CMS Publishes Proposed 2021 Medicare Physician Fee Schedule

Clinical labs get a reprieve from PAMA reporting, pathology professional fees may be cut by 9%

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MEDICARE’S PROPOSED PHYSICIAN FEE SCHEDULE (PFS) rule was announced on Aug. 4, 2020. The rule had one positive development for clinical laboratories and hospital laboratory outreach programs and a negative development for anatomic pathologists.

Clinical laboratories and hospital outreach labs will welcome the news that the proposed 2021 rule would delay the next Clinical Laboratory Fee Schedule (CLFS) reporting period by an additional year This means applicable laboratories would not need to report private payer lab test price data until Jan. 1, 2022.

No Decrease in Lab Fees for 2021

The other positive element of the proposed 2021 rule extends phased-in reductions to the CLFS through 2024, with a 0% reduction for 2021 and a 15% reduction cap for each of the next three years. These provisions were part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, passed on March 27.

Anatomic pathologists will not welcome one significant change. Under the proposed PFS rule for 2021, pathologists may face a 9% cut to Medicare payment for pathology services. CMS also proposed to reduce technical component reimbursement for pathology labs by an average of 5%. (See related article.)

For clinical laboratories and hospital outreach laboratories, the proposed 2021 PFS rule modifies how federal officials are to implement certain sections of the Protecting Access to Medicare Act of 2014 (PAMA). As enacted, PAMA directed the federal Centers for Medicare and Medicaid Services (CMS) to conduct a study of private payer lab test prices and use that data to establish a market-based payment system under the CLFS, with Medicare rates set every three years based on laboratory reporting. The first round of reporting took place in 2017, and new payment rates began Jan. 1, 2018.

In December 2019, under the Further Consolidated Appropriations Act of 2020 (FCAA), the second PAMA private payer lab test price reporting period was delayed from 2020 to 2021, meaning that applicable clinical laboratories would have had to report their private payer test price data to CMS beginning Jan. 1, 2021, through March 31, 2021.

However, the proposed PFS rule—in implementing the CARES Act—would further delay this second reporting period from 2021 to 2022, while also exempting CLFS laboratory tests from market-based payment reductions for 2021. Annual reductions would be capped at 15% from 2022 through 2024.

Data Collection Period Unchanged

While the second collection period for PAMA private payer lab price reporting has been delayed until 2022, the CARES Act does not modify that collection period. Thus, the collection period dates of Jan. 1, 2019, through June 30, 2019, remain the same. When collected and analyzed by CMS, this data will be used to set fees for the three years of 2022, 2023, and 2024. Fee cuts cannot exceed 15% for a test in each of these three years.

The delay in reporting and implementation of the next round of fee cuts may be beneficial to the clinical laboratory industry.

“The primary value in this is if you keep kicking the can down the road, the chances are going to increase that before labs have to report again, the American Clinical Laboratory Association (ACLA) will prevail and perhaps get some significant changes made that will make the whole thing more palatable to labs,” said Karen Lovitch, chair of the Health Law Practice at Mintz in Washington, D.C.

Some Benefit to Clinical Labs

Another lab industry expert, Mark Birenbaum, PhD, administrator of the National Independent Laboratory Association (NILA) ), believes that the reporting delay benefits clinical laboratories, at least in the short run. “With labs still trying to increase COVID-19 testing, I think the delay in PAMA reporting will help relieve some of the strain labs are experiencing,” he said.

“I’m also pleased that clinical labs get an extra year for reporting private payer lab test prices,” he added. “NILA still believes that PAMA is deeply flawed in the mechanism that CMS uses to calculate the weighted medians. NILA will continue to push for changes to address those problems.

“The fact that there are no additional cuts to the Medicare CLFS in 2021 means that Medicare payments will be status quo during the pandemic,” Birenbaum continued. “It keeps the flawed price cuts in place, which is not good. However, for planning purposes, clinical laboratories won’t have to deal with new lab test price cuts to the Medicare CLFS until 2022.”

Birenbaum also believes it is important for clinical laboratories to continue educating federal legislators and government officials about how the Medicare price cuts undermine the financial stability of many community laboratories, which, in turn, means Medicare beneficiaries lose access to high quality lab tests in their area. “Labs must convince either CMS to change the PAMA regulations or Congress to change the PAMA statute, but it’s difficult to predict how that will turn out,” he observed.

