The Centers for Medicare & Medicaid Services (CMS) released a final rule implementing Section 216(a) of the Protecting Access to Medicare Act of 2014 (PAMA), requiring laboratories performing clinical diagnostic laboratory tests to report the amounts paid by private insurers for laboratory tests. Medicare will use these private insurer rates to calculate Medicare payment rates for laboratory tests paid under the Clinical Laboratory Fee Schedule (CLFS) beginning January 1, 2018. The final rule includes provisions to ease administrative burdens for physician office laboratories and smaller independent laboratories.
Implementation of the new payment system from January 1, 2017 to January 1, 2018 was moved by CMS to allow laboratories sufficient time to develop the information systems necessary to collect, review, and verify data before reporting applicable information. This also will allow time for CMS to perform independent validation and testing of the system through which laboratories will report applicable information, and allow laboratories to perform end-to-end testing of their systems with CMS’ system.
The final rule will generally require reporting entities to report private payer rates and test volumes for laboratory tests if an applicable laboratory receives at least $12,500 in Medicare revenues from laboratory services paid under the CLFS and more than 50 percent of its Medicare revenues from laboratory and/or physician services. Around 95 percent of all physician office laboratories and about half of independent laboratories will not fall under these requirements. This will easing administrative burdens for physician office labs and smaller independent labs while still capturing most of the CLFS spending on physician office and independent laboratories.
For the first year, the system will collect private payer data from January 1 to June 30, 2016 and report it to CMS between January 1 and March 31, 2017. CMS will calculate and post the new Medicare rates (equal to the weighted median of private payer rates for each test) by early November 2017. These rates will take effect on January 1, 2018. Payment rates under the revised CLFS will be updated to reflect market rates paid by private payers every three years for most tests.