In late September, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would significantly revise the Medicare payment system for clinical diagnostic laboratory tests and implement other changes required by section 216 of the Protecting Access to Medicare Act of 2014 (PAMA).

This news should be of interest to many organizations, including those performing clinical lab billing and hospital lab billing.

Key components of the proposed rule, as identified by CMS in a fact sheet and press release, include:

  • “Applicable” clinical labs will be required to report on private insurance payment amounts and volumes for lab tests. This data will be used to determine Medicare’s payment for lab tests beginning January 1, 2017.
  • PAMA defines applicable laboratories subject to the new reporting requirements as having their majority of Medicare revenues paid under the Clinical Laboratory Fee Schedule (CLFS) or the Physician Fee Schedule (PFS). For an entity that is composed of multiple facilities, at least one of which is a laboratory that meets the CLIA definition of laboratory, CMS would consider that organization to be an applicable laboratory as long as more than 50 percent of the total Medicare revenues of its entire organization are received from payments under the CLFS and PFS.
  • The laboratories that would be required to report private payor rate and volume data would need to receive at least $50,000 in Medicare revenues from laboratory services and more than 50 percent of their Medicare revenues from laboratory and physician services. CMS proposes to exclude all laboratories from being an applicable laboratory, and thus from reporting private payor data, if they are paid less than $50,000 per year on the CLFS.
  • The Medicare Clinical Laboratory Fee Schedule (MCLFS) will be updated every three years for clinical diagnostic laboratory tests (CDLTs) and annually for advanced diagnostic laboratory tests (ADLTs) to reflect market rates paid by private payers.
  • Laboratories will collect private payor data from July 1, 2015, through December 31, 2015, and report it to CMS by March 31, 2016. CMS would then publish the updated proposed MCLFS in early September 2016 with a 30-day public comment period before the final rates for calendar year 2017 are published on November 1, 2016.
  • PAMA states that the payment amount for a test cannot drop more than 10% as compared to the previous year’s payment amount for the first three years after implementation (2017-2019), and not more than 15% for the subsequent three years (2020-2022).
  • Tests that meet the criteria for being considered new ADLTs will be paid at actual list charge for a minimum of three quarters.

CMS is soliciting comments on the rule until November 24. Instructions on how to submit comments are found in the proposed rule.