Bloomberg BNA: Lab Industry Optimistic About New System Based on Private Pay Report Submissions

An upcoming market-based system for pricing services performed by clinical laboratories is a “better alternative” for the industry than the current Medicare payment system, the president of the American Clinical Laboratory Association said April 23.

Although many questions remain to be answered, the system to align Medicare payment rates with the private sector will allow labs to avoid “multiple threats” to reimbursements, ACLA President Alan Mertz said during a webinar, “The Ins and Outs of Lab Reform: Urgent Details on Lab Test Payment Under Medicare,” sponsored by Bloomberg BNA and the ACLA.

Provisions to reform the clinical lab fee schedule (CLFS) were included in legislation to temporarily extend Medicare physician pay rates, signed by President Barack Obama April 1 (63 HCDR, 4/2/14).

Based on the Median

For widely ordered tests, the new pricing method, which is to take effect in 2017, requires rates for Medicare fee-for-service lab claims to be based on the weighted median—or midpoint—of private payment rates, including those from Medicare and Medicaid managed care plans.

Labs will send reports for widely ordered tests to the Centers for Medicare & Medicaid Services every three years beginning in 2016.
The reports will be confidential and neither the payer nor the lab is to be identified in the data.

In preparation for reporting, the CMS will conduct a rulemaking to establish data collection methods, and other factors, including nominations to a new advisory committee to review and provide input on coverage and payments.

A proposed rule may be out as early as this summer but no later than the first quarter of 2015, according to Tom Sparkman, ACLA’s vice president of government affairs.

Industry Faced Cuts

The system is superior to the situation that the labs were facing through CMS rulemaking that would have cut rates under the CLFS beginning in 2015 and the annual threats to Part B services under the sustainable growth rate (SGR) formula, Mertz said.

In establishing payment rates for widely ordered tests, the CMS could exempt low-volume or low-expenditure labs from the reporting burden, Sparkman said. However, those included face daily civil penalties of up to $10,000 for failing to report.

The ACLA and others need to ensure that labs participate in the reporting, Mertz said, to allow for a “true and accurate representation of the market.”

Regardless of the reporting results, a rate may not be reduced by more than 10 percent [per year] in the first round of reports and by more than 15 percent [per year] in the second round, Sparkman said.

Reprinted from Bloomberg BNA

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