The Washington area's three largest clinical laboratories are charging the federal Medicare program up to five times as much for the same tests as they are billing private doctors or the local Medicaid program for the poor.
The laboratories acknowledge that they have separate price lists for Medicare, the federal health insurance plan for the elderly, but say they are justified in charging more because their administrative costs and billing problems are far greater in dealing with the Medicare bureaucracy.
At a time when federal health benefits are being cut back, members of Congress are trying to determine whether such discrepancies are further examples of abuse in the 15-year-old Medicare program or the inevitable result of a billing system so complex that it drives up the cost for patients and providers alike.
These differences are underlined in data obtained by a House Commerce subcommittee on investigations chaired by Rep. John D. Dingell (D-Mich.), which plans a hearing today on the issue. The panel obtained the records of the area's three largest labs--American Medical Laboratories of Fairfax, National Health Laboratories of Vienna and Litton Bionetics of Kensington--and looked at 11 of the most common lab tests performed in January 1981.
On some tests the charges to Medicare were more than twice as high as those to private doctors. In all, the labs charged Medicare $22,600 for the 3,600 tests examined by the subcommittee. If they had charged doctors for the same tests, their fee schedules indicate the bill would have been about $14,100.
Robert Collier, senior vice president at American Medical Laboratories, said that billing the Medicare program "costs us about 25 to 30 percent more. You've got to go through hell two or three times until you finally get the information. It costs us $2.70 to handle a Medicare patient's bill, and that's if there are no problems. Some of them don't pay, and a lot of times you find they're not eligible for Medicare."
The result is a substantial difference in costs. When a patient eligible for Medicaid, the joint federal-state health care program for the poor, needs a routine urinalysis, for example, the D.C. Medicaid program will pay the laboratory $1. But when a patient over 65 goes to the same laboratory for the same test, the bill is $4 for Medicare and $1 for the patient-a total of $5.
For a complete blood count the laboratories charged area doctors $4.20. The District's Medicaid program pays $4 for the same test. But the labs charged Medicare as much as $10 for the same blood test, with Medicare paying 80 percent of the bill.
Collier acknowledged that his lab does a similar amount of work for Medicaid and gets paid a lot less for it. The paperwork requirements are about the same as Medicare, he said, but it is harder to determine which patients are eligible and about half the cases end up as bad debts.
Collier said he is grateful that Medicaid is only a small part of the lab's business. "If enough tests came in, there would be a point where we would lose money," he said.
According to Collier, his lab has to send one bill to Medicare, which pays 80 percent of the cost, and a second bill to the patient, who pays 20 percent. Medicaid is easier to deal with because it pays the entire bill. The lab also charges private doctors much less, he said, because it can bill them once a month and let them worry about collecting from both the government programs and the poor and elderly patients.
In nearly a quarter of the tests examined by the House subcommittee, the labs billed Medicare 116 to 150 percent of the fees they charge doctors; in another 20 percent of the tests, the labs charged 151 to 200 percent of these fees; and in 11 percent of the cases, the labs charged more than 200 percent of these fees.
"There are indeed two totally different fee schedules because there are totally different costs involved," a spokesman for Litton Bionetics said. "The price of the test itself is the same, but there are monstrously higher administrative costs when we deal directly with Medicare."
Van Mahabel, a top Medicare official at the Health and Human Services Department, said Medicare sets its payments according to a formula based on the "usual and customary" charges made by labs in a local area. He noted that the figure is raised each year with inflation, which means if every lab doubled its charges this year, Medicare would double the "customary" charges it pays next year.
But Mahabel pointed out that these rates don't include the much lower fees that laboratories charge private doctors. He said the program is now considering whether to include these lower charges to doctors in figuring the amount that Medicare should pay, which he said could save a substantial amount of money.
"Laboratories are very competitive and they try to give doctors the best rates possible," Mahabel said. "There isn't that competitiveness when they bill Medicare because they already have the business.
"Medicaid says that either you accept our charges or we won't send you any patients. We don't have that kind of clout under Medicare" because of more rigid federal regulations, he said.
Medicare pays for about 500,000 lab tests a year in this area at an estimated cost of $10 million.
Peter B. Coppola, who oversees the Medicaid program for the D.C. Department of Human Services, said he isn't bound by the labs' "customary" fees and doesn't raise the payments every year.