Inside Track: (Still) the Next Big Thing

 

Final PAMA pricing for 2018 is expected in November, but lab associations are still hoping for a reprieve.

By Steve Halasey

In the October 2017 issue of Clinical Lab Products, we broke with the usual Q&A formatting of our Inside Track column to update readers about the coming implementation of the Protecting Access to Medicare Act of 2014 (PAMA), which is expected to bring about the first major adjustment to the Medicare clinical laboratory fee schedule (CLFS) since it was established more than 30 years ago.¹

The new law creates a system for pricing clinical laboratory testing that will be based on the rates paid by private payors. It requires a defined group of ‘applicable laboratories’ to report their pricing (a step completed earlier this year), and will then apply a set of rules to calculate the new Medicare pricing schedule. While our October column was being prepared, the Centers for Medicare and Medicaid Services (CMS) had not yet released its evaluation of payor data, and it was unclear whether the agency would heed the calls of many clinical laboratory associations to delay implementation of the new pricing system.

The answer to that question appeared shortly after the October issue of CLP went to press. Making quick work of the steps required to evaluate the private payor data submitted by ‘applicable laboratories,’ at the end of September CMS released the preliminary payment rates and supporting documentation for the pricing schedule it intends to implement on January 1, 2018.² But for many laboratory associations, the new fee schedule is nothing like what they hoped PAMA would achieve—and everything they feared that CMS would implement.

“Organizations representing independent labs, hospitals, and physicians have all voiced concern with the accuracy and integrity of the laboratory payment data provided to CMS,” says Julie Khani, president of the American Clinical Laboratory Association (ACLA). “We know based on public comments, as well as a report issued by the HHS Office of Inspector General, that significant sectors of the laboratory market, most notably hospital laboratories, have been prohibited from providing private payor data to CMS. The data provided to CMS is flawed and is not reflective of the broad scope of the laboratory market, yet all providers of laboratory services will be reimbursed by PAMA rates. It is critical that CMS gets this right the first time, rather than rushing to meet an arbitrary deadline.”

Following CMS’s publication of the pricing schedule for 2018, responses from clinical laboratory organizations were both swift and shrill. A number of organizations repeated their earlier calls to delay implementation of the new fee schedule until PAMA’s formulas for soliciting and processing pricing data have been corrected. Others encouraged grassroots efforts aimed at convincing Congress or the secretary of Health and Human Services to forestall implementation.

“Despite concerns voiced by organizations representing independent labs, hospitals, and physicians with the substance of the rule, the accuracy and integrity of the laboratory payment data provided to CMS, and the severe consequences for a critical industry, CMS has pressed forward with a flawed approach and produced a flawed outcome,” wrote ACLA’s Khani. “It is imperative that the implementation of the rates published today be delayed, allowing time for Congress, CMS, and stakeholders to achieve PAMA’s intent: a true market-based payment solution for laboratory services.”³

“The statute’s intent was to establish private market-based laboratory payment rates within Medicare, but the regulatory agency has not done this,” wrote Mark S. Birenbaum, PhD, administrator of the National Independent Laboratory Association (NILA).⁴

“With few exceptions, these rates are not market-based,” agreed Khani. “If finalized, these rates will inflict severe cuts—well beyond those ever envisioned by Congress—and ACLA believes the impact will be unprecedented and far-reaching. These rates will devastate many of our members and create severe disruptions in access to laboratory services, particularly for the most vulnerable Medicare beneficiaries.”³

“This regulation will eliminate access to laboratory services for many Medicare beneficiaries, particularly those living in rural and underserved areas and those with complex health conditions that rely on clinical laboratory tests to guide their care and treatment,” added Birenbaum. “If these payments are not corrected, laboratories will be forced to lay off thousands of workers across the United States, eliminate services, or close their businesses all together. NILA is perplexed as to why the Secretary is not making needed corrections to this burdensome and flawed regulation before proceeding.”⁴

“A fundamental premise of PAMA was that it would align Medicare diagnostic payment rates with the private-payer marketplace. But the lab-reported data that Medicare has used to calculate the new payment rates does not accurately reflect the private market, due to both challenges related to the reporting system itself and to the lack of hospital and physician office lab data,” said Andrew C. Fish, JD, executive director of industry association AdvaMedDx.⁵ “For many tests, the Medicare reimbursement cuts now projected to take place under PAMA are dramatically deeper than Congress originally envisioned when it passed PAMA and it is imperative to ensure that PAMA rates are calculated correctly and that new PAMA rates will not lead to diminished access to advanced diagnostic tests.”

