Toxicology laboratories have seen declines in reimbursement this past year. In reaction to the overutilization of urine toxicology screens, CMS (Centers for Medicare & Medicaid Services) has made drastic cuts to LC-MS methods of testing. Billing codes often lag behind technology, which made LC-MS a more attractive financial option for laboratories. This led to overutilization and abuse.
For years, toxicology testing was a straightforward laboratory test, with predictable reimbursements. When the going got good, many new labs entered the market. This cut into market share for medium to large laboratories, and consequently reduced their economies of scale. With reimbursements on the decline, many laboratories will not be able to keep their costs down to meet the new allowables, and will risk going out of business.
To make matters worse, the toxicology industry has its own self-inflicted wounds to deal with. Across the nation, some toxicology laboratories have committed well publicized abuse:
overbilling Medicare, providing physician inducements, and performing unnecessary tests are a few of the common accusations.
Nationally, toxicology is a $3 billion dollar industry according to IBISWorld, a business research firm. Over a 6-year period, the industry rose over 2,000%, which put a spotlight on the sector and put pressure on the Federal Government to control the spending.
It is likely the landscape of the toxicology sector will look much different in the coming years, with lab attrition sure to come. Those who survive will likely be larger labs who have resources to run efficiently to maintain profitability, as well as small to medium-sized laboratories who expand their testing menu beyond toxicology.
There are options available for labs who wish to expand their services thereby strengthening their bottom line and supporting the viability of their business.