Members of the clinical lab community have long raised critical issues regarding the performance of the Centers for Medicare & Medicaid Services (CMS) and its Clinical Lab Fee Schedule (CLFS), the route used to establish Medicare payment rates for outpatient clinical laboratory services.
One of the key challenges for the CLFS process has always been its dependence on pricing parameters that did not reflect a connection with the marketplace. National CLFS pricing limits for each laboratory test code were calculated as a percentage of the median of all local Medicare fee schedule amounts for those tests, without regard to the commercial marketplace outside Medicare.
On top of such in-house calculations, lab fees have also suffered from waves of reductions imposed by Congress in order to pay for the costs of other healthcare legislation—including the nearly annual effort to create “doc fix” legislation and avoid the Medicare sustainable growth rate mandates of the Balanced Budget Act of 1997.
At the beginning of April, President Obama signed into law the Protecting Access to Medicare Act of 2014, which incorporates the first major changes in CLFS policies and procedures since the schedule was first implemented in 1984. To say that some updating and reform was long overdue would be a significant understatement. To suggest that the newly enacted legislation is all that is necessary would likely be naïve.
No doubt, the biggest change that will be brought about by the new legislation is the creation of a market-based system for establishing the payment rates for all laboratory tests. Scheduled to be fully operational at the beginning of 2017, the new system will require labs to reveal their pricing for tests sold into the commercial market, which have previously been considered proprietary and confidential.
In return for this informational concession—a practice that has been strongly refused by the manufacturers of other types of medical products—labs will get a process that is both more inclusive of market input and more transparent.
According to Tim Sheets, national director for managed care and reimbursement at molecular and specialized testing services provider Progenity, the new legislation may bring about a more cogent process for aligning reimbursement with a market-based pricing model, as opposed to Medicare’s subjective cuts to clinical laboratory fees. “The overall idea is for the stakeholders to now be able to weigh in on changes to fee schedules as opposed to just CMS or the Medicare administrative contractors (MACs) making recommendations,” says Sheets. “It hopefully will open the process up to better communication and data-sharing on best reimbursement practices for clinical laboratories.”
So far, no one is claiming that the new legislation is the end-all fix to reimbursement for clinical labs. As contributors to articles in this issue attest, there is much more work to be done.
Steve Halasey
Chief Editor, CLP
[email protected]
(626) 219-0199
