Budget to rein in vitamin tests

PATHOLOGY spending will be slashed by up to $500 million in the May budget as the government moves to cut Medicare rebates.

PATHOLOGY spending will be slashed by up to $500 million in the May budget as the Gillard government moves to cut Medicare rebates and impose restrictions on a range of high-growth tests.

All pathology tests will be vetted for efficacy and cost-effectiveness as the government tries to cut from 7 per cent a year to 5 per cent the growth in pathology spending.

It has been alarmed at a sudden spike in testing for Vitamin D deficiency after the number of tests grew tenfold, from 22,670 tests in 2000 to 2.2 million last year. Fees for this and a number of other vitamin deficiency tests are expected to be cut.

The health budget is facing severe cutbacks with medicine subsidies placed on hold and speculation that the patient charge for medicines could be increased as the government tries to balance the budget by 2013 and fund a new dental scheme.

Last financial year the government spent more than $80m on vitamin D tests and a government review found evidence the Medicare fee for the test was "significantly greater than the cost of service provision".

It calls for the Medicare payment to be cut.

The review questions the need for the test that is being heavily ordered for female patients aged 25-84; it says they can easily remedy suspected vitamin deficiency by increasing their sun exposure.

There are similar concerns about growth in other tests, such as for vitamin B12, iron and folate.

"It is also becoming clear through information submitted that other tests are similarly over-remunerated and may present an opportunity for government to better reflect the costs of service provision through reducing the fee," the review says.

The government has two weeks to finalise a memorandum of understanding with the industry that will underpin government funding for the sector for the next five years.

The pathology industry wants a new MOU to provide certainty in funding. It acknowledges it has to help the government find savings but is fiercely opposing any attempts to impose Medicare fee cuts on pathology tests.

"We wouldn't accept fee cuts," said one industry source who warned they would threaten the safety and quality of pathology testing.

Another insider warned that the industry would have to increase patient co-payments and close some suburban collection centres if the savings measures cut the annual growth in pathology funding below 5 per cent.

The industry wants to use demand-management techniques to achieve the bulk of the savings in pathology.

An expert Pathology Services Table Committee keeps watch on pathology use and it is expected to be asked to review a greater number of pathology services every year and come up with ways of controlling demand for them.

This could include placing a restriction on the number of times each year a test can be performed on a patient, restricting the purpose of a test, alerting the government's medifraud watchdog about inappropriate ordering of tests and educating general practitioners about ordering tests.

Pathology items are expected to become subject to a new quality framework that would entail a review of existing pathology items to ensure they reflected contemporary evidence, offered improved health outcomes and represented value for money.