2014’s PAMA Fix Comes Back to Haunt Big Labs

AS YOU READ THE INTELLIGENCE BRIEFINGS IN THIS ISSUE about lab industry efforts to convince Congress, the administration, and the new leaders of the Centers for Medicare and Medicaid Services to delay implementation of the PAMA final rule on market price reporting, keep in mind that—for the nation’s two largest public lab companies—there is plenty of irony in current events.

Think back to 2014, when Congress passed the Protecting Access to Medicare Act (PAMA). PAMA’s primary goal was to fix the Medicare sustainable growth rate (SGR). Members of Congress needed to identify budget offsets to finance the SGR fix and were in negotiations with the clinical laboratory coalition to identify a mutually-acceptable way for the lab industry to contribute its share of budget offsets to help passage of the legislation.

Several sources familiar with these negotiations say that, independent of the clinical lab coalition, lobbyists for at least one of the two national labs approached senators involved in these negotiations and offered a different way for the legislators to obtain what was calculated to be a reduction in Medicare Part B lab test payments of $2.4 billion over 10 years.

Once the legislators had this budget give-back approach for the lab industry’s contribution to the SGR fix, all conversations with the clinical laboratory coalition ceased. Following PAMA’s passage into law, the American Clinical Laboratory Association (ACLA) announced its support for the legislation.

But the Association for Molecular Pathology (AMP) and the National Association of Independent Laboratories (NILA) issued statements opposing the law. Their criticisms were essentially the same issues that today, ACLA members Laboratory Corporation of America and Quest Diagnostics are voicing in their meetings with legislators and government officials in efforts to delay implementation of the PAMA final rule.

That is why there is irony that the public labs find themselves opposing the final rule that CMS crafted to allow it to cut Medicare Part B lab test prices. This is the part of the PAMA law that the national labs are said to have negotiated independent of the clinical lab coalition. And to add to the irony, CMS says that these cuts will total $5 billion over 10 years. That is double the $2.4 billion of budget cuts estimated when PAMA was signed into law in April of 2014!