AMA, AHA Join Labs to Request Delay, Fix

22 healthcare associations come together, ask CMS to delay Medicare Part B lab fee cuts

CEO SUMMARY: In what may be a first for the clinical lab industry, the American Medical Association and the American Hospital Association joined with 20 other healthcare associations to ask CMS Administrator Seema Verma to address the problems with the CMS proposal involving Medicare Part B fees. Specifically, the associations asked Verma to delay implementing the Medicare Part B Clinical Laboratory Fee Schedule, which CMS plans to implement Jan. 1, 2018.

IN A SIGNIFICANT EVENT FOR THE CLINICAL laboratory industry, 22 healthcare associations issued an important warning to the federal Centers for Medicare and Medicaid Services that the fee cuts proposed for implementation on Jan. 1 will disrupt patient care by restricting Medicare beneficiaries’ access to clinical lab tests.

In a letter sent Oct. 6 to CMS Administrator Seema Verma, the American Medical Association and the American Hospital Association joined 20 other lab and healthcare associations asking Verma to correct numerous substantial problems with the market study that CMS conducted into private payer lab test prices.

The decision of the AMA and the AHA to join with other healthcare associations on an issue involving Medicare regulation of Part B clinical laboratory testing is without precedent in the past 25 years. It is a milestone event and a powerful statement to Medicare officials that physicians and hospitals recognize why the Medicare Part B clinical lab test fee cuts to be implemented Jan. 1 will interfere with the provision of healthcare in hospitals and physician clinics.

“We urge the Centers for Medicare and Medicaid Services to take immediate action to address the significantly deficient data collection process used to establish new clinical laboratory payment rates, which resulted in unreliable and unsustainable rates that fall short of Congress’ goal of establishing a market-based system,” the associations wrote in the letter. “We urge CMS to suspend implementation of the draft payment rates until these deficiencies can be addressed.”

Serious Deficiencies Cited

Among the problems the association cited was a flawed process to collect market-based price data on clinical laboratory tests. “The payment data collected by CMS for tests on the Clinical Laboratory Fee Schedule (CLFS) does not result in an accurate weighted median of private payer rates for most tests on the CLFS, as required by the Protecting Access to Medicare Act (PAMA). We believe the data used to set the proposed rates would not stand up to statistical validity review,” the letter stated.

“The data sources used to determine the preliminary rates do not appear to reflect the various market segments, which CMS has the authority to consider in order to validate the data submitted,” the associations wrote. “It is also clear from our review that the overly burdensome regulatory requirements resulted in the submission of inaccurate and incomplete laboratory payment data that is not reliable for use in its current form.”

Many times over the past two years, the lab and healthcare associations expressed concerns to CMS, HHS, and Congress about the final PAMA regulation, including the serious limitations in lab test data collection and the “skewed” proposal that resulted, the letter stated.

Significant Harm to Patients

“The proposed CLFS rates will now result in significant harm to the nation’s surveillance network for emergent public health issues, job losses across the United States, and significantly reduced access to clinical laboratory testing for Medicare beneficiaries, particularly those in rural geographic and post-acute care settings,” the letter stated.

The associations asked Verma to prevent the disruption in care and the financial turmoil that will befall independent labs, hospitals providing lab testing, and physician office labs.

“We stand together in our position that before CMS proceeds with making any revisions to the CLFS, the agency must first:

    • “Modify the PAMA regulation to address data integrity concerns and market exclusion through a statistically valid process that is least burdensome on providers;
    • “Ensure that the private payer data CMS collects accurately represents all segments of the clinical laboratory market (national independent, community and rural independent, hospital outreach, and physician office laboratories); and,
    • “Provide a transparent process to allow for the validation of the data collected by CMS.”

Fast Action Requested

The associations’ comments are consistent with those of the clinical laboratory profession in its comments to HHS, CMS, and Congress about the final market price reporting rule that CMS issued last year. “In light of these significant concerns, we call on CMS to take swift action to engage in a constructive dialogue with stakeholders on ways to improve the PAMA data process and calculation, and establish a clear path forward for the clinical laboratory community and the Medicare beneficiaries who rely on its services. We urge CMS to suspend implementation of the revised payment rates while this path forward is determined.”

It is noteworthy that the coalition of associations signing the letter represent most hospitals, physicians, and clinical laboratories. In the past 25 years, this is a coalition without precedent in the clinical lab industry.

Medicare officials appear to have designed a flawed and biased study of themarket prices that private health insurers pay to clinical labs. They did so by excluding from reporting those hospital labs, physician office labs, and community labs that insurers value and thus reward with higher fees for lab tests.

Insurers do so because they recognize that these labs have higher costs and serve communities and rural areas that would otherwise not have access to lab services.

In addition, Medicare used a weighted median—not a weighted average—when producing the lab test price data. This factor biased the results of the analysis still further.

Tough Fight Ahead?

Certainly the AMA, AHA, and the lab associations united in this coalition have a tough fight to persuade government officials to suspend implementation and fix the deficiencies in the final market price reporting rule and in the CLFS for 2018.

At the same time, it would be foolish of Congress, HHS, and CMS to not recognize this fact: Although clinical lab testing represents only about 3% of what the government spends on healthcare, lab test data makes up 70% or more of a patient’s permanent health record.

What’s more, lab tests play a role in more than half of all diagnoses, in decisions on how to treat, and in monitoring patient care. Thus, if Medicare officials deprive the nation’s labs of adequate funds, they could see almost every aspect of medical care deteriorate or suffer as a consequence.

Flawed, Biased Price Study

The letter sent to CMS is just the most recent development in this important story. Following the release of the proposed Medicare Part B Clinical Laboratory Fee Schedule by CMS on Sept. 22, many lab associations and experts have issued public comments. This special, expanded issue of THE DARK REPORT provides detailed coverage and analysis of these developments.

Hospitals, Physicians, Labs Unite in Response to CMS

THESE ARE THE 22 HEALTHCARE ASSOCIATIONS that signed the Oct. 6 letter to the administrator of the Centers for Medicare and Medicaid Services:

  • AdvaMedDx
  • American Academy of Family Physicians
  • American Association for Clinical Chemistry
  • American Association of Bioanalysts
  • American Clinical Laboratory Association
  • American Hospital Association
  • American Medical Association
  • American Medical Technologists
  • American Society for Clinical Laboratory Science
  • American Society for Clinical Pathology
  • American Society for Microbiology
  • Association of American Medical Colleges
  • Association of Public Health Laboratories
  • Clinical Laboratory Management Association
  • COLA
  • College of American Pathologists
  • Medical Group Management Association
  • National Association for the Support of Long Term Care
  • National Independent Laboratory Association
  • New York State Clinical Laboratory Association
  • New York State Society of Pathologists
  • Point of Care Testing Association

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