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).
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