer to as a procedure code.  The HCPCS is divided into two subsystems, referred 
to as Level I and Level II of the HCPCS.  Level I HCPCS codes are comprised of Current Procedural Terminology codes.  
The five character codes and descriptions included in this study are obtained from Current Procedural Terminology 
(CPT), copyright 2014 by the American Medical Association (AMA).  CPT is developed by the AMA as a listing of 
descriptive terms and five character identifying codes and modifiers for reporting medical services and procedures.  
Any use of CPT outside of this study should refer to the most current version of the Current Procedural Terminology 
available from AMA.  Applicable FARS/DFARS apply.  Level II HCPCS codes are established by CMS primarily for items, 
supplies, and nonphysician services not covered by CPT codes.    
13 Medicare pays for most lab tests furnished to hospital inpatients under the hospital inpatient prospective 
payment system (IPPS) or as reasonable costs under Part A to hospitals excluded from IPPS.  CMS, Medicare Claims 
Processing Manual, Pub. No. 10004, ch. 3,  10.4.  In 2014, Medicare began to pay for most lab tests performed in 
outpatient hospitals under the Outpatient Prospective Payment System (OPPS).  Therefore, the amount that 
Medicare paid for lab tests performed in outpatient hospitals decreased in 2014.  For more information about the 
limited circumstances under which Medicare pays for outpatient lab tests under the Clinical Laboratory Fee 
Schedule rather than the OPPS, see 78 Fed. Reg. 74826, 74942 (Dec. 10, 2013).   
14 These tests are procedure codes 83840 and G0431, respectively. 
15 In 2014, many of the lab tests performed in outpatient settings (such as hospitals, skilled nursing facilities, and 
dialysis facilities) were paid under Medicare payment systems other than the Clinical Laboratory Fee Schedule.  As 
we have noted, our analysis included only lab tests paid under Medicares Clinical Laboratory Fee Schedule.      
Medicare Payments for Clinical Laboratory Tests in 2014:  Baseline Data (OEI091500210)  11