Labs Relieved CMS Halted Plan to Slash Pay for Diagnostics

December 05, 2013 Categories: All News, ACLA In The News

Clinical laboratories are relieved that CMS held off on its plan to cap Medicare pay to independent labs at the lower rates paid to hospital outpatient or ambulatory surgery centers for diagnostic tests, which would have cut pay an average of 25 percent for tests that physicians interpret. The lower pay rates would have applied to anatomic pathology services that are commonly used to diagnose cancers.

CMS’ final physician fee schedule rule does not includes the lower pay rates. In the proposed version of the rule, the agency stated that diagnostic technology has changed significantly since the lab fee schedule was created, resulting in an increase of point-of-care testing, new tests and the proliferation of laboratory-developed tests. The point-of-care tests are much cheaper to use, but the lab fee schedule, unlike other fee schedules and prospective payment systems, does not account for the drop in cost, the proposed rule stated.

CMS had proposed using Outpatient Prospective Payment System and Ambulatory Surgical Center rates to set the practice expense relative value units for the Physician Fee Schedule. The OPPS and ASC rates are based on hospital cost reports, and the Physician Fee Schedule is based on inputs to the American Medical Association’s Specialty Society RVS Update Committee. Hospital cost reports are audited by Medicare Administrative Contractors, and RUC relies on physician groups to provide them practice expense data that is not audited.

However, labs argued that hospital lab costs are substantially higher than the outpatient data indicate. Hospitals don’t report costs on specific items, and when used to calculate costs for items and services, the reports often are inaccurate.

The American Clinical Laboratory Association said Sens. Johnny Isakson (R-GA) and Amy Klobuchar (D-MN) and Reps. Jim Gerlach (R-PA) and Bill Pascrell (D-NJ) sent letters to CMS Administrator Marilyn Tavenner that were instrumental in stalling the policy in the proposed rule. One hundred and thirteen members of Congress signed onto the letters.

“We are grateful CMS has heeded the concerns of labs, pathologists, manufacturers, Members of Congress and patients who voiced strong opposition to the OPPS proposal,” said ACLA President Alan Mertz.

While CMS is not moving forward on the anatomic pathology proposal, the final physician fee schedule rule includes a proposal to revise payments for codes under the Clinical Laboratory Fee Schedule to account for “technological changes.” ACLA and other stakeholders submitted comments on this proposal, which was also included in the proposed rule, and advocated for a clear and transparent process for allowing input from labs and manufacturers.

“We will continue to work with CMS and Congress on behalf of our membership and the Medicare patients they serve as changes to laboratory reimbursement are considered,” ACLA President Alan Mertz said in a statement. — Lisa Gillespie


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