This is an excerpt from a 2,000-word article in the July 5 issue of THE DARK REPORT. The original article is available to paid members of the Dark Intelligence Group.
CEO SUMMARY: Everyone has read the basic facts, but THE DARK REPORT has gone further to analyze the real-world impact of the final rule from the Protecting Access to Medicare Act of 2014. TDR asks a key expert: Will implementation of the final reporting rule for labs put smaller, community labs at financial risk? Yes, says the National Independent Laboratory Association. As the rule stands, NILA believes, the CMS Clinical Lab Fee Schedule will deliver drastic rate cuts that will strangle smaller labs.
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MANY COMMUNITY CLINICAL laboratories may be forced to close or sell to other larger clinical labs under the final rule for market price reporting that the federal Centers for Medicare & Medicaid Services issued June 17. The rule will be used to set new, lower payment rates in the CMS Clinical Lab Fee Schedule (CLFS).
“The rule’s approach supports the interests of the largest publicly traded lab companies,” stated Julie S. Allen, who represents the National Independent Laboratory Association (NILA) and is Vice President of the District Policy Group. “It does so because CMS will collect data from the commercial discounted rates paid to the largest publicly-traded labs. This data will dominate since those labs generate the biggest volume of Medicare Part B lab testing.
“The rule will result in the exclusion of most of the higher private payment rates currently paid to hospital laboratories,” added Allen. “By excluding private payment data from hospital labs, CMS will set the new Medicare Part B rates at levels that do not reflect the costs of providing testing in the community laboratory setting that often are the only local laboratories serving Medicare patients in their coverage areas.
“From NILA’s perspective, we see very little improvement from what CMS outlined in the PAMA proposed rule,” she says. “That is why we view the final rule as being significantly damaging.
Slow Death for Some Labs?
“How is this final rule any better than proposing to cut lab test payments on an arbitrary basis based on technology, which CMS proposed in 2013?” Allen asked. “For those who espouse support for the PAMA rule, I’d love an explanation on how PAMA is any different than what labs would have faced under a competitive bidding model?
“This final rule is just as bad as these other approaches to cutting Medicare Part B lab test payments,” she continued. “It’s just a slower death for community laboratories instead of an immediate death. What is unfortunate is that Medicare beneficiaries in many communities are at risk of losing access to the local lab testing services they have relied on for years.
“For these and other reasons, NILA is considering a legal challenge to the rule under federal administrative law and will press members of Congress to require CMS to change the final rule,” Allen declared.
Organizations that represent large clinical laboratory companies have praised CMS’ decision to delay the implementation of the new clinical lab rates as a victory for laboratories. That’s in part because laboratories complained last fall that they would not have time to collect the data CMS needs to set the rates nor would they have time to implement the new rates.
“But a delay in implementation was inevitable anyway, and the one-year delay CMS provided is still insufficient,” explained Allen. “Under the terms of the regulation, labs actually have less than six months to collect and report the data.
“NILA is examining every angle to address this regulation,” Allen says. “There are potential legal challenges and legislative angles to pursue. Among the legal areas we are investigating is whether CMS’ market analysis deliberately violates the statute.”