Laboratory Test Rates Vary Markedly for Patients in Different Dialysis Facilities

Our examination of 766 freestanding facilities showed that, despite the similarity of their patient populations, patients of some facilities received on average many more laboratory tests per year than others. Test Rate Disparities Indicate Inappropriate Levels of Test Ordering

The large differences in the rates of tests ordered suggest that there may be both excessive use, with some patients receiving tests too often or receiving tests that may not be necessary at all, and underuse, with patients receiving too few tests to ensure appropriate monitoring of their condition. The experts reviewed usage rates for 34 individual laboratory tests from two data samples and questioned the usage rates for 20 tests. In our data samples, one of these tests was provided to 5 percent of the patients in the top 100 facilities about 8 times a year, and the other test was provided to 3 percent of the patients about 10 times a year. Financial Incentives and Other Physician-Related Factors May Explain Wide Variation in Test Rates

Financial incentives as well as lack of knowledge and differences in medical practices may help explain the wide variation we found in the rates of laboratory tests provided. As a result, neither knows if Medicare is paying for unnecessary tests for patients who receive numerous tests or if patients who receive few tests are receiving high-quality treatment. To replicate such an analysis, HCFA could examine contractor data for laboratory claims. These claims identify the ordering (or referring) physician. In addition, if the laboratory actually performs the tests a physician orders, Medicare will pay for unnecessary tests because the laboratory is only complying with the physicians’ orders. Although the data are available, HCFA does not examine them in a way that would reveal relative test usage rates. Matter for Congressional Consideration

The Congress may wish to consider making the ordering physician liable for the recovery of payments made to laboratories when the physician continues to order tests that are not medically necessary or are provided too frequently, after having been notified of a pattern of such inappropriately high testing rates. Recommendation to the Administrator of HCFA

We recommend that, to assist contractors in their efforts to determine the appropriateness of laboratory tests ordered for Medicare dialysis patients, the HCFA Administrator profile physicians ordering laboratory tests for dialysis patients and notify the contractors of the providers whose test order rates are aberrant. Objectives, Scope, and Methodology

Our objective was to determine whether patients of some dialysis facilities receive many more than the average number of laboratory tests and, if so, to determine what the Health Care Financing Administration (HCFA) should do to help ensure that dialysis patients receive only necessary tests. Medicare paid $35.9 million for laboratory tests for these patients in 1994 and $40.6 million in 1995. Because 12 of these tests are included in the bundle, it was ordered for an unlikely number of patients. No value for dialysis patients. Provided to an implausibly large proportion of patient population.
Why GAO Did This Study

Pursuant to a congressional request, GAO examined the anomalous patterns of test rates among dialysis patients, focusing on: (1) the extent to which the rates for providing laboratory tests to Medicare patients varied among dialysis facilities; (2) the appropriateness of these rates; (3) reasons for the variation; and (4) the adequacy of the reviews that the Health Care Financing Administration (HCFA), the agency administering Medicare, performs to examine laboratory test claims.

What GAO Found

GAO noted that: (1) despite the large volume of laboratory services provided to end stage renal disease (ESRD) patients, HCFA does not scrutinize the level of laboratory tests ordered for patients receiving dialysis; (2) GAO's study in 1994 showed that clinically similar patients received laboratory tests at widely disparate rates; (3) this variation suggests that Medicare may be paying for an excessive number of tests or that patients may not be receiving the tests needed to adequately monitor their condition; (4) renal disease experts GAO consulted found questionable usage rates for 20 of 34 individual laboratory tests identified in two data samples; (5) they determined that many of these tests provided to patients at 100 facilities with the highest average number of tests ordered per patient were either provided too often or ordered for an implausibly large proportion of patients; (6) low rates of laboratory tests for patients of some facilities were also found; (7) the nature of fee-for-service reimbursement does not give physicians adequate incentives to be judicious in ordering tests; (8) the likelihood of excessive testing may increase when a company owns both a dialysis facility and a laboratory and includes unnecessary tests in standing orders; (9) these and other physician-related factors, such as the physician's knowledge of the latest testing techniques and medical practice differences, help explain the wide variation in laboratory test rates; (10) neither HCFA nor its claims-processing contractors analyze claims data that would reveal the dramatic variation in test rates found in GAO's study; (11) neither knows if Medicare is paying for unnecessary tests for some patients or if other patients receive too few tests to ensure high-quality treatment; (12) because claims for tests are submitted by the laboratories performing the tests, contractors' reviews of claims data would likely identify the laboratories and not the test rate patterns found when the data are arrayed by the patient's ordering physician or dialysis facility; (13) without knowledge of these patterns, HCFA has no indication of whether laboratory claims made on behalf of ESRD patients receiving dialysis are for an appropriate level of tests; and (14) without a process for identifying the physicians who order tests for dialysis patients and for notifying contractors of providers whose test order rates are aberrant, HCFA is unable to identify physicians who order unneeded or inadequate numbers of tests.