Noteboom The Law Firm

VA May Switch To Medicare Rates to Reduce Costs

April 16, 2010 - By changing to Medicare pricing, the VA believes it can save money in laboratory testing payments as well as by making 39% less payments to non-VA sponsored dialysis clinics for patient services. So this proposed change would include both inpatient and outpatient non-VA services. April 19 is the due date for the decision on this proposed rule.

If this rule does pass, the VA stands to save $251 million next year in all non-VA services based on Medicare rates. In addition to affecting dialysis and lab services, the proposed rule would affect:

• Ambulatory surgical centers;
• Home health care; and
• Hospice services.

 To determine how switching to the Medicare clinical lab fee schedule would affects health care costs, the VA looked at 100 different lab services which amounted to 86.5% of all the non-VA paid out clinical lab costs. Measured against this, the VA compared their costs to the Medicare fee schedule. The result was the VA paid almost $49 per lab test for the 100 services. Under the Medicare fee schedule, the VA would pay $11.47 for the same services. The reduction is about 75% in costs to the VA.

The VA has an obligation to make the most financially sounds decisions. Using the Medicare fee schedule may very well help the VA accomplish this responsibility and once the decision the reached, we will see which way the VA decides to spend their money.