By the beginning of October, clinical laboratory organizations had banded together to make their concerns known. In a joint letter to CMS Administrator Seema Verma, 22 clinical laboratory stakeholder organizations described again their concerns about the payment rates published by CMS, and called for implementation of the PAMA rates to be suspended until issues with data integrity and market exclusion have been addressed.⁶ The letter noted that it was not the organizations’ first effort to get action from HHS: “As a stakeholder community, we have repeatedly pointed out to CMS, HHS, and Congress in formal comments and in meetings our concerns with the final PAMA regulation, including the serious limitations and skewed process the regulation created. . . . We stand together in our position that before CMS proceeds with making any revisions to the CLFS, the agency must first:

• Modify the PAMA regulation to address data integrity concerns and market exclusion through a statistically valid process that is least burdensome on providers;
• Ensure that the private payer data CMS collects accurately represents all segments of the clinical laboratory market (national independent, community and rural independent, hospital outreach, and physician office laboratories); and
• Provide a transparent process to allow for the validation of the data collected by CMS.”⁶

CMS is scheduled to release the final version of the PAMA fee schedule during November. But so far, lab organizations are holding fast to their hope that implementation will be postponed.

“There is still a chance that implementation of PAMA’s clinical laboratory regulations can be delayed beyond the January 1, 2018, implementation date,” says NILA’s Birenbaum. “But the likelihood of CMS doing so depends on the level of grassroots pressure applied by laboratorians. Much more pressure needs to be applied to CMS.”

Laboratorians need to contact their members of Congress, repeatedly, says Birenbaum, and urge them to ask HHS to instruct CMS to delay and fix PAMA’s laboratory regulations (see “Comment . . . Period“).

But—as we observed in October—the time remaining for CMS to address the concerns of clinical laboratory organizations is very limited. Stakeholders hoping to convince CMS to delay implementation will need to act surely and quickly—while still preparing for the possibility that the coming year will not turn out as they hope.

Steve Halasey is chief editor of CLP.

References

1. Protecting Access to Medicare Act of 2014. PL 113-93.

2. CY 2018: Preliminary Private Payor Rate-Based CLFS Payment Rates and Analytics [online]. Baltimore: Centers for Medicare and Medicaid Services, 2017. Available at: www.cms.gov/medicare/medicare-fee-for-service-payment/clinicallabfeesched/pama-regulations.html. Accessed September 26, 2017.

3. ACLA Expresses Serious Concerns with Proposed PAMA Medicare Payment Rates for Clinical Laboratory Tests; Renews Calls for Delay and Reform [press release, online]. Washington, DC: American Clinical Laboratory Association, 2017. Available at: www.acla.com/acla-expresses-serious-concerns-with-proposed-pama-medicare-payment-rates-for-clinical-laboratory-tests-renews-call-for-delay-and-reform. Accessed November 12, 2017.

4. Flawed Laboratory Payment Rates on Course to Devastate US Laboratory Job Market and Access to Clinical Laboratory Testing [press release, online]. St Louis: National Independent Laboratory Association, 2017. Available at: www.nila-usa.org/images/nila/pdfs/9-22-17_nila%20press%20release%20-%20pama%20rate%20announcement.pdf. Accessed November 12, 2017.

5. AdvaMedDx Statement on CMS Clinical Laboratory Fee Schedule Update [press release, online. Washington, DC: AdvaMedDx, 2017. Available at: www.advamed.org/newsroom/press-releases/advameddx-statement-cms-clinical-laboratory-fee-schedule-update. Accessed November 12, 2017.

6. Laboratory Market Stakeholders Call for Suspension of Draft PAMA Rates; Urge CMS to Take Immediate Action to Address Flawed Data Collection and Methodology [press release, online]. Washington, DC: American Clinical Laboratory Association, 2017. Available at: www.acla.com/laboratory-market-stakeholders-call-for-suspension-of-draft-pama-rates-urge-cms-to-take-immediate-action-to-address-flawed-data-collection-and-methodology. Accessed November 12, 2017.