In June 2025, the U.S. Department of Health and Human Services Office of Inspector General (OIG) announced a new item in its Work Plan: “Medicare Payments for Clinical Diagnostic Laboratory Tests in 2024.” This annual review, mandated by the Protecting Access to Medicare Act of 2014 (PAMA), focuses on analyzing the top 25 laboratory tests by Medicare expenditures for the previous calendar year. For clinical laboratories and healthcare providers, this announcement signals the need to pay close attention to billing practices, compliance programs, and potential audit risks.
Understanding the OIG Work Plan Review
Each year, the OIG examines Medicare payments for clinical diagnostic laboratory tests (CDTs), which include some of the most commonly ordered lab tests in healthcare, such as comprehensive metabolic panels, complete blood counts (CBCs), Hemoglobin A1c, and lipid panels. The goal of this review is to assess payment trends, identify any irregularities or outliers, and ensure that Medicare funds are being used appropriately.
The findings from this review can have significant implications, including:
- Future Payment Rate Adjustments: If the OIG identifies patterns of overpayment, underpayment, or overutilization, CMS may adjust reimbursement rates for certain tests in future years.
- Audit and Enforcement Priorities: Tests or providers identified as outliers may be subject to increased scrutiny, audits, or even enforcement actions.
- Identifying Fraud, Waste, and Abuse: The review helps pinpoint areas where Medicare may be vulnerable to improper payments, whether due to billing errors, unnecessary testing, or potential fraud.
Why This Matters to Clinical Laboratories and Providers
It is important for clinical laboratories and healthcare providers to ensure that their billing practices comply with Medicare regulations. The OIG’s annual review highlights the need for vigilance in several key areas:
- Medical Necessity: Every claim submitted to Medicare must be supported by documentation that demonstrates the test was medically necessary for the patient’s diagnosis or treatment.
- Proper Documentation: Accurate and thorough documentation is essential to support the billing of high-volume or high-cost tests. Incomplete or inconsistent records can increase the risk of claim denials or audits.
- Compliance Programs: An effective compliance program can help identify and correct potential issues before they become problems. Regular internal audits, staff training, and clear policies are all critical components.
Recent False Claims Act (FCA) litigation, such as Jensen ex rel. United States of America v. Genesis Laboratory, highlights the real-world risks for laboratories that fail to ensure robust compliance with federal regulations regarding medical necessity, lab requisition practices, and the Anti-Kickback Statute (AKS). The Genesis case underscores the heightened scrutiny laboratories face and the importance of maintaining clear documentation and proactive compliance programs. For a detailed discussion of the compliance lessons from Genesis, see our previous article.
Recommended Actions for Laboratories and Providers
Given the increased oversight and potential for future audits, laboratories and healthcare providers should take proactive steps now to minimize risk:
- Review Billing and Coding Practices: Analyze your billing data for 2024 to identify your top reimbursed lab tests. Check that these claims are coded accurately and supported by robust documentation.
- Conduct Internal Audits: Periodically audit your own claims for high-volume and high-cost tests to identify any patterns of overutilization or documentation gaps.
- Update Compliance Programs: Make sure your compliance program addresses the latest OIG and PAMA requirements. Provide regular training to billing and coding staff on Medicare rules and documentation standards. Best practice would be to develop policies to specify what information is required to support medical necessity (e.g., test order, relevant diagnosis, brief clinical history) and provide staff with training on recognizing what the HIPAA minimum requirement is and what would be considered inadequate support to justify medical necessity.
- Benchmark Against Industry Data: Although the top 25 tests for 2024 have not yet been published, you can compare your data to previous years’ OIG/PAMA reports to assess whether your billing patterns fall within normal industry ranges.
- Prepare for Increased Scrutiny: If your lab is a high-volume provider of any of the commonly reviewed tests, be prepared to respond to potential audit requests. Maintain organized records and be ready to demonstrate medical necessity for each test billed.
Looking Ahead: How to Stay Informed and Compliant
The regulatory landscape for clinical laboratories is constantly evolving. Staying informed about OIG Work Plan updates, CMS policy changes, and new compliance requirements is essential for minimizing risk and ensuring continued participation in the Medicare program.
- Subscribe to OIG and CMS Updates: Regularly review updates from the OIG and CMS to stay aware of new audit priorities and regulatory changes.
- Consult Compliance Experts: If you have concerns about your lab’s billing practices or compliance program, consider consulting with a healthcare attorney or compliance expert.
Conclusion
The OIG’s 2025 Work Plan review of Medicare payments for clinical diagnostic laboratory tests is an important reminder for all laboratories and healthcare providers to review their billing practices, ensure proper documentation, and strengthen compliance programs. By taking proactive steps now, you can minimize your risk of audit, protect your revenue, and continue to provide high-quality care to your patients.
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