Protecting Access to Medicare Act of 2014 Could Harm Independent Community Labs

Many factors involved in Medicare protection act’s lab market data reporting

Protecting Access to Medicare Act Medicare logo

In the Protecting Access to Medicare Act of 2014 (PAMA), the Center for Medicare and Medicaid Services (CMA) is directed to collect market price data and use the data to establish prices for the Medicare Part B Clinical Laboratory Fee Schedule, starting on January 1, 2017.

“As part of its reporting of rates, PAMA requires laboratories to outline all discounts and rebates,” stated Julie Scott Allen, Senior Vice President with the District Policy Group, representing the National Independent Laboratory Association (NILA). “However, the law excludes some of the biggest forms of discounting, including capitated rate arrangements.

“Organizations such as NILA have questioned how discounting will be applied to the final rate calculations CMS conducts, given the complexity of those arrangements,” she noted. “There are numerous forms of discounting, including by test, by overall contract, and by volume. Sometimes discounts to lab tests are not applied until the end of a specified contract term to ensure a metric is met.

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“How such discounts are ultimately considered and applied to CMS’ rate calculations are of concern,” Allen said. “Most community independent labs do not typically compete on volume or offer discounts. Instead, they compete on quality and an ability to provide services to communities otherwise not served by the nation’s largest lab companies. CMS needs to consider these issues.

“PAMA does not clearly define what types of laboratories are required to report test prices and volumes,” continued Allen. “The law outlines that ‘an applicable lab’ is one in which the majority of its Medicare payment comes from either the (Medicare) Physician Fee Schedule or the Clinical Lab Fee Schedule.

“Thus, we must ask, ‘Who was this intended to exclude?” she said. “Hospital inpatient laboratory services are paid under DRGs but not under either fee schedule. Hospital outpatient laboratory services have largely—though not entirely—been paid as a bundled payment for overall services provided to these patients.

“That leaves hospital outreach laboratories that can be significant competitors to small and mid-size community and regional laboratories,” concluded Allen. “However, which labs are required to report market data will ultimately be determined by CMS. ”

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