PAMA Cuts Have Simply Been Kicked Down the Road

PAYMENT RATE CUTS FOR CLINICAL LABORATORY TESTS, called for under the Protecting Access to Medicare Act of 2014 (PAMA), have been avoided temporarily—again. 

A down-to-the-wire bill in Congress to keep the federal government funded into the new year included a provision to delay PAMA cuts to the Clinical Laboratory Fee Schedule (CLFS) for 2023. This is welcome news for clinical labs and pathology groups, who otherwise faced 15% cuts in payments for 800 diagnostic tests. 

But the congressional vote is not a long-term solution to the problems that surround PAMA cuts for lab test reimbursement. Lawmakers have simply kicked the can down the road for the third time since 2020. That means short of solid action on Capitol Hill in 2023, PAMA cuts will again loom on Jan. 1, 2024. 

Laboratories have argued for years that PAMA’s cuts unfairly hurt hospital labs and small lab companies. The core of the problem rests with how the federal Centers for Medicare and Medicaid Services (CMS) collected test payment data and then used it to determine prices for the Medicare Part B CLFS. That data tends to overly rely on payment reporting from larger national labs. Such organizations generally receive lower payment rates from private health insurers in exchange for higher test volumes. 

This past fall, members of Congress—acting on behalf of concerned labs and industry groups—presented a bill that sought to change the situation. The Saving Access to Laboratory Services Act (SALSA) proposed to cap future payment decreases to the CLFS and adjust how CMS calculates lab test payments. 

As 2022 closed without SALSA being put to a vote, attempts were made to add it to a larger spending bill. Political competition was no doubt fierce as many, if not all, lawmakers wanted their pet causes in the spending package, so SALSA was left out. The potential costs of implementing SALSA probably played a factor. 

SALSA or a similar proposal should be revived in 2023. Clinical laboratories and pathology practices need long-term comfort that their test payment rates will not be subjected to stiff reductions. That’s a New Year’s resolution all laboratory leaders should collectively strive to achieve.

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