No relief in sight for 2018 Clinical Laboratory Fee Schedule, but critical issues remain

ACLA ponders appeal of lawsuit ruling against CMS’ 2018 Clinical Lab Fee Schedule

This is an excerpt from a 2,400-word article in the October 1, 2018 issue of THE DARK REPORT. The complete article is available at all times to paid members of the Dark Intelligence Group, and non-members may access one premium article per month.

 CEO SUMMARY: Many lab professionals are disappointed at the news that there will be no relief from the current drastically cut 2018 Clinical Lab Fee Schedule, as a federal judge dismissed the American Clinical Laboratory Association’s (ACLA) arguments in its lawsuit against the federal Department of Health and Human Services (HHS). But In an exclusive interview, the ACLA’s lead lawyer on the case explains to THE DARK REPORT ACLA’s claims about how HHS failed to follow the intent of Congress when it implemented the Protecting Access to Medicare Act. Lab professionals will want to understand these issues as ACLA decides whether to appeal the ruling. 

FOR CLINICAL LABS, IMPORTANT QUESTIONS WERE LEFT UNRESOLVED on Sept. 21, 2018, when a U.S. District Court judge dismissed the arguments the American Clinical Laboratory Association (ACLA) made in its case against the federal Department of Health and Human Services (HHS).

In a lawsuit ACLA filed last year, the ACLA made a compelling case that under the Protecting Access to Medicare Act of 2014 (PAMA), HHS set clinical laboratory rates for 2018 based on a flawed data-collection process.

The process was flawed because HHS did not follow Congress’ intent. Instead, it collected data on what private health insurers pay labs from only 1% of the nation’s clinical laboratories, ACLA charged in its lawsuit filed Dec. 11, 2017, in U.S. District Court for the District of Columbia.

When the Centers for Medicare and Medicaid Services used that limited amount of payment data to set the rates for the 2018 Clinical Laboratory Fee Schedule, the resulting rates were 10% lower than the rates HHS paid clinical labs in 2016.

In a Memorandum Opinion, U.S. District Judge Amy Berman Jackson dismissed the ACLA’s arguments in the case, saying the court lacked “subject matter jurisdiction.”

In the Protecting Access to Medicare Act of 2014 (PAMA), Congress said clinical labs were precluded from challenging the rates set under the law. In her opinion, Judge Berman cited the preclusion provision as being a significant reason for rejecting the ACLA’s arguments.

Important Questions Raised 

But in the opinion, Berman also acknowledged that the court was not addressing the important questions ACLA raised about how HHS implemented PAMA. For insight into those questions, THE DARK REPORT interviewed Mark D. Polston, the ACLA’s lead lawyer on the case and a partner with the firm King & Spalding in Washington, D.C.

The unanswered questions include:

  • How HHS misinterpreted the data-reporting requirements in the PAMA statute;
  • How HHS collected data from only 1% of the nation’s labs; and,
  • How HHS excluded a large number of labs by requiring only labs that have a National Provider Identifier (NPI) number to report data to HHS.

‘Underpay for Lab Tests’

“The HHS interpreted the term ‘applicable lab’ in a certain way, knowing that it would grossly underpay for diagnostic lab tests,” Polston said. “That’s why the agency identified the term ‘applicable lab’ in the way that it did,” he argued. “But, the HHS doesn’t have the authority to do that when Congress told it very explicitly how it interpreted the term ‘applicable lab.’

“That’s the important merits question here and that’s the question that we ultimately wanted the court to address on the merits.”

Lab administrators and pathologists following the implementation of the PAMA statute know that one way HHS excluded labs from reporting payment data was to require that only a lab with an NPI number needed to report.

“We think that, with both the provisions of the preclusion part of the statute and the question about the merits of our arguments, there is a question of what is an ‘applicable lab,’” Polston explained. “On this issue, the language of the statute is abundantly clear. By that I mean the text of the wording of the statute is clear, and so is the context in which the statute is passed.

Will There Be an Appeal?

After outlining the specific questions that went unaddressed, Polson then turned to the options that ACLA has as it considers whether to appeal the decision or not.

“Right now, a number of options are under consideration but nothing has been decided yet,” he said. “One issue under consideration is whether to continue to pursue this case in an expedited fashion.”

Regardless of the steps ACLA takes, Polston acknowledged that labs continue to struggle with low payment rates in the 2018 Clinical Laboratory Fee Schedule. “We recognize that this is an urgent matter,” he said. “That’s why, when we led our complaint in December, we actually worked with the Department of Justice that represents HHS in this matter, to expedite the briefing in the case.

“Also, we asked the court to take the case under consideration and to rule in an expedited fashion,” he added. “All of that was done in response to the various issues related to the fact that this case has some urgency, given that there is harm being done” by the Medicare fee schedule cuts.

“By that I mean the harm that potentially befalls Medicare beneficiaries who cannot get access to some of these services that they were getting before the rates went into effect in January,” he said. “There also is harm to clinical laboratories that can no longer provide services at these low rates and that may have to go out of business. This leaves more Medicare beneficiaries trying to find access to these lab services in different places.

Do you believe the ACLA should appeal the U.S. District Court judge’s ruling? Please share your thoughts with us in the comments below.



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