PAMA Test Price Cuts Deferred: It’s a ‘Huge Win’ for Labs

Congress votes a one-year delay in implementation of the next round of fee reductions to Medicare CLFS

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TWO BIPARTISAN VOTES IN THE U.S. HOUSE OF REPRESENTATIVES AND SENATE will save clinical laboratories from another year of deep payment cuts imposed under the Protecting Access to Medicare Act of 2014 (PAMA). 

“This is a huge win for clinical labs,” said Erin Will Morton, Senior Vice President for Washington, D.C.-based CRD Associates. Morton represents the National Independent Laboratory Association (NILA) in matters pending before Congress. 

On Dec. 7, the House passed the Protecting Medicare and American Farmers from Sequester Cuts Act, which included the payment-cuts delay. The Senate approved the bill on Dec. 9, and President Joe Biden signed the act into law the next day.

Cuts Delayed for One Year

The move delays until 2023 cuts that were scheduled to go into effect on Jan. 1, 2022. Under PAMA, Medicare was scheduled to put in place the next round of phased-in cuts, which could have been as much as 15% on some 600 clinical lab tests. Also, under the Budget Control Act of 2011, Medicare would have imposed a cut of 2% due to what’s called sequestration, which Medicare has included in its budgets since 2013, according to published reports. 

In the House, 221 Democrats and one Republican voted in favor of the bill, while 211 Republicans voted no. In the Senate, 59 Democrats and Republicans voted in favor, 35 Republicans voted no, and six members did not vote. 

“What Congress passed, and Biden signed, was a standalone bill that included a series of Medicare fixes to address PAMA, the sequestration cuts, an increase in payment under Medicare’s physician fee schedule, and other measures affecting Medicare,” Morton explained. 

“In addition to the delay in the cuts under PAMA, there’s also a delay in the reporting requirements under PAMA for 2022,” she added. 

The Congressional votes, however, do not eliminate PAMA’s requirements. “Right now, the delay is for one year,” Morton noted. “While this is a huge relief, our focus now is on long-term reform of PAMA.

“NILA and other organizations are working on a more permanent legislative solution that needs to pass next year,” she explained. “Doing long-term PAMA reform will continue to be an uphill battle, but for 2022, clinical laboratories get a reprieve, and that’s great news for now.” 

Through PAMA, Medicare has cut deep into what it paid clinical labs. Under the Clinical Laboratory Fee Schedule, Medicare paid labs 10% less in each of three years (2018, 2019, and 2020) than it would have originally paid, for a cumulative total cut of 27.1% to date, according to the American Clinical Laboratory Association. The federal Centers for Medicare and Medicaid Services did not implement a cut of 15% under PAMA that was scheduled to take effect on Jan. 1, 2021. Instead, that 15% cut was scheduled to take effect on Jan. 1, 2022. 

Since the first days of the novel coronavirus early in 2020, the value and necessity of rapid and high-quality clinical laboratory testing have been on display nationwide. Never in the history of the clinical laboratory industry has testing been such a necessary component of the healthcare system.

“Over the past two years, policymakers and the American public have learned that having a robust clinical laboratory infrastructure in every state is a critically important part of the nation’s healthcare system,” Morton noted. 

“We’ve seen a renewed understanding among policymakers of the value that clinical laboratories contribute to patient care,” she said. 

“Certainly, the role that labs played during the pandemic has been instrumental in battling the coronavirus. That created a renewed understanding among members of Congress that cutting what Medicare pays for clinical lab testing is not appropriate during the pandemic. 

“Even before the pandemic, NILA focused on improving access to lab services,” she added. “Yet a number of labs were forced to close when the payment reductions under PAMA went into effect in 2018.” 

Labs Serving Rural Areas

NILA Executive Director Mark Birenbaum noted that payment cuts under PAMA have already weakened the nation’s clinical laboratory infrastructure. “Any additional cuts will severely damage the ability of laboratories to continue their COVID-19 response, especially for those laboratories that service rural and underserved communities,” he said. 

NILA and 27 other organizations sent a letter to Congress in November urging them to delay the PAMA cuts. Representing clinical laboratories, hospitals, healthcare systems, diagnostic-test manufacturers, and patients, those organizations urged Congress to delay Medicare payment cuts on the most common clinical laboratory tests.

“As our nation’s community and regional laboratories continue to respond to the ever-evolving COVID-19 pandemic and brace for the onset of the newest variant, Omicron, they cannot afford drastic cuts to their Medicare reimbursement,” Birenbaum stated.

Actions to Take

While the news about the PAMA delay is promising, full attention to the future is needed from clinical laboratory executives and pathologists.

The Dark Report will cover developments with PAMA as they unfold. Meanwhile, lab directors may want to take some or all of the following actions in the new year:

  • Keep tabs on the progress of NILA, the ACLA, and other industry organizations regarding PAMA reform efforts. These groups will let members know of any changes.
  • Reach out directly to your representative or senator in Congress to discuss the importance of lab testing during the pandemic, related reimbursement difficulties, and why permanent reform on PAMA may be necessary.
  • Review PAMA cuts with your revenue teams and analyze data about how the cuts affected the organization. This type of information may help push the cause for reform if presented to industry groups and lawmakers.

With more PAMA cuts averted for a year, there is relief, but also realization that the battle is not over.

Contact Erin Will Morton at emorton@dc-crd.com; Mark Birenbaum at 314-241-1445 or nila@nila-usa.org.

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