Skip to main content
Premium Trial:

Request an Annual Quote

Lab Groups Demand Broader Representation in PAMA Pricing Proposal

NEW YORK (360Dx) – Lab groups set forth multiple proposals, including statistical sampling, for capturing a broader picture of lab pricing data in the creation of market-based Medicare prices for lab testing under the Protecting Access to Medicare Act.

In prepared responses this week to the Centers for Medicare & Medicaid's 1,400-page annual proposed rule on Medicare payment pricing, lab industry groups pushed to expand PAMA pricing data capture to a wider swath of the lab industry, particularly hospital outreach labs, with different proposals for how data collection could be achieved.

CMS has faced vocal criticism from the lab industry that sharply lower market-based Medicare reimbursement rates introduced under PAMA in January were based on flawed data collection methods.

Many of the lab industry associations urged CMS to do away with a requirement that labs that submit test pricing to CMS must bill Medicare under their own National Provider Identifier (NPI) number, a rule that lab organizations say excludes hospital outreach labs that they directly compete with.

"Because most hospital outreach laboratories bill under the NPI used by the entire hospital ... this criterion excludes the private payment rates received by a large segment of the nation's laboratories and skews the resulting reimbursement calculation," the College of American Pathologists stated in its comment letter.

The American Clinical Laboratory Association urged CMS to replace the NPI number as a method for identifying labs required to report with the CMS 1500 and CMS 1450 forms using a 14x bill type, which are used by hospital outreach labs.

"This approach would account only for the hospital laboratory business that competes in the marketplace with independent clinical laboratories," Julie Khani, president of ACLA, wrote in the lab association's letter.

ACLA dismissed concerns expressed by CMS in its rule that hospital outreach laboratories might not have sufficient time to implement this data reporting change before the start of the next data collection period, which begins Jan. 1, 2019. Labs currently reporting data under PAMA complied with a rule finalized two weeks before the end of the first data collection period, she noted. The ACLA position hospital outreach labs is also shared by the National Independent Laboratory Association, (NILA).

The College of American Pathologists also supports exploring use of the CMS 1450 14x for lab pricing data collection, but suggested capturing a wide swath of the lab industry's pricing data through statistical sampling.

"The CAP also encourages CMS to explore options to collect applicable information from a randomly selected and statistically valid subset of applicable laboratories – including hospitals, large independent laboratories, small independent laboratories, and physician office laboratories – and use the information reported to determine Medicare rates for subsequent data collection periods," the CAP letter stated.

The American Society of Clinical Pathology similarly urged adoption of the CMS 1450 14x bill type to identify applicable labs for reporting data, according to a letter from ASCP President James Wisecarver. ASCP also urged CMS to adopt a "weighted median" formula for calculating market-based Medicare reimbursements, where if hospital laboratories comprised 20 percent of the market, data from those facilities should be weighted to 20 percent of the final calculation.

Rift with hospital association

The push by lab groups to capture lab test pricing data from outreach hospitals is at odds with the position of the American Hospital Association, which opposed both the use of the CMS 1450 form and the use of CLIA certificates for collecting data from hospital outreach labs.

"We do not believe these options are at all feasible for hospitals to operationalize, [and they] would be impossible to do in the short period of time before the data collection starts on January 1, 2019," Roslyne Schulman, director of policy at the American Hospital Association, said in a statement.

The Association for Molecular Pathology also opposes capturing data from hospital outreach labs. It shares CMS' interpretation that Congress did not intend for hospitals to share the pricing reporting burden, AMP President Kojo S.J. Elenitoba-Johnson wrote in the association's comment letter.

He expressed concern that the CMS 1450 form identifies Medicare Part B revenues but would leave hospital outreach labs responsible for identifying, collecting, and reporting private payor rates.

"The billing systems for these laboratories are not arranged such that this information can be easily extracted. It would require a whole new system to be developed at potentially considerable cost to the laboratories," he wrote.

Low expenditure threshold

There was considerable variation in response to a CMS proposal to reduce by 50 percent the "low expenditure threshold" for reporting private payor lab prices to CMS. Currently CMS requires labs that receive $12,500 in Medicare payments from the Clinical Laboratory Free Schedule in a six-month data collection period to report payor pricing data to CMS. In its proposed rule, CMS stated that it is considering reducing that threshold to $6,250.

Many lab industry organizations, including the National Independent Laboratory Association (NILA), COLA, and ASCP all expressed concern that reducing the low expenditure threshold would not make a significant impact on PAMA pricing but could overburden small labs, poorly equipped to handle reporting requirements. This opinion was shared by the American Medical Association.

ALCA states that it "would not oppose" lowering the expenditure threshold but conceded that the move might not be necessary if more significant changes were made.

CAP supports lowering the low expenditure threshold so that physician office labs are not excluded from weighted median pricing calculations, but advocated shortening the data collection period for small labs, for example to 90 days from the current six months, to alleviate the administrative burden.

Separately, several lab organizations supported a CMS proposal to change its calculation so that Medicare Advantage pricing data could be collected for PAMA rate setting. However, most of the organizations stated that this change would have little impact on PAMA rates.

The comment period of CMS's proposed rules for Medicare pricing ended on Monday at 5 p.m. The agency did not indicate when it will introduce a final rule. The proposed rule affects the 2019 PAMA data collection period, which would affect PAMA pricing beginning in 2020.