Physicians Office Resource Volume 12 Issue 4 | Page 5

CMS used this data to calculate weighted medians for each CLFS billing code, which then become the new Medicare payment rates. These rates apply to all Part B Medicare fee for service claims. A cap structure spreads the impact of large cuts out over a period of years. The new weighted median fee structure went into effect January 1, 2018. These rates are valid for every entity that bills Medicare Part B for tests on the CLFS. Market rate data collection repeats every three years. The New PAMA Paradigm Before PAMA: ✓ Payment rates were based on lab charges in 1984-1985, adjusted annually for inflation ✓ Fifty-seven local fee schedules ✓ Same pricing schedule for all categories of lab testing After implementation of PAMA (January, 2018): ✓ Payment rates for tests will be based on private payer rates, updated every three years ✓ Single national fee schedule ✓ Adds a new category of lab tests —advanced diagnostic laboratory tests (ADLTs)—with a different pricing schedule Additionally, the practice of bundling tests into panels for payment is eliminated and the new rates apply to each individual test based on the individual median private payer rates for those tests. Problems with the survey The data reporting process used for the 2018 fee schedule has drawn ire throughout the industry, and is the basis for a lawsuit filed by the American Clinical Laboratory Association (ACLA) in December 2017, which has yet to be resolved. “ With clinical labs facing medicare cuts of up to 30% over the next 3 years under the new CMS fee schedule, the labs most likely to survive are those labs which are operationally efficient, financially fit, and strategically diversified. ” Irwin Z. Rothenberg, MBA, MS, CLS(ASCP) The lawsuit charges that CMS ignored congressional intent and instituted a flawed data reporting process. While this case is still pending, it did not prevent the 2018 fee schedule from going into effect on January 1, 2018. The ACLA complaint asks the court to set aside the regulations and order CMS go back to the drawing board to conduct a more truly market-based reporting process. market analysis mandated by Congress became compromised. 2. The decision to impose a retrospective data collection period through rule-making did not allow labs to make arrangements to collect data accurately or in totality. 3. Legislated requirement to use weighted median methodology to calculate price averages, instead of a mean average, which skews collected data to the highest FOUR FUNDAMENTAL volume rather than averaging all ISSUES UNDERMINE THE prices paid. PAMA PROCESS: 4. Lack of a clear and transparent 1. The narrow definition of mechanism to determine the applicable labs that excluded quality of submitted data. nearly all hospital laboratories, All “applicable” laboratories were which represent almost half of the required to report under PAMA, laboratory industry. With hospitals starting January 1, 2017, for a almost universally excluded, retrospective period. In 2015, the reported pricing skewed lower OIG projected that about 5% of US than actual market pricing. F or labs would be required to report many reasons, hospital lab rates under this definition, or an estimated are generally higher than those at 12,437 labs. However, this 5 % independent labs. Without these represents 69% of all Medicare rates represented in the mix, the payments made to labs. 5