CMS Update Plans for Medicare Clinical Lab Fee Schedule Could Be in Trouble

California results show that Protecting Access to Medicare Act of 2014 rule for rate reporting may be doomed

This is an excerpt from a 1,400-word article in the April 11 issue of THE DARK REPORT. Full details of the California program are included in the original article, available to paid members.

CEO SUMMARY: Evidence from California shows that national lab test price reporting, required for CMS to set rates for the Medicare Clinical Lab Fee Schedule in 2017, might be even more problematic than labs have been warning. THE DARK REPORT is the only lab industry news source to report on this development.

medicare-clinical-lab-fee-schedule-CMS-logoTHE LAB INDUSTRY IS STILL WAITING for CMS to issue a final rule relative to its plans to collect test price data and use it to set lab test prices for the Medicare Clinical Lab Fee Schedule by Jan. 1, 2017. And Congress, which originally passed the law that includes this mandate three years ago – the Protecting Access to Medicare Act of 2014 – has recently sent letters to CMS asking for a deferral in implementing the law.

But as clinical lab managers wait for that shoe to drop, now comes the news that a trial run of sorts has already been attempted by the California Department of Health Care Services (DHCS) – and it has failed dismally.

THE DARK REPORT is the only lab industry news source to report on the fact that just 9% of clinical laboratories in California submitted data to DHCS for its rate-setting program, according to DHCS data. The data were based on what third-party payers paid the laboratories in 2014.

Of the 742 labs required to submit the data last year on what third-party payers paid them, only 66 unique labs submitted the requested data.

Lab test price reporting is a controversial section of PAMA, for many reasons. One reason is the heavy burden placed on labs to gather and report the lab test price data for each type of test and for each health insurance plan.

If California only could get 9% compliance with its lab test price reporting requirement from almost 750 labs, does this fact support a credible argument that, assuming CMS goes forward with the PAMA laboratory test price reporting requirement, it may get compliance of just 10% or lower? This is particularly problematic because CMS must require labs throughout the United States to report even more complex test price data than what was required of laboratories in California.

The data-collection effort of the California DHCS last year was phase one of a two-phase program. In phase two, labs have been asked to submit data on what third-party payers paid them in 2015. The deadline for submitting data under Phase Two was March 18. State officials have yet to tally how many labs had submitted data and how many had not under Phase Two.

Results of California data reporting

Asked to characterize what the data in the first round showed in terms of what labs are paid, Anthony Cava, spokesman for DHCS, said new clinical laboratory fee schedule rates effective February 1, 2016, would result in savings of about $18.5 million compared with what DHCS paid in 2014.

DHCS achieved those savings by cutting what it paid for almost 400 clinical lab codes. “As a result of the new methodology, the Medi-Cal rates for a total of 370 codes decreased, effective July 1, 2015. Also, there were 35 codes that had no rate reduction,” he said. Cava further detailed the amounts of payment cuts for the different codes, which once again could prove to be predictive of cuts that woul come in 2017 for Medicare.

Will your lab be prepared to handle CMS’ lab test reporting requirement if and when it becomes official? Why or why not? Please share your insights with us in the comments


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