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Protecting Access to Medicare Act (PAMA)

On April 1, 2014, President Barack Obama signed H.R. 4302: Protecting Access to Medicare Act (PAMA) of 2014. The law’s primary purpose was to extend the Sustainable Growth Rate (SGR) formula for 12 months.

Along with the SGR extension, PAMA addressed a grab bag of Medicare-related issues.

Under PAMA, many clinical laboratory organizations will see a substantial decline over the coming years in the prices paid to them for the highest-volume lab tests reimbursed under Medicare Part B. The law specifies that the federal Centers for Medicare & Medicaid Services (CMS) can begin enacting those price cuts in 2017.

Six aspects of PAMA specifically apply to clinical laboratories:

  • Setting prices with market data: Certain labs are required, as of Jan. 1, 2016, to report private-payer payment rates and volumes for their tests.
  • New category – Advanced diagnostics tests (ADTs): For certain tests developed and performed by single laboratories, the initial payment rate for ADTs will be set at the “actual list charge.” If the charge exceeds private-payer rates by more than 130%, CMS can recoup the overpayment.
  • Setting prices for new tests and expert advisory panel: To ensure transparent and reliable decisions about pay rates and coverage, CMS will assemble a panel of outside advisors, including clinicians and other technical experts. Also, CMS must follow either the crosswalk or gapfill process to determine the initial payment rates and explain, in a transparent manner, how the calculations were made.
  • Changes in how Medicare handles lab test codes: For new lab tests, CMS will use temporary HCPCS codes to enable payment prior to a permanent HCPCS or CPT code.
  • Coverage requirements and decisions: In support of fair and open coverage decisions for a lab test when a local coverage determination is needed, MACs must now follow a defined development and appeals process.
  • Oversight of the process to create coverage guidelines and set lab test prices: Two levels of oversight are written into the law: one by the U.S. Government Accountability Office (GAO), the other by the Office of Inspector General (OIG) of Department of Health and Human Services (DHHS).

Community Lab Ceases after 37 Years of Operation

CEO SUMMARY: In Pennsylvania, one of the state’s largest independent clinical laboratories, HNL Lab Medicine in Allentown, acquired a lab competitor last month, Northeastern Laboratory Medicine in Hazelton. The deal is a good strategic move for both labs because HNL will continue to…

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CMS Publishes Proposed 2021 Medicare Physician Fee Schedule

MEDICARE’S PROPOSED PHYSICIAN FEE SCHEDULE (PFS) rule was announced on Aug. 4, 2020. The rule had one positive development for clinical laboratories and hospital laboratory outreach programs and a negative development for anatomic pathologists. Clinical laboratories and hospital outreach lab…

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Insurers Are Rejecting Many PLA, MAAA Codes

>>CEO SUMMARY: Clinical labs developing innovative tests face a challenge getting paid. While Medicare may reimburse for these tests, some commercial payers and state Medicaid programs are not paying for new proprietary laboratory analyses (PLA) codes and multianalyte assays…

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Be Careful Payers, You May Get What You Wish For!

Few clinical laboratory executives and pathologists would disagree with the assertion that both government and private payers would like to see the prices they pay for medical laboratory testing and the amount of money they spend reimbursing labs to stay flat or shrink from one year to the next. C…

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CMS Adjustments for Medicare Fee Schedule Might Be Too Late

This is a summary of two articles in the Nov. 13, 2018 issue of THE DARK REPORT. The complete articles are available only to paid members of the Dark Intelligence Group. CEO SUMMARY: On Nov. 2, the federal Centers for Medicare and Medicaid Services released its Physician Fee S…

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NILA, ACLA Respond to CMS 2019 Final Lab Rule

CEO SUMMARY: On Nov. 2, the federal Centers for Medicare and Medicaid Services released its Physician Fee Schedule for 2019. It says it will expand the number of labs from which it collects data about the lab test prices paid by private health insurers. While some labs may welcome these c…

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Two Federal Court Decisions Are Bad News for Labs

Every pathologist and clinical lab administrator should pay attention to two federal court decisions made recently in two different legal cases. One decision is bad news for the entire clinical lab industry. The other is bad news for lab companies that push compliance with federal anti-kickback laws….

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Biggest Lab Firms Diverge on Hospital Lab Strategies

CEO SUMMARY: Almost half of the nation’s hospitals and health systems are rethinking how to use their clinical labs to support clinical and financial strategies. Options range from outright sale of their lab outreach businesses to lab management agreements or joint ventures with one of …

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CMS Shows Its Hand in New Draft Rules for 2019

CEO SUMMARY: Publication of the draft Medicare Physician Fee Schedule on July 12 brought unwelcome news for the clinical lab industry, at least as it pertains to whether hospital lab outreach data should be included in the PAMA market study that the federal Centers for Medicare and Medica…

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CMS physician fee schedule: Will hospital labs be excluded again from PAMA price reporting?

CEO SUMMARY: Publication of the draft CMS Physician Fee Schedule on July 12 brought unwelcome news for the clinical lab industry, at least as it pertains to that perennial question: Should hospital lab outreach data be included in a PAMA market study? The federal Centers for Medicare and …

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