Labs' challenge over Medicare cuts dismissed: 7 things to know

A federal judge has dismissed the lab industry's challenge to a Medicare payment regulation issued by HHS on the grounds that it's out of her jurisdiction, according to Law360.

Seven things to know:

1. Federal Judge Amy Berman Jackson dismissed the challenge Sept. 21, saying the Washington, D.C., court is not permitted to review the case.

2. The case centers on a regulation implemented under the Protecting Access to Medicare Act of 2014. According to the lawsuit, the regulation stipulates that Medicare payments for clinical diagnostic lab tests be based upon the amount of reimbursement labs receive for these tests from private payers. The regulation requires "applicable laboratories" to report pricing information to HHS for use in calculating Medicare reimbursement.

3. The American Clinical Laboratory Association, a nonprofit group representing clinical and anatomic pathology laboratories, challenged the regulation in December, arguing that the term "applicable laboratory" — defined as "a laboratory for which a majority of the revenues it receives from Medicare are from Medicare's clinical laboratory fee schedule or its physician fee schedule" — violates the 2014 act and the Administrative Procedure Act. They asserted this definition excluded more than 99 percent of hospital laboratories from the 2014 act's data-reporting requirements.

HHS contends Congress prevented judicial review of the payment policy.

4. Ms. Jackson ultimately agreed with HHS, concluding: "While the court acknowledges that plaintiff's arguments on the merits raise important questions, it agrees with defendant that it cannot resolve this dispute, and it will dismiss this matter for lack of subject matter jurisdiction."

5. The laboratory association expressed disappointment in the judge's decision, saying, "While the district court's opinion acknowledges that ACLA's 'arguments on the merits raise important questions,' the district court refused to consider those arguments, because it erroneously concluded that Congress had stripped it of jurisdiction to do so. The court's decision that it is powerless to require HHS to comply with the statutory requirements sets a harmful precedent that allows agencies to circumvent Congress' express directions at the expense of patient care."

6. A spokesperson for CMS, which operated under HHS, told Becker's federal officials are examining the court decision and "have no further comment at this time."

7. The laboratory association said it is considering further legal action.




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