What the Protecting Access to Medicare Act Means for Clinical Laboratories.

Abstract

In 2014 Congress passed the Protecting Access to Medicare Act (PAMA),10 which required the Centers for Medicare and Medicaid Services (CMS) to revise the Clinical Laboratory Fee Schedule (CLFS) to reflect private sector payment rates. This change was in response to Government Accountability Office and Department of Health and Human Services Office of the Inspector General reports that indicated that Medicare was paying substantially more for testing than private insurers paid. Legislators projected the new law would reduce laboratory payments by $3 billion over 5 years. To minimize the immediate impact on clinical laboratories, Congress directed CMS to phase in anticipated rate cuts. Payment reductions were limited to 10% annually for the first 3 years, 15% per annum for the following 3 years, and no limits thereafter. The new CLFS took effect on January 1, 2018. That year, cuts were applied to 75% of laboratory tests. CMS expects 58% of tests to have further reductions in 2019. Many in the laboratory community have asserted that the CMS cuts are too deep. CMS estimates the new fee schedule will reduce Medicare payment to laboratories by $5 billion over 5 years—$2 billion more than Congress intended. Healthcare groups suggest that one reason for this discrepancy is that >90% of the payment information used by CMS to set the new rates came from high-volume, large commercial laboratories that offer volume discounts, thereby skewing the payment data toward lower-than-average rates. Laboratory and manufacturer groups have urged CMS to expand the number and types of laboratories required to submit payment data to more accurately reflect the spectrum of laboratories that provide testing for patients. CMS, however, asserts that its current data collection model accounts for most laboratory tests and payments and that expanding the number of reporting facilities will not greatly alter the fees …