This is an excerpt from a 2,900-word article in the March 18, 2019 issue of THE DARK REPORT. The full article is available to members of The Dark Intelligence Group.
CEO SUMMARY: This is the first lab industry intelligence briefing which presents the lessons learned by a hospital system lab when it gathered, analyzed, and reported its private health insurer lab test price data during the first PAMA price reporting cycle of 2016-2017. One big change in PAMA reporting is that the federal Centers for Medicare and Medicaid Services now defines most health system and hospital labs as “applicable labs” and requires them to report private payer price data. This report provides lab executives and pathologists with insights about specific operational steps to take for making the data collection process go faster and more smoothly.
FOR THE SECOND TIME IN THREE YEARS, clinical laboratories defined as “applicable laboratories” under the Protecting Access to Medicare Act of 2014 (PAMA) are collecting data on what private health insurers pay them for lab tests. Once the data are compiled, labs will submit the data next year to the federal Centers for Medicare and Medicaid Services (CMS) on what they’re paid and the volume of tests they run.
During this data-gathering and reporting cycle, it is essential that hospital laboratory management and pathologists—as well as hospital CEOs and CFOs—understand two important circumstances that make this reporting cycle different from what happened during the first PAMA reporting cycle in 2016 and 2017.
First, CMS expanded the definition of applicable laboratories in such a way that most of the nation’s hospitals and health networks are now required to report their private payer lab test price and volume data to CMS. While PAMA has been in place since 2014 and this is the second reporting cycle under the law, it is significant that many hospital CEOs, CFOs, and clinical laboratory administrators remain unaware that the current PAMA final rule requires their organizations to report their labs’ private payer test price and volume data to CMS.
Second, lab industry experts tracking these developments say that the odds are higher this time that CMS will assess penalties against some applicable labs that fail to comply with the requirements to report price and value data accurately. In that first data-collection and reporting period in 2016 and 2017, CMS did not assess penalties against any applicable labs.
Penalties of $10,000 Per Day
The penalties are substantial. Under PAMA, Congress set penalties of as much as $10,000 per day for any applicable laboratory that fails to report or that reports inaccurate or incomplete data.
Thus, hospital and health system laboratories that now meet the definition of applicable labs—but remain unaware of their legal requirement to report their private payer lab test price data to CMS—are at risk for such penalties.
Labs Now Collecting Data
Meanwhile, across the nation, applicable laboratories are collecting those data. The key requirements of this data-collection period are:
- Between Jan. 1 and June 30 of this year, applicable labs must collect the data on the payments and test-volume amounts they get from private (non-public) health insurers.
- Then, the applicable laboratories must submit their price and volume data from this six-month data collection period to CMS in the first quarter of next year (2020).
Clinical laboratories will see a difference in this PAMA private payer price reporting cycle versus what happened in the first cycle, in which applicable labs collected price and volume data from Jan. 1 to June 30, 2016, and reported that data between Jan. 1, 2017 and May 30, 2017.
That difference is how CMS expanded the definition of “applicable laboratories” to include all hospitals that bill for clinical laboratory tests using the Form CMS-1450 14x Type of Bill (TOB) and which bill Medicare more than $12,500 in one year for non-patient laboratory services.
In addition to these differences, there is another issue under PAMA that labs need to know: There is a widespread lack of practical knowledge about how to comply with the PAMA price reporting requirement.
In December, Quest Diagnostics and Modern Healthcare Custom Media reported the results of a survey of hospital executives. It showed that almost 80% of respondents were not at all familiar, or only somewhat familiar, with PAMA and its effect on hospitals. In addition, 45% of hospital executives responded that they were not at all familiar with PAMA and 33% said they were only somewhat familiar with the law.
To help clinical laboratories understand their requirements under the law, officials at CMS have issued documents, guidance, and information to explain PAMA price reporting and how labs must comply.
But government guidance and commentary are carefully crafted to be neutral about how clinical laboratories should respond to the various requirements in the PAMA final rule. Also, government guidance generally avoids going into detail on those key issues that might be subject to regulatory challenge or litigation in federal courts.
Guidance from CMS
Consequently, applicable labs have many questions about what steps to take to gather private payer lab test price data, then properly analyze and verify the data, package the numbers correctly, and submit these data to CMS. Applicable labs need to know how to fully comply with the PAMA statute and the final rule of private payer lab price reporting and thus avoid federal penalties.
To understand how one clinical lab faced the challenges of collecting and reporting private payer data under PAMA, The Dark Report interviewed Dean Hoppes, MBA, Chief Financial and Administrative Officer for Health Network Laboratories, in Allentown, Pa. His organization reported its lab test price data to CMS during the first PAMA reporting cycle in 2017 and is collecting data now in this second data-collection cycle.
Independent, Regional Lab
Founded in 1983, Health Network Laboratories (HNL) is an independent regional laboratory that does more than eight million billable tests each year, 99% of which it performs in-house. The seven-hospital Lehigh Valley Health Network is one of its chief sources of volume.
HNL has some 1,000 employees throughout the lab system, including 35 board-certified pathologists and scientific directors and more than 400 certified lab scientists and phlebotomists. It operates multiple labs. One is a 100,000 square foot facility in Allentown.
Also, HNL has 60 patient service centers and draw sites in Pennsylvania and in New Jersey. The lab’s clients include physician offices, hospitals, long-term care facilities, employers, and industrial accounts.
“The Lehigh Valley Health Network (LVHN) represents about 50% of our work and the other 50% comes from our outreach program,” Hoppes said. “We’re the exclusive laboratory for LVHN.
“In addition to serving the Lehigh Valley area, we also go out to Central Pennsylvania as far west as Chambersburg,” he noted. “We have one patient service center in New Jersey, along with quite a few clients, including physicians’ offices, hospitals, nursing homes, and long-term care facilities,” Hoppes adds.
Lessons from 2017 Reports
When HNL submitted its lab test price data under PAMA in 2017 during the first reporting cycle, its management team learned important lessons—some painfully. “Just the sheer volume of the data we needed to report made this a major challenge,” admitted Hoppes.
“At the same time, we did have the proper systems in place and a highly-skilled billing staff,” he noted. “These resources helped us work through all the serious issues of collecting the data and reporting those numbers accurately.
“Also, throughout this entire reporting cycle, our clinical laboratory team was aware of the steep federal fines that could result,” he added. “We understood the need to submit complete, accurate data that was documented in the event that officials from CMS might do a detailed review or audit of our data.”
Workshop Teaches How To Accurately Report PAMA Data and Comply with the Law
DURING THIS PAMA PRIVATE PAYER PRICE REPORTING CYCLE, thousands of hospital and health system laboratories are required to report their price data to the federal Centers for Medicare and Medicaid Services. Failure to report can result in penalties of $10,000 per day.
To help hospital CFOs and lab administrators meet this federal reporting requirement, on May 2 there will be a special one-day workshop on PAMA lab price reporting at the Executive War College in New Orleans.
This comprehensive workshop features presentations by CFOs who reported their data in 2017, attorneys knowledgeable about the requirements of PAMA, three billing companies and consultants, and a web session with CMS officials.
Visit www.executivewarcollege.comto register.
Is your lab one of the newly-applicable labs that must report lab test price data to CMS for the first time? If so, please share your thoughts on the process with us in the comments below.