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Protecting Patient Access to Medical Tests Through Fair Test Reimbursement

Laboratory medicine is a crucial component of quality healthcare, and Americans living in rural and underserved areas often struggle to access it. These communities often depend on outreach laboratories in hospitals and nursing facilities that operate with thin profit margins. Adequate Medicare reimbursements are crucial for these laboratories to remain financially viable.

Medicare payments to laboratories are based on the Clinical Laboratory Fee Schedule (CLFS) which historically had varied rates across regional, state, and carrier service areas. Congress enacted the Protecting Access to Medicare Act (PAMA) in 2014 to modernize the CLFS and establish a uniform market-based payment system. To accomplish this, the Centers for Medicare and Medicaid Services (CMS) was instructed to aggregate payment data from all significant sectors of the laboratory market and set rates that accurately represent those real-world prices.

Flaws in the Data

Unfortunately, the data reporting process used by CMS was significantly flawed. Payment information was collected from less than 1% of U.S. laboratories, and of participating labs, large commercial laboratories submitted 90% of the data despite performing only 50% of tests in the U.S. These large laboratories take advantage of efficiencies of scale, allowing them to charge lower rates than other labs on a per-test comparison. This skewing of the data toward lower rates discounts more holistic data from other critically important labs. As a result, according to projections by CMS, Medicare payments to laboratories will be cut $670 million in 2018 and $3.93 billion over a decade. These cuts significantly exceed Congress’ original estimation, by almost six fold.

The Push to Improve PAMA

The laboratory community has been working hard to address the flaws in PAMA, especially for the sake of patients in rural areas. This population will be the first to suffer if it becomes financially nonviable for local laboratories to provide essential services and healthcare providers are forced to outsource their laboratory services.

As a major part of this push, the American Clinical Laboratory Association filed a lawsuit in December 2017 against CMS asserting the agency ignored congressional intent by using flawed data to set rates. In May 2018, AACC members also visited the offices of lawmakers to share their concerns about PAMA and advocate for its improvement.

Additional Resources

AACC Letters to Congress

08.02.2018: AACC Joins with Other Healthcare Groups in Seeking PAMA Changes
03.09.2018: AACC Joins Lab Community in Opposing Medicaid Cuts
10.23.2017: AACC Urges CMS to Delay Implementation of New CLFS
10.03.2017: AACC Seeks Delay in PAMA Implementation
08.31.2017: AACC Recommends CMS Include Hospital Payment Data in New Payment Rates
03.24.2017: AACC Joins Laboratory Community in Seeking PAMA Delay
11.24.2015: AACC Proposes Broadening PAMA Reporting Requirements
06.16.2014: AACC Requests CMS Conduct Impact Analysis Study on New Private Market Rate Payment System on Patient Access to Care

From Other Organizations

American Clinical Laboratory Association: Litigation Materials and Resource Kit
National Independent Laboratory Association: PAMA Fact Sheet

Government Resources

09.29.2017: HHS OIG Setting Medicare Payment Rates for Clinical Laboratory Tests
09.29.2017: Medicare Payments for Clinical Laboratory Tests in 2017: Year 3 Baseline Data
09.29.2016: Medicare Payments for Clinical Laboratory Tests in 2015: Year 2 Baseline Data
09.29.2016: Changing How Medicare Pays for Clinical Diagnostic Laboratory Tests: CMS Progress Update
06.23.2016: PAMA Final Rule
09.29.2015: Medicare Payments for Clinical Laboratory Tests in 2014: Year 1 Baseline Data
04.01.2014: PAMA Statute