Pathology/Lab Coding Alert

Unless CMS relents to universal industry condemnation.

The preliminary pricing proposal is in, the stakeholder response rages, but unless the Clinical Laboratory Fee Schedule (CLFS) final rule makes a radical about-face, your lab could be facing the single largest payment overhaul of all time.

Grasp the Repricing Process

Setting new CLFS payment amounts to reflect the weighted median of private payer rates is the stated goal of Section 216 of the Protecting Access to Medicare Act (PAMA), which CMS implemented in the Medicare Clinical Diagnostic Laboratory Tests Payment System final rule on June 23, 2016. For an in-depth look at the repricing process - which labs report data, what lab tests are involved, and how CMS handles new codes or those with no current National Limit Amount (NLA) - see "PAMA Finalized: Get Ready for Lab Price Reporting and CLFS Overhaul" in Pathology/Lab Coding Alert Vol. 17, No. 9.

After collecting data from certain laboratories for their test payment rates and volumes for a six-month period in 2016, CMS calculated the weighted median price for each test and issued the Preliminary Private Payor Rate-Based CLFS for comment.

Still to come: CMS should issue the final rule later in November. If the agency upholds the preliminary rates, you can expect the target payments for many lab tests to decline sharply. However, the rule provides a payment-rate phase-in plan that caps rate reductions at 10 percent for calendar years (CY) 2018-2020, and 15 percent for CY 2021-2023.

Study the Preliminary Fee Schedule

Using the 2017 CLFS and the CMS calculated weighted median and 2018 fee (capped at 10 percent reduction), you can see from Table 1 how the PAMA repricing might affect some common lab test codes.

Losers: As Table 1 shows, many of the common tests your lab might perform, such as metabolic panel, glucose, and complete blood count (CBC), demonstrate a weighted median roughly 30 to 40 percent lower than the 2017 CLFS NLA. The 10-percent payment reduction cap means that you won't experience the entire pay cut next year.

Winners: You can also see from Table 1 that some lab tests, mostly molecular analyses, will see a huge pay increase in 2018 and beyond because the weighted median was higher than the 2017 NLA.

Other concerns: Some codes didn't have a 2017 NLA, so CMS set the 2018 price at the weighted median. For instance, CMS set an $11.23 payment rate for the common test 80061 (Lipid panel). But the average state reimbursement rate for this test is approximately $18, meaning that labs can expect more than a 35 percent pay cut for that test in the first year.

Follow Stakeholder Concerns

Laboratory stakeholders are uniformly outspoken against the implementation of the preliminary 2018 CLFS, and many have publically expressed their concern to CMS during the comment period.

For instance, 21 agencies, including the American Association for Clinical Chemistry (AACC), American Society for Clinical Laboratory Science (ASCLS), College of American Pathologists (CAP), and American Society for Clinical Pathology (ASCP), among others, submitted a letter to CMS stating, "We believe the data used to set the proposed rates would not stand up to statistical validity review [and] ... do not appear to reflect the various market segments. ... We urge CMS to suspend implementation of the revised payment rates ..."

In agreement, Julie Khani, president of the American Clinical Laboratory Association (ACLA) stated, "The proposed rates published by CMS are based on a deficient data collection process that excluded the majority of laboratories from participating, resulting in the submission of inaccurate and incomplete laboratory payment data."

Emphasizing the lack of representation of hospital and point of care labs in the data collection process, Debra Rodahl, MBA, MLS(ASCP)CM, ASCLS President, stated that CMS "collected 90 percent of reported data from independent laboratories. Hospitals and physician office laboratories, which provide 44 percent of laboratory services under Medicare, represented just 8.5 percent of the reporting entities."

Resources: You can access the preliminary payment files at www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/PAMA-Regulations.html. Watch future issues of Pathology/Lab Coding Alert for news on the upcoming CLFS final rule, which will determine your lab payment rates beginning Jan. 1.