The Centers for Medicare & Medicaid Services (CMS) has published 45 frequently asked questions (FAQs) and CMS responses about the Medicare Clinical Diagnostic Laboratory Tests (CDLTs) payment system final rule.

CMS announced on June 17 the release of the final rule, which implemented section 216(a) of the Protecting Access to Medicare Act of 2014 (PAMA). This section requires reporting entities to report private payor rates paid to laboratories for lab tests. The rates will be used to calculate Medicare laboratory billing payment rates.

The final rule also announced the decision by CMS to move the implementation date for the private payor rate-based fee schedule to January 1, 2018.

Highlights of the FAQ, which can be accessed here, are as follows:

Q: Why is CMS changing the clinical laboratory fee schedule (CLFS)?

A: Section 216(a) of PAMA, which established section 1834A of the Social Security Act (the Act), requires changes to the process for pricing Clinical Diagnostic Laboratory Tests (CDLTs) under the Medicare clinical laboratory billing fee schedule. Section 1834A of the Act requires CMS to implement the new rates under the revised CFLS beginning January 1, 2017; however, CMS is announcing an implementation date of January 1, 2018.

Q: What are laboratories required to do?

A: Under the new CLFS, applicable laboratories or “reporting entities” (as discussed later) will collect and report to CMS “applicable information” consisting of private payor rates for each test and the volume of tests paid at each rate, and the specific HCPCS codes associated with the test. CLFS payment amounts will be determined based on the weighted median private payor rate for a given laboratory test, with certain exceptions for new tests and a group of tests defined by statute as new advanced diagnostic laboratory test (ADLTs).

Q: How will laboratories be defined for purposes of determining an applicable laboratory under the new CLFS?

A: A laboratory, (as defined in CMS’s Clinical Laboratory Improvement Amendments of 1988 (CLIA) regulations ), using its National Provider Identifier (NPI), is considered an applicable laboratory if more than 50 percent of its total Medicare revenues are received from payments under the CLFS and physician fee schedule (PFS).

Additionally, generally, an applicable laboratory would also have to receive at least $12,500 in Medicare revenues received for CLFS services during a data collection period to be an applicable laboratory. The $12,500 will not apply to certain laboratories with respect to the ADLTs they offer and furnish.

Q: Who is required to report data?

A: CMS finalized the definition of applicable laboratory at the NPI level, rather than the taxpayer Tax Identification Number (TIN) level; however, CMS is retaining the TIN-level entity as the “reporting entity” (now defined separately from the applicable laboratory). As such, the TIN-level entity is responsible for reporting applicable information for all of its component NPI-level entities that meet the definition of an applicable laboratory.

Q: What entity is responsible for collecting applicable information from private payors?

A: CMS is not prescribing how reporting entities and applicable laboratories are to collect and prepare applicable information for submission. The TIN-level entity and its applicable laboratory entities will establish their own approach for ensuring that the TIN-level entity can report applicable information.

Q: What type of private payor data must be reported?

A: The reporting entity must report applicable information for each CDLT furnished by its component applicable laboratories. Applicable information is the private payor rate for each test for which final payment has been made during the data collection period, the associated volume for each test, and the specific HCPCS code associated with the test. If an applicable laboratory has more than one payment rate for the same private payor for the same test, or more than one payment rate for different payors for the same test, the reporting entity will report each such payment rate and the volume for the test at each such rate.

Q: How frequently must private payor data be reported to CMS?

A: Reporting entities are required to report applicable information every three years for CDLTs, and every year for ADLTs, except for an ADLT in its initial data collection period (in which case a reporting entity will report by the end of the second quarter of the new ADLT initial period).

Q: Does the law include any penalties for non-reporting?

A: The statute authorizes CMS to impose civil monetary penalties of up to $10,000 per day, adjusted for inflation as required by the Inflation Adjustment Act Improvements Act of 2015, for each failure to report or each misrepresentation or omission in reporting applicable information. Additional guidance on reporting will be issued after publication of the CLFS final rule.

Q: How will the payment amounts for new tests be determined?

A: For a CDLT that is assigned a new or substantially revised HCPCS code on or after the date of enactment of PAMA (that is, April 1, 2014), and which is not a new ADLT, the statute specifies that payment for the test will be determined on the basis of a crosswalking methodology or a gapfilling process.