ACLA charges that CMS ignored congressional intent in implementing a new clinical lab payment system under PAMA 

In a lawsuit filed on December 11 against the acting secretary of the Department of Health and Human Services (HHS) in the US District Court for the District of Columbia, the American Clinical Laboratory Association (ACLA; Washington, DC) charges that the Centers for Medicare and Medicaid Services (CMS) failed to follow a congressional directive to implement a market-based laboratory payment system, thereby jeopardizing Medicare patients’ access to vital laboratory services.

The lawsuit asserts that CMS ignored congressional intent and instituted a highly flawed data reporting process in advance of setting market rates under the Protecting Access to Medicare Act of 2014 (PAMA). Contrary to Congress’s directives, the overwhelming majority of laboratories—99.3%, according to the suit—were prohibited from reporting private payer data. As a result, CMS failed to protect access to laboratory services for Medicare beneficiaries.  According to the association, the flawed process implemented by CMS could cause serious financial harm to potentially thousands of hospital, independent, and physician office laboratories, and make it harder for Medicare beneficiaries to get access to medical testing, particularly in remote rural areas and in nursing homes that depend on laboratory testing services.


Julie Khani, American Clinical Laboratory Association.

“We have repeatedly advised CMS that there are significant, substantive deficiencies in the final rule, which fails to follow the specific commands of the PAMA statute,” says Julie Khani, ACLA president. “Contrary to Congress’s intent, instead of reforming Medicare reimbursement rates to reflect the broad scope of the laboratory market, the secretary’s final rule will disrupt the market and prevent beneficiaries from having access to the essential laboratory services they need.”

“CMS clearly disregarded and violated the statute’s specific, unambiguous directives requiring commercial rate information to be reported and collected from a broad, diverse group of market participants,” says Mark D. Polston, partner at King & Spalding, the law firm representing ACLA in the suit. Polston is a former chief litigation counsel for CMS, with decades of experience in Medicare reimbursement policy. “Instead, information was collected from less than 1% of US laboratories,” Polston adds. “More than 99% of laboratories were prohibited from reporting their data.”

“Every day, this industry provides laboratory services that are vital in preventing illness, diagnosing disease, and monitoring medical treatment,” says Curt Hanson, MD, ACLA board chair and chief medical officer at Mayo Medical Laboratories. “This lawsuit reflects our obligation to those who are providing critical testing services, and to those millions of Americans who rely on the services our industry provides.”

ACLA is a not-for-profit association representing clinical and anatomic pathology laboratories, including national, regional, specialty, hospital, end-stage renal disease, and nursing home laboratories. In a press release, the association indicated that it continues to support modernizing the CMS clinical laboratory fee schedule under PAMA, “assuming the process is based on the clear direction of Congress to establish a Medicare payment system based on the collection of private payor rates across the wide spectrum of the clinical laboratory community.”

“From the beginning, ACLA has supported a fair and predictable market-based system that encourages innovation and recognizes the value of clinical laboratory testing in healthcare services for Medicare beneficiaries,” says Khani. “It is reckless and damaging to Medicare beneficiaries for the secretary to implement a payment system based on a specious data collection process that actually threatens the viability of some laboratories to continue operations and jeopardizes access to important lab tests.”

To view the complaint in its entirety, click here.