ACLA Gets Procedural Win in Its Appeal of PAMA Case

IN A SIGNIFICANT WIN for the American Clinical Laboratory Association (ACLA) and other groups suing federal Department of Health and Human Services (HHS), the U.S. Court of Appeals for the District of Columbia ruled in the ACLA’s favor on July 30.

Ruling on the appeal in the case the ACLA brought against HHS Secretary Alex Azar last year, the judge said ACLA is entitled to challenge what it called HHS’ “harmful regulatory overreach” when it implemented the Protecting Access to Medicare Act (PAMA) last year.

Under PAMA, the federal Centers for Medicare and Medicaid Services cut what it pays clinical labs by 10% and then by 10% again this year. Another 10% cut is scheduled for Jan. 1, and then three years of 15% cuts will begin on Jan. 1, 2021.

Following Intent of Congress

ACLA challenged the implementation of the 2014 law on the grounds that CMS did not follow Congress’ intent when it failed to institute a market-based system for setting the rates it pays for clinical lab tests. “HHS’ continued flawed data collection process poses a direct challenge to the rule of law and PAMA’s intent to support a sustainable, market-based laboratory market for millions of seniors,” ACLA said in a statement announcing the decision.

In response to questions from The Dark Report, ACLA President Julie Khani outlined what happens next with this case now that the District of Columbia Circuit Court of Appeals has reversed the DC district court’s decision and found that the portion of the PAMA that precludes judicial review of reimbursement rates does not preclude review of the way Azar implemented the data collection provisions in the law.

“Now that this jurisdictional issue has been resolved, the case returns to the district court, and the district court will decide whether the applicable laboratory definition violates the Administrative Procedure Act as arbitrary and capricious,” Khani said.

In its lawsuit against HHS, ACLA charged that under PAMA, HHS didn’t collect data from enough clinical laboratories so that the data on what private health insurers pay for clinical lab tests represented the full, nationwide market for such tests. Failing to collect enough data skewed the results in a way that was unfavorable to clinical labs, the ACLA argued.

How does the case proceed now? Khani explained that the appeals court sent the case back to Judge Amy Berman Jackson, who heard the case in the D.C. Circuit Court. “Unless she decides to transfer the case, she will hear it again,” Khani said.

Asked if the appellate court decision means the next decision could be favorable as well, Khani said, “The appeal was focused on the jurisdictional issue: Does preclusion of judicial review of reimbursement rates also preclude review of the data collection provision?

“Now that the jurisdictional issue has been resolved, the focus of the district court will be on the merits—namely the applicable laboratory definition,” she explained “The D.C. Circuit Court’s decision does not pre-judge the merits of the arguments, but having eliminated the jurisdictional issues, the chances of success before the district court have increased.”

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