CMS finalizes lab fee schedule changes: 5 key takeaways

CMS issued a final rule Friday, revising the Medicare payments system for clinical diagnostic laboratory tests paid under the Clinical Laboratory Fee Schedule and implementing changes required by the Protecting Access to Medicare Act of 2014 (PAMA).

The Clinical Laboratory Fee Schedule (CLFS) provides payment for about 1,300 clinical diagnostic laboratory tests, and Medicare pays approximately $7 billion per year for these tests, according to CMS.

Here are five key takeaways from the final rule.

1. PAMA requires CMS to update the CLFS based on private payer rates for laboratory tests reported by "applicable laboratories." In the final rule, CMS decided to use the national provider identifier (NPI) as the mechanism to determine whether a laboratory is considered an "applicable laboratory." If more than 50 percent of a lab's total Medicare revenues are received under the CLFS or physician fee schedule it will be deemed an "applicable laboratory."

2. That is a change from the proposed rule, where CMS had suggested using taxpayer identification numbers. Healthcare groups, including the American Hospital Association, strongly opposed using TINs because doing so would exclude hospital outreach laboratories from reporting. Multiple commenters felt excluding those entities would skew pricing due to the volume of Medicare Part B testing performed by hospital outreach laboratories, according to a blog post by Karen Lovitch and Kate Stewart, both lawyers at Mintz Levin.

3. Under the final rule, CMS expanded the definition of advanced diagnostic laboratory test (ADLT) to include protein-only tests. According to CMS, "ADLTs will be paid using their actual list charge amount during a new ADLT initial period," which PAMA defines as an "initial period of three quarters." Once the new ADLT initial period is over, payment for a new ADLT will be based on the weighted median private payer rate paid to the single laboratory and reported to CMS.

4. CMS delayed implementation of the new approach to setting CLFS payment rates from Jan. 1, 2017, to Jan. 1, 2018. "We are pleased that CMS will delay the program start date and include data from hospital-based labs in setting payment rates," said American Hospital Association Executive Vice President Tom Nickels. "The one-year delay will give labs more time to develop the technology needed to participate in the program."

5. Under the final rule, the first data collection period will run from Jan. 1, 2016, to June 30, 2016, and the first data submission period will run from Jan. 1, 2017, to March 31, 2017. "As the first data collection period is already underway, affected laboratories should ensure that they have systems in place for gathering the requisite data and reporting to CMS in the first quarter of 2017," according the blog post by Ms. Lovitch and Ms. Stewart.

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