COLA: GAO Should Address PAMA’s Effect on Patients

GAO’s report last fall did not discuss how PAMA changes Medicare and other patients’ access to tests

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CEO SUMMARY: In a recent statement, COLA, an organization that accredits clinical labs, expressed strong concern about how a report from the Government Accountability Office did not address how the Protecting Access to Medicare Act of 2014 (PAMA) affects patients’ access to testing, especially in rural areas. COLA said its surveys of providers across the nation provides evidence that Medicare patients already have less access to lab tests compared with access before Medicare cut lab fees.

In its report issued in November about how the Protecting Access to Medicare Act of 2014 (PAMA) would affect clinical labs, the Government Accountability Office (GAO) left out significant information about how the law would affect patients, said John Daly, MD, COLA’s Chief Medical Officer.

Instead of focusing on patient care, the GAO report, “Medicare Laboratory Tests: Implementation of New Rates May Lead to Billions in Excess Payments,” addressed how the federal Centers for Medicare and Medicaid Services (CMS) could end up overpaying for clinical lab tests. Those overpayments would result in billions more in Medicare spending, the GAO estimated.

“What really concerns COLA about the GAO report is that it does not include any discussion about how PAMA affects patient’s access to testing, especially in rural areas,” stated Daly. “And, these [Medicare fee] cuts reduce access to laboratory testing to more than Medicare patients because the closure of community laboratories will affect all patients—including pediatric patients.”

In addition to failing to address how PAMA affects patients, Daly also was concerned that the GAO report focused attention on a hypothetical problem.

Under PAMA, CMS has cut payments to clinical laboratories by 10% last year, 10% this year, and will cut payments by 10% next year. Then, CMS can cut payments by a maximum of 15% a year from 2021 through 2023. The cuts are already taking a toll on patient care, Daly said. But the GAO report did not include an analysis of how these new payments have affected Medicare beneficiaries’ access to clinical laboratory services, he added.

COLA’s National Lab Survey

A nonprofit organization that accredits some 7,000 medical laboratories, COLA collected data over the past two years on the availability of clinical laboratory testing in rural and urban areas nationwide. More than a third of the laboratories that responded to a survey COLA did said that they were referring more patients to other labs, making changes in their test menus to control costs, and were not updating their equipment, stated Daly. “That shows that many of these medical laboratories may be getting ready to close the doors,” he added.

“A lesser number of labs have laid off staff and didn’t renew service contracts,” Daly added. “And, again, this means that they may close. Other surveys have shown that some labs have already closed because of the financial erosion from PAMA [and cuts to Medicare Part B clinical lab fees]. Labs serving nursing homes and nursing home administrators themselves are very concerned.”

Is Patient Access Reduced?

Despite the effects of lower payments on clinical labs, there has been little reporting on PAMA’s effects on patient care, noted Daly.

“We are all in agreement that there needs to be a more constructive dialog with GAO and others in government about how PAMA is affecting Medicare, particularly in rural America and how it’s affecting infirm adults in urban areas,” Daly commented. “In nursing homes and long-term care facilities, there are very vulnerable patients.”

Those patients need what COLA calls near-patient testing. “We’ve taken a critical look at the value of near-patient testing,” Daly explained. A survey COLA did in 2017 and 2018 showed that 90% of physicians in all regions of the country—particularly those in areas with fewer than 20,000 people—believed that elderly patients would be exposed to more serious healthcare risks if they lose access to near-patient testing.

“For most patients, near-patient testing gives recipients better outcomes,” emphasized Daly. “And, the cuts in payment under PAMA could have adverse effects on healthcare quality and patient outcomes. But GAO did not evaluate this aspect of how PAMA affects testing.” For more information, see COLA’s site on near-patient testing at

GAO: Findings Do Not Reflect Industry Practice

IN ITS REPORT TO CONGRESS IN NOVEMBER, the Government Accountability Office (GAO) said that spending for Medicare could rise by $10.3 billion from 2018 through 2020 if the federal Centers for Medicare and Medicaid Services (CMS) stopped paying bundled payment rates for certain panel tests.

The problem with this part of the report is that the estimates of how CMS pays for panel tests are hypothetical, said John Daly, MD, COLA’s Chief Medical Officer. These hypothetical effects in the report led U.S. Senator Chuck Grassley (R-Iowa), Chairman of the Senate Finance Committee, to ask officials from the federal Department of Health and Human Services and from CMS to explain “the potential for a striking increase in costs to Medicare for laboratory services.”

In response to the GAO report, clinical lab associations criticized the agency. In recent communications between the American Clinical Laboratory Association (ACLA) and GAO officials, the congressional watchdog agency admitted that the report does not reflect actual industry payment practices.

ACLA said the GAO’s role is to examine how taxpayers’ dollars are spent and provide Congress with objective, reliable information to save money and work efficiently. “And yet, following growing pushback to a recent report on laboratory billing practices in the Medicare program, James Cosgrove, GAO health care director and author of the report, shared that the GAO’s findings are not actually reflective of current industry practice—but rather are based on a hypothetical scenario,” the ACLA said.

“We weren’t analyzing what labs are or aren’t doing,” Cosgrove told ACLA. “We were analyzing what the exposure to Medicare would be.”

Contact Matthew Spenny at 800-981-9883 or


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