No clinical pathology laboratories are known to have ceased serving Medicare and Medicaid patients

It’s widely acknowledged by physicians and other providers that Medicaid reimbursement in many states is significantly less than the true cost of providing the service. There are also many types of health procedures where Medicare reimbursement fails to fully reimburse the provider. Thus, it is an important signal when two prominent healthcare organizations announce that—in certain locations and for certain services—they will no longer serve Medicaid or Medicare patients.

Pathologists and clinical laboratory managers will soon see an increasing number of healthcare providers decide to cease serving Medicare and/or Medicare patients. Just in the past 12 months, such nationally respected healthcare organizations as Walgreens and Mayo Clinic have announced that, in certain markets, they will no longer serve new Medicare and/or Medicaid patients. The details of these decisions are revealing.

In the State of Washington, earlier this spring, Walgreens (NYSE:WAG) announced that all 121 of its pharmacies in the state would no longer accept new Medicaid patients. This followed an earlier announcement by the Bartell Drugs chain that its 44-store chain would also no longer serve new Medicaid patients in Washington State.

It was last year when Walgreens announced that 44 of its pharmacies would be withdrawn from serving the Washington Medicaid program. This news came just prior to the government’s implementation of severe cuts in reimbursement for brand name drugs.

More recently in January of this year, Walgreens raised that number to 64 stores representing 75% of the company’s Medicaid business in Washington. And then, in March, Walgreens made a final announcement—“No new Medicaid patients as of April 16” for the entire store chain of 121 stores in Washington State, again citing Medicaid reimbursement cuts as the reason for the withdrawals.

Similarly, last fall, Rochester, Minn.-based Mayo Clinic also announced that it would no longer accept Medicaid patients from Nebraska and Montana. And then, Mayo’s Arizona branch announced that they would no longer take Medicare patients at its Glendale facility. In a Washington Post article, Mayo officials said that these two “business decisions” came out of “long standing concerns about what it sees as underpayment by Medicare and Medicaid.”

In the same Washington Post article, Shelly Plutowski, spokeswoman for the Mayo Clinic, said, “These decisions aren’t based on timing with what’s going on with the [healthcare reform] legislation. It simply is the reality of the healthcare business. And how are we going to be able to continue our mission when these payments are so far below what it costs to provide the care?” she asked.

These trends are particularly troublesome for clinical laboratory managers and pathologists. Any regular declines for reimbursement for Medicare and Medicaid services will make it more challenging for medical labs to maintain financial stability.

It is interesting that the news of Walgreen’s decisions in Washington State, and the Mayo Clinic’s decisions in Minnesota and Arizona, did not receive wider media attention last spring. Executives at both organizations would fully understand the potential negative publicity that would result from a decision to stop serving Medicare and Medicaid patients. Thus, the fact that these prominent healthcare providers were willing to cease serving Medicare and Medicaid patients provides powerful evidence that even some of the nation’s largest healthcare providers can no longer fully absorb the financial costs of serving patients in these programs due to inadequate reimbursement.

Dark Daily is not yet aware of any significant clinical laboratory or anatomic pathology group that has publicly stated that it will no longer serve either Medicare of Medicaid patients. However, if Congress continues to budget insufficient funds for lab test services from year to year, we soon might have similar examples as clinical lab and pathology groups follow the example of Walgreens and Mayo Clinic example and opt out of serving Medicare and Medicaid patients.

Related Information:

Walgreens to Stop Filling Medicaid Prescriptions at Nearly Half of Its Pharmacies in the State of Washington as of May 1

Continued Reduction in State Medicaid Reimbursement Forces Walgreens To Stop Filling Medicaid Prescriptions at 64 Washington Pharmacies as of Feb. 15

121 Walgreens Stores to Stop Taking New Medicaid Patients

Walgreens to Fill Prescriptions for Current Medicaid Patients Only As of April 16; Talks Continue with State of Washington