The clinical laboratory fee schedule yesterday, today, tomorrow.

Abstract

1. Joan Longberry, CLDir (NCA)[⇑][1] 1. is a retired clinical laboratory manager and consultant and an advisor for the ASCLS Government Affairs Committee 1. Address for Correspondence: Joan Longberry, 45 West Dunedin Road, Columbus, Ohio 43214, JoanLongberry{at}aol.com 1. Describe at least three changes in Medicare payment methodology for laboratory services following the implementation of the clinical laboratory fee schedule (CLFS) in 1984. 2. List the key provisions of the Balanced Budget Act of 1997 affecting payment for Medicare laboratory services. 3. Compare the initial mechanism for annual inflation adjustments to the CLFS with the actual updates between 1991 and 2007. 4. Discuss two reasons for the actual decreases in reimbursement for laboratories since the CLFS was implemented. 5. Explain the difference between the “cross-walking” and “gap-filling” processes used to set CLFS payment amounts for new tests. 6. List five recommendations in the IOM Report “Medicare Laboratory Payment Policy: Now and in the Future”. 7. Describe the key elements of the design for the Competitive Bidding for Medicare Clinical Laboratory Services demonstration project. 8. List the specific purposes for an alternative payment system outlined in the Medicare Clinical Diagnostic Laboratory Fee Schedule Modernization Act of 2008. Introduction For well over two decades, the laboratory community has been confronted with a myriad of legislative and regulatory changes in payment policies and reimbursement levels for services provided to Medicare beneficiaries for outpatient clinical laboratory services. When Medicare was first implemented, clinical laboratories were reimbursed according to usual, customary and reasonable charges and beneficiaries were responsible for a copayment. Following the enactment of the Deficit Reduction Act in 19841, payment to laboratories providing Part B services to Medicare changed to a national clinical laboratory fee schedule (CLFS) system. Although the fee schedule established in 1984 bears little resemblance to the actual cost of laboratory testing in 2009, it remains the mechanism by which laboratories are reimbursed. An Institute of Medicine study in 2000 made several recommendations for reimbursement that have yet to be implemented. This article will review the many problems and challenges to the CLFS that have occurred since its inception in 1984. The Beginning Initially under Medicare, clinical laboratories were paid for outpatient Part B services based on customary and reasonable charges. Each state had fiscal intermediaries (which reimbursed hospital laboratories) and carriers (which reimbursed independent and physician office laboratories) and each had different ranges of customary and reasonable charges. Clinical laboratories found collecting the then-required beneficiary co-payments of 20% to be exceedingly difficult, as most did not have a billing relationship with patients. In addition, the costs of billing and collecting such small amounts were financially and administratively burdensome. Thus, the laboratory industry supported the fee… ABBREVIATIONS: ASCLS = American Society for Clinical Laboratory Science; BBA = Balanced Budget Act; CLFS = clinical laboratory fee schedule; CMS = Centers for Medicare & Medicaid Services; CPI = consumer price index; CPT = current procedural terminology; FY = fiscal year; HCFA = Health Care Financing Administration; HHS = Department of Health & Human Services; HR = House of Representatives; IOM = Institute of Medicine; MSA = metropolitan statistical area; MMA = Medicare Prescription Drug, Improvement, and Modernization Act; NLA = national limitation amount; PL = public law 1. Describe at least three changes in Medicare payment methodology for laboratory services following the implementation of the clinical laboratory fee schedule (CLFS) in 1984. 2. List the key provisions of the Balanced Budget Act of 1997 affecting payment for Medicare laboratory services. 3. Compare the initial mechanism for annual inflation adjustments to the CLFS with the actual updates between 1991 and 2007. 4. Discuss two reasons for the actual decreases in reimbursement for laboratories since the CLFS was implemented. 5. Explain the difference between the “cross-walking” and “gap-filling” processes used to set CLFS payment amounts for new tests. 6. List five recommendations in the IOM Report “Medicare Laboratory Payment Policy: Now and in the Future”. 7. Describe the key elements of the design for the Competitive Bidding for Medicare Clinical Laboratory Services demonstration project. 8. List the specific purposes for an alternative payment system outlined in the Medicare Clinical Diagnostic Laboratory Fee Schedule Modernization Act of 2008. [1]: #corresp-1