Laboratory Test Ordering by Physicians

The Effect of Reimbursement Policies

by M. Susan Marquis

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The use of laboratory tests has more than doubled during the past decade. This study investigates the importance of several reimbursement factors in the frequency of test ordering by office-based physicians. The number of laboratory tests ordered per visit is not related to the level of the patient's insurance coverage. Despite this, more generous insurance coverage for ambulatory care would lead to an increase in total test volumes, because physician visit rates have been shown elsewhere to be strongly influenced by the amount of patient cost sharing for medical care. Physicians who control test billing are more likely to order tests than physicians who refer their patients to laboratories that bill directly. However, testing in-house and controlling test billing may be the result of a high anticipated volume of tests rather than the cause of a higher test ordering frequency. The author concludes that direct billing regulations are not likely to result in significant reductions in total health care costs. The marginal cost of the tests is far below their average costs, so that very large reductions in test volumes would be required to achieve significant cost savings.

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