>CEO SUMMARY: At the end of 2019, the Laboratory Access for Beneficiaries (LAB) Act became law and addressed two of the three most onerous requirements in the Protecting Access to Medicare Act (PAMA) of 2014. It delays the data-reporting requirements under PAMA, and requires an independent advisory panel to review the methods federal officials used when implementing PAMA and to recommend revised data collection and rate-setting processes. It does not prevent the latest 10% cut in Medicare’s lab payments.
In a positive development for clinical laboratories, Congress passed the Laboratory Access for Beneficiaries (LAB) Act and President Trump signed it into law in the final days of 2019.
House and Senate passage of the LAB Act was the result of a year-long effort to explain to members of Congress the pressing need to address the serious problems clinical labs faced under the Protecting Access to Medicare Act (PAMA) of 2014, and how the implementation of PAMA was reducing beneficiaries’ access to local clinical lab testing services.
Leading the effort to educate members of Congress about these issues were the American Clinical Laboratory Association (ACLA) and the National Independent Laboratory Association (NILA). ACLA and NILA worked with lab members of both associations and 31 other groups representing laboratories, nursing homes, physicians, and patients.
Their efforts involved meeting with and calling members of Congress to explain the detrimental effects PAMA has had on laboratories, nursing homes, Medicare patients, and physicians.
For clinical laboratories, the LAB Act addressed two of the three most onerous requirements of PAMA, which are:
- The reporting of lab test prices that commercial health insurers paid to clinical
- The methodology CMS used to define which laboratories it would require to report the prices health insurers paid them for
- The drastic cuts in payment under the Clinical Laboratory Fee Schedule that CMS implemented under PAMA.
For the first onerous requirement, the LAB Act delayed until Jan. 1, 2021, the requirement that clinical labs must report the data—including prices—that private health insurers paid labs for hundreds of lab tests in what would have been the second reporting period.
Data Used to Cut Prices
After the first reporting period in 2017, CMS used that data to cut what it paid for tests in 2018, 2019, and 2020 on the Medicare Part B Clinical Laboratory Fee Schedule (CLFS). (See TDR, “PAMA Final Rule Issued, CMS Plans to Cut Rates by 5.6%,” July 5, 2016; and “What Labs Can Expect from PAMA in 2019,” May 20, 2019.)
Laboratory directors and pathologists nationwide have leveled withering criticism against PAMA and the rules the federal Centers for Medicare and Medicaid Services (CMS) used when implementing the law regarding how clinical laboratories needed to collect data on the prices private health insurers paid for lab tests, the types of labs required to report that data, and the methodology CMS used to set CLFS payments.
Since 2015, when CMS proposed a draft rule to implement PAMA, clinical labs have said CMS was planning to impose an unfair system to collect and report data on what commercial health insurers paid for tests. The first data-collection effort resulted in deep cuts in what CMS paid for tests, causing some lab companies to close, to lay off staff, and to reduce the lab testing services they offered to Medicare beneficiaries and other patients.
Important Step Forward
The second onerous problem is the methology CMS is using to collect data, then use that data to set prices for Medicare Clinical Laboratory Fee Schedule (CLFS). The LAB Act requires an important step to address those problems CMS caused when it implemented PAMA’s data-re- porting and collection methodology, which the clinical laboratory industry characterized as deeply flawed.
The act requires the Medicare Payment Advisory Commission (MedPAC) to review the methodology and suggest an alternative that would allow CMS to collect payment data that reflects the actual market rates that insurers pay. MedPAC is a nonpartisan board that advises Congress. (See sidebar, “Lab Directors Explain Problems with PAMA,” page 5.)
While delaying the reporting data and asking MedPAC to review the methodology are positive factors, the LAB Act did not prevent the third and most egregious part of PAMA from going into effect on Jan. 1 of this year: a third round of 10% cuts to the CLFS. This year is the third consecutive year that CMS has implemented cuts of 10% annually. Beginning next year (2021) and continuing for two more years (2022 and 2023), PAMA allows CMS to cut lab test payments by 15% annually.
If Congress had failed to pass the LAB Act, clinical laboratories would have been required to report private market data through the same flawed data process used in 2017, ACLA said.
Payment cuts under PAMA remain in effect while a legal case proceeds in the U.S. Court of Appeals for the District of Columbia. In December 2017, ACLA brought that case against Alex Azar, the Secretary of the federal Department of Health and Human Services.
While that case continues and the deep cuts in Medicare lab payments remain in effect, the LAB Act has become one of the first positive developments for clinical labs in the six years since Congress passed PAMA.
NILA praised lawmakers’ efforts, not- ing that the bill had 80 cosponsors in the U.S. House of Representatives, a strong sign that members of Congress wanted to address the flawed implementation of PAMA. The bill was introduced in the Senate in mid-December by senators Richard Burr (R-North Carolina) and Sherrod Brown (D-Ohio) and had gained four additional cosponsors: Robert Menendez (D-N.J.), Pat Roberts (R-Kan.), Michael Bennet (D-Colo.) and Thom Tillis (R-N.C.).
