Labs Discover Much Complexity In Their Lab Test Price Data

Reporting prices paid by payers for tests such as chemistry panels proving to be very complicated

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DON’T EXPECT IT TO BE EASY AND STRAIGHTFORWARD when reporting the prices of chemistry panels as the final rule for lab test market price reporting rule requires. Instead, labs should expect the process to be complex and troublesome.

Also, labs should be concerned that Medicare officials have threatened to make deep cuts to chemistry panel prices if labs do not submit market price data as required.

These are two warnings from Julie Scott Allen, Senior Vice President of the District Policy Group in Washington, D.C. Allen represents the National Independent Laboratory Association (NILA) and she has first-hand knowledge of how the Protecting Access to Medicare Act of 2014 was written and became law.

Allen offered those two admonitions during a recent webinar about PAMA and the final rule for lab test market price reporting. Conceptually, it sounds simple to ask a clinical laboratory to report, for each test, what it was paid by each payer and what the volume was for each test.

However, what many independent labs are learning is that matching different payers’ payments to one type of test can be a complex undertaking. The additional complexity inherent in paying for panels of tests or in receiving bundled payment for panels of patients makes the analysis much more challenging.

During a webinar for THE DARK REPORT about the Patient Access to Medicare Act, Allen, an expert in payment policy for clinical labs, explained some of the challenges labs face in reporting data on chemistry panel tests.

“There are variants in how payers pay for tests and this is true for chemistry panels,” stated Allen. “There are sometimes inconsistent and different ways that health plans pay for tests—even across different plans from one payer.

“On top of that, there are inconsistencies in how laboratories manage these variants from payers,” Allen cautioned. “The big concern, of course, is that laboratories will not be able to provide accurate data that the agency can use when assessing payments to different labs and from different payers.

“Automated test panels are relevant to the discussion because the federal Centers for Medicare & Medicaid Services has recently highlighted the issue of automated test panels as an area of focus and concern,” Allen said. “Suddenly the agency has recognized an important fact: the way labs bill for lab testing does not always align with the information labs get back from payers.

“As a result, CMS is considering strategies to revise payments for tests when labs do not get data back from payers on specific tests, and therefore, cannot report data to the agency under PAMA,” she explained. “Some NILA members have encountered problems when seeking to report on certain types of tests, such as automated muti-channel test panels (ATPs) or chemistry tests and other tests that payers bundle together.

CMS Seems Ready to Target Chem Panels for Deeper Cuts

PUBLIC STATEMENTS BY OFFICIALS from the federal Centers for Medicare & Medicaid Services indicate an interest in making deep cuts to the reimbursement for certain highly-automated, high-volume chemistry tests.

“At a recent public meeting, the National Independent Laboratory Association asked CMS about these issues,” stated Julie Scott Allen, Senior Vice President of the District Policy Group. “It became clear that the agency has an agenda regarding those chemistry tests that are most frequently billed under Medicare and it wants to find a way to make some drastic cuts in payments outside of the Protecting Access to Medicare Act of 2014.

“When looking for areas to cut payments, CMS has always had a focus on chemistry tests,” she explained. “Now with PAMA, CMS reasons that if labs are paid for a bundle of chemistry tests, those rates are typically reduced—meaning labs don’t get a full payment amount on each test in that bundle. But CMS also reasons that if it paid for each test separately, through an individual test submission, and reimburses on each test directly, then the agency pays more.

“Now the agency is asking if it’s correct to pay one rate under a bundle and another rate if paying for each test separately,” continued Allen. “We believe the agency intends to reduce lab payment rates, even beyond the cuts that are coming under PAMA—meaning CMS is now considering strategies to target chemistry tests directly. One strategy CMS could use is to remove the code that exists now and provide a temporary code, so that the agency then can cross-walk a new set of rates.”

Allen is discussing an emerging issue that has not gained much attention within the clinical laboratory industry. Because these tests are among the highest volume assays reimbursed under Part B, CMS sees an opportunity to cut its costs further by enacting more restrictive guidelines, independent of how it uses market data to cut the prices for these tests.

“As labs know, there are variants in terms of how labs bill for some tests and what they’re paid for those tests. There are also variants in how labs apply those payments in their systems,” continued Allen. “Those variations create challenges associated with how your lab reports that information in line with the requirements of the PAMA Final Rule.

CMS reporting Instructions

“Currently, there are 23 CPT codes for chemistry analytes that CMS pays as panels,” she added. “CMS has argued that these are not specific CPT codes. In the subsequent material that CMS provided through guidance, the agency listed the HCPCS codes that labs need to report on. CMS is asking that labs break out the tests in some of the panels (hepatic and lipid) and report that information to the agency.

“This means that, for example, hepatic or lipid tests are reported individually to the agency,” Allen explained. “Such a requirement is an obvious concern to NILA members because typically clinical labs do not bill for the individual tests in these chemistry panels.

“When your lab gets a payment, you certainly don’t apply the payment to the individual tests,” she said. “You apply payments as you receive them, whether they apply to a panel or not. You wouldn’t split out the individual payments unless, of course, you were paid a clean claim on one of those individual tests. The problem for labs is that their systems are not designed to break out the individual tests in a given panel.

“There is also complexity in terms of how your lab bills payers, such as when you respond to a physician order and have several panels of tests and individual tests to perform for an individual patient,” she added. “When you submit all that to a payer, many times the payer will submit a lump-sum payment back to your lab. When that happens, the lab applies those payments in the best way it can to  justify in their data systems that they have been paid for those tests.

Complexity of Reporting Price Data Is Illustrated By CMS Instructions for Automated Chem Panels

DURING THE WEBINAR ON PAMA LAB TEST MARKET PRICE REPORTING, Julie Scott Allen, Senior Vice President of the District Policy Group, presented this information illustrating guidance the federal Centers for Medicare & Medicaid Services issued on how labs should report price data for different chemistry panels and tests. It demonstrates why labs do not have the full guidance needed to have confidence that they are compliant with the reporting requirements.

Screenshot 2016-11-30 12.43.09

“Labs apply the panel payments when paid on the panel and sometimes will pro-rate the data across other tests for which they billed because the payer didn’t provide a specific payment rate for those tests,” Allen said.

a Bundle of Questions

“In the final rule, CMS stated explicitly that, if a payer pays in a bundle in a way that’s not tied to specific tests (meaning the payer is lumping together other test reimbursements into one payment in a way that makes it impossible to put a final payment rate on each test in that lump-sum payments), then your lab doesn’t need to report that data,” Allen said. “So, on the one hand, CMS is telling labs they don’t have to report on a test-by-test basis when payers lump payments together. But, on the other hand, CMS is telling labs to break apart panels on a test-by-test basis to report it, despite the fact that it not always possible for a lab to do that.

Waiting For CMS To answer

“We have asked CMS how to resolve these questions and are waiting for an answer,” she stated. The experience of NILA member labs in collecting their market price data demonstrates that CMS faces its own challenge to analyze this data in an objective and fair manner and in a way that meets the language and intent of Congress as set out in the language of the PAMA law.

Contact Julie Scott Allen at 202-230-5126 or


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