Fewer Labs Today in the U.S.

“The COVID-19 pandemic is exposing major problems created by a long period of downsizing the nation’s laboratory infrastructure,” explained Birenbaum. “There are fewer labs today because of the constant reduction of payment rates for lab tests. It is increasingly difficult for community and regional labs to stay in business. As a national resource, clinical laboratories have been weakened over the past 15-20 years, and that is being exposed during the current pandemic when high quality community and regional laboratories are really needed.

“In fact, the national news media has rightly called attention to all the problems that have been created by lack of testing capacity, lack of instrumentation, and fewer labs able to perform essential SARS-CoV-2 testing. LabCorp and Quest Diagnostics have struggled at times to keep COVID-19 lab test turnaround times within the target range and some of NILA’s community labs have stepped in to help,” noted Birenbaum.

Role of Community Labs

“The COVID-19 pandemic demonstrated that the United States cannot simply depend on a handful of billion-dollar lab companies—especially in times of emergency,” he added. “This really highlights the role of the community lab, not just during a pandemic, but also during other emergencies, like natural disasters. It is essential that the nation maintain and nurture an infrastructure of community and regional labs.”

Contact Karen Lovitch at kslovitch@mintz.com or 202-434-7324; Mark Birenbaum atnila@nila-usa.org or 314-241-1445.

Additional Proposed 2021 Medicare PFS Changes of Interest to Clinical Labs, Pathology Groups

HIGHER PAYMENTS FOR COVID-19-RELATED SPECIMEN COLLECTION FEES AND ASSOCIATED TRAVEL ALLOWANCE for clinical laboratories are being reconsidered with the proposed 2021 Medicare Physician Fee Schedule (PFS) rule.

On April 6, 2020, the federal Centers for Medicare and Medicaid Services (CMS) established that Medicare will pay a nominal specimen collection fee and associated travel allowance to independent laboratories for the collection ofspecimens for COVID-19 clinical diagnostic laboratory testing for homebound and non-hospital inpatients.

To identify specimen collection for COVID-19 testing specifically, CMS established two new level II HCPCS codes

• Code G2023 (specimen collection for severe acute respiratory syndrome coronavirus (SARS-CoV-2) (Coronavirus disease [COVID-19], any specimen source); and,

• Code G2024 (specimen collection for severe acute respiratory syndrome coronavirus 2 (SAR-CoV-2) (Coronavirus disease [COVID19]), from an individual in an SNF or by a laboratory on behalf of an HHA, any specimen source), for independent laboratories to use when billing Medicare for the nominal specimen collection fee for COVID-19 testing during the public health emergency.

CMS is now requesting comment on whether it should delete those two HCPCS codes once the COVID-19 public health emergency ends. Specifically, it is seeking public input on why these codes, and their corresponding payment amounts, which are higher than the nominal fees for specimen collection for other conditions, would be necessary or useful outside of the context of the public health emergency.

Additional Changes:

• Conversion Factor. CMS is proposing a conversion factor of $32.36, a decrease from the CY2020 conversion factor of $36.09. This change would result in a 10.6% reduction.

• Non-Physician Supervision of Diagnostic Tests. The proposed rule would allow the following practitioners to supervise the performance of diagnostic tests subject to state scope of practice laws: nurse practitioners, clinical nurse specialists, physician assistants, and certified nurse midwives.

• Medicare Telehealth Services. During the public health emergency, CMS added approximately 135 telehealth services for reimbursement under Medicare. CMS is proposing to permanently allow some of those services to continue via telehealth and to extend payment for certain services, such as emergency department visits and home visits, through the calendar year in which the emergency ends.

• Direct Supervision through Telehealth. CMS proposes that practitioners be permitted to supervise services virtually using real-time, interactive audio and video technology until the end of the calendar year in which the public health emergency ends, or Dec. 31, 2021, whichever is later.

CMS noted this extension will allows clinicians and CMS time to consider whether to adopt this policy permanently, due to patient safety concerns. Comments on the proposed rule are due by 5 p.m. on Oct. 5, 2020, and can be submitted electronically or by mail.

Due to the COVID-19 public health emergency, CMS says it likely will not be able to publish the final rule 60 days prior to the start of 2021 as it usually does. As a result, CMS expects to provide a 30-day delay in the effective date of the final rule.

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