More Time for Labs
The law gives laboratory associations time to pursue additional improvements to PAMA, said ACLA President Julie Khani. “Fortunately, Congress’ decisive action puts us on the path to enact meaningful PAMA reforms that will protect seniors’ access to essential laboratory testing services, as the law originally intended,” Khani said in a news release.
Given these developments, under- standing the role ACLA, NILA, and other lab and patient-care groups played in getting the law passed is useful for clinical lab directors and pathologists. The year- long process required extensive lobbying of members of the U.S. House and Senate, ACLA and NILA said. As part of that effort, lab directors and lab staff members played key roles.
A Year-Long Effort
“One reason we were successful in get- ting the LAB Act passed was that the laboratory community worked together,” said Erin Will Morton, who represents NILA’s interests in Congress and with CMS. “NILA worked closely with ACLA and other organizations representing labs, such as AdvaMedDx, the Point of Care Testing Association, and with the entire Clinical Lab Coalition.
“Even an important bill like the LAB Act won’t move out of committee just because one organization wants it to,” emphasized Morton. “It takes a collective effort of the entire clinical lab industry to pass legislation like the LAB Act and get it signed into law.”
A key part of the effort for NILA, ACLA, and other lab groups was getting their members involved, said Morton, who also is Senior Vice President of CRD Associates, in Washington, D.C.
“NILA did a lot of grassroots organizing to encourage our members to make phone calls to their representatives in Congress and to ask them to cosponsor the bill,” she commented. “We also met regularly with the staff of the relevant House and Senate committees so that we could keep the conversations moving.
“Getting a bill like the LAB Act passed in Congress requires both a grassroots effort—which we had from members of NILA, ACLA, and other groups—and close coordination with House and Senate committee staff to get the language included in a larger year-end bill.
“In addition, NILA members got involved at the state and Congressional District levels. “For that effort, NILA had regular conference calls with our members and sent out talking points and other materials to help facilitate effective communications with their members of Congress,” Morton said.
Assessing PAMA’s Impact “Specifically, we wanted NILA members to talk about the impact that PAMA was having not only on clinical laboratories in their states and districts but also on patients,” she added. “When lab owners talk about patients with members of Congress, it means they’re talking about voters.
“That’s why we stressed to NILA membership that it’s so important for policy-makers on the Hill to hear about the effect that bills will have on patients and their families,” she commented. “A groundswell of activity is essential to moving something like this bill through Congress.
“We recognized that policymakers needed to hear from constituents about how PAMA affected patients in their districts and in their states,” she said.
“Once we knew that clinical lab directors and other lab staff were calling members of Congress, then we could reinforce that message by following up with those same offices here in D.C. to reiterate the message and ask them to sponsor the bill,” she added.
“In addition to grassroots activities over the past year, ACLA took the lead in scheduling hundreds of meetings in D.C. to explain the LAB Act to members of Congress,” she said.
Thomas Sparkman, ACLA’s Senior Vice President of Government Affairs and Policy, agreed that the groups representing labs, nursing homes, physicians, and patients worked together well.
“The work that ACLA and other stake-holders did to get the LAB Act across the finish line shows that there was a broad understanding that the implementation of PAMA did not go as Congress intended,” he commented.
Also significant was support from two groups representing physicians: the American Academy of Family Physicians and the Infectious Diseases Society of America, he added.
“In addition, I was impressed that more laboratories from every sector of the clinical laboratory industry came forward in the past year saying they needed to stem the tide of payment cuts under PAMA,” Sparkman said. “That includes large clinical labs, small and regional laboratories, hospital labs, and labs serving nursing homes. We even had some nursing home administrators supporting our efforts.”
Now that the law is passed, the next steps involve working with MedPAC to ensure that the data-collection effort will represent the entire lab industry, Morton and Sparkman said.
MedPAC’s Recommendations Passage of the LAB Act is definitely a positive development for the clinical laboratory industry. However, it remains to be seen whether MedPAC will make recommendations that truly address the problems and flaws with how CMS is implementing PAMA, as well as whether CMS will then implement the MedPAC recommendations as MedPAC intended.
Lab Directors Explain Problems with PAMA
In pushing Congress to pass the LAB ACT, policymakers needed to hear how the Protecting Access to Medicare Act of 2014 is changing how clinical labs operate, said Erin Will Morton, who represents the National Independent Laboratory Association (NILA).
“It was important for us to explain that the business model that clinical laboratories have followed for many years is changing drastically and affecting patient care negatively,” Morton added.
“NILA members were calling members of Congress to talk about the risk their businesses faced from the decrease in payment rates under PAMA,” she explained. “The cuts in payment are having a negative effect on their ability to continue to serve their patients.
“Some NILA labs also talked about the layoffs they had to make and the implications that those layoffs were having on patient services,” she said. “Several members said they were considering limiting or even eliminating their contracts with nursing homes.”
Clinical laboratories have considered cutting those services because the payment was already so low, before the payment cuts under PAMA, that they barely covered labs’ costs.
“Multiple lab companies told us that they had to cancel some nursing home contracts,” she added. “NILA also encouraged nursing homes to call their members of Congress.”
Contact Erin Will Morton at 202-484- 1100 ext. 158, or email@example.com; Thomas Sparkman at 202-637-9466.