Labs Surprised By CMS’ Proposed 25% Pay Cut For Diagnostic Lab Tests

July 18, 2013 Categories: All News, ACLA In The News

Laboratories are up in arms over CMS’ unexpected proposal this week to cut pay for lab tests by 25 percent, but CMS Medicare chief Jonathan Blum said the diagnostics have been overvalued because CMS up to now has not factored in technological changes that bring down the cost of tests. CMS proposes in the new laboratory fee schedule rule a process to adjust pay based on changes in technology.

The American Clinical Laboratory Association decried the proposed rule.

“First, absent any discussion with clinical laboratories, patients, and other stakeholders, CMS proposes to identify codes and propose revised payments in the Clinical Laboratory Fee Schedule (CLFS) due to “technological changes,” ACLA states in a release. “Second, the Proposed Rule would severely reduce payments for pathology codes when services are provided by independent laboratories,” the lobby group adds.

The proposal to revise pay was unexpected because until now CMS said that once pay levels for tests are set, they don’t change.

Blum said during a Senate Finance Committee hearing on Wednesday (June 10) that’s exactly the problem CMS is proposing to fix. He said the lab fee schedule is unusual in that once CMS sets pay rates, there is no way to account for market dynamics and technological changes in annual updates to the fee schedule. Durable medical equipment is another example of a product or service for which it’s difficult to cut reimbursement when prices fall, and CMS has faced years of heavy lobbying against the bidding program it is using to cut prices for DME.

Diagnostic technology has changed significantly since the lab fee schedule was created, CMS says, 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 states.

“There are also brand new technologies that did not exist when the CLFS was established, most notably genetic and genomic tests,” the proposed rule adds.

Medicare covered few of the early genomic and genetic tests because they were either screening tests or tests for conditions found in children. As the tests have expanded over the past couple decades, Medicare has taken on a more prominent role in their payment.

“We believe that, given the technological changes that have occurred in the laboratory industry over the past several decades and the growth in the number of clinical laboratory tests (CMS has added approximately 800 new test codes to the CLFS since its inception), it would be appropriate to establish a process to reconsider payment amounts on the CLFS to take into account increased efficiency, changes in laboratory personnel and supplies necessary to conduct a test, changes in sites of service, and other changes driven by technological advances,” CMS states. — John Wilkerson

See the original article here.

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