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ACLA's PAMA Suit Against HHS to Move Forward Following Appeals Court Ruling

NEW YORK – The US Court of Appeals for the District of Columbia ruled yesterday in favor of the American Clinical Laboratory Association in its suit against the US Department of Health and Human Services regarding implementation of the Protecting Access to Medicare Act.

The ruling overturned a lower court decision that dismissed the lab association's lawsuit due to a "lack of subject matter jurisdiction." The case will now go back to the US District Court for the District of Columbia for review.

ACLA originally filed the suit in 2017, arguing that the data collection process used by the Centers for Medicare & Medicaid Services to establish lab test pricing under PAMA was flawed due to the fact that it excluded a large percentage of the lab industry from price reporting.

Under PAMA, CMS sets prices for lab tests based on private payor rates that it collected using payment data from clinical labs nationwide. Industry groups have argued, however, that large swaths of labs were not required to report payment data, leading to an overweighting of data from large firms like Quest Laboratories and Laboratory Corporation of America, which, industry advocates claim, have lower cost structures than the typical clinical lab.

In response to ACLA's suit, HHS argued that the court did not have jurisdiction over the matter because the PAMA Clinical Laboratory Fee Schedule final rule is not subject to judicial review, and even if it were, ACLA has not exhausted its legal remedies.

In an opinion issued last September, US District Court Judge Amy Berman Jackson agreed with the government's argument about jurisdiction. However, this week the Court of Appeals ruled that the establishment of test payment amounts, which is not subject to judicial review, is distinct from regulations establishing the process for collecting pricing data, which the court ruled is subject to review.

"We strongly commend the Court of Appeals’ decision and are very encouraged that it recognizes that ACLA is entitled to challenge the harmful regulatory overreach by the HHS Secretary in his implementation of the Protecting Access to Medicare Act," ACLA President Julie Khani said in a statement. "HHS’s continued flawed data collection process poses a direct challenge to the rule of law and PAMA’s intent to support a sustainable, market-based laboratory market for millions of seniors."

ACLA also in its statement advocated for Congress to advance the Laboratory Access for Beneficiaries (LAB) Act, which was introduced by US House members in July. That bill would delay the reporting of lab payment data required by PAMA by one year and collect recommendations from the National Academy of Medicine on how to improve the law's requirements around lab payment data reporting.