Pathology/Lab Coding Alert

Guidelines miss June 30 mark.

If you’ve been waiting with bated breath to learn how (or if) your lab should report lab-test volume and payment information to Medicare beginning Jan. 1, 2016 — get ready to wait some more.

Despite a Congressionally-mandated June 30, 2015 deadline to publish implementation regulations for section 216 of the Protecting Access to Medicare Act of 2014 (PAMA), CMS has not done so. Industry leaders are asking if this means that labs won’t have to meet their Jan. 1, 2016 implementation date.

Read on to get a PAMA status-update, plus the whole story of what the law is supposed to do for clinical lab test pricing.

Get Official CMS Comment from CLFS Process

At the July 16 annual Clinical Laboratory Fee Schedule (CLFS) public meeting, CMS representatives addressed the PAMA Section 216 rulemaking process — which was already more than two weeks past the deadline.

“We haven’t completed rulemaking,” said Marc Hartstein, director for CMS’ Hospital and Ambulatory Policy Group. With no firm date in sight, the “mission is to get the rule out as soon as possible,” Hartstein assured, after enumerating the complexities in the process.

Current focus is on the clinical lab data collection system, according to CMS representative Sarah Harding at the meeting. The agency’s goal is to build a sophisticated, “extremely secure system,” Harding said. “There will be a registration process for the system ahead of time” that applicable labs should engage as soon as it’s available, Harding stated.

No news from MPFS: Despite expectations that the regulation to implement PAMA Section 216 might appear in the Medicare Physician Fee Schedule (MPFS) proposed rule, that source also didn’t pan out.

Bottom line: At this point in time, you have no way to know if you’re an “applicable lab” that will need to report data to Medicare, you don’t know how you will accomplish the process, and you don’t have a specific timeline for learning these things. 

Question: So will you still have to meet the Jan. 1, 2016 deadline for reporting test volume and payment information to Medicare?

“The answer will probably lie in the public comment process as well as in the final rule,” Hartstein said at the public meeting. “I would guess that … people will make the comment that we should delay the effective date,” he said.

Know PAMA Section 216 Basics

“Improving Policies for Clinical Laboratory Tests,” is the PAMA Section 216 title, and the law activates a plan to base Medicare payments for clinical laboratory tests on private sector payment rates beginning January 1, 2017.

You can expect a three-pronged approach for establishing clinical lab test prices, according to the law.

Step 1: “Applicable” labs must begin reporting per-payer test volumes and payment data to Medicare on January 1, 2016, and then again every three years. CMS will use the data to determine a weighted median payment for lab tests, which will form the basis of the CLFS.

CMS will phase in the new payment rates over a six-year period if the new rate is significantly less than the current CLFS rate, with a maximum reduction of 10 percent for plan years 2017 through 2019, increasing as time goes on.

Step 2: The law allows for coding and pricing “advanced diagnostic laboratory tests” (ADLTs) that are not currently paid on the CLFS. These are tests that a single lab performs and doesn’t sell for use by others, plus meets one of the following criteria:

• Utilizes an algorithm to provide a single result based on multiple nucleic acid and/or protein analyses Is FDA approved

• Meets CMS requirements similar to FDA approval.

• CMS will set payment as the test list charge for the first three quarters, then reset payment based on laboratory data of actual market rate, which the lab must report annually.

Step 3: CMS will establish an advisory panel to recommend coding and pricing for new tests that are not ADLTs using gapfilling or crosswalking, similar to the current process for pricing new lab tests on the CLFS.

Bottom line: The law “makes significant changes to how we determine payments for lab services beginning Jan. 1, 2017,” said Hartstein in the CLFS public meeting.

Understand Industry-Leader Response

Concerns abound about the law and its potential impact on laboratory compliance burden and payment rates.

Applicable laboratories: The law defines applicable laboratories as those that receive most of their Medicare pay through the CLFS, the MPFS, and the new section 1834A of the Social Security Act. But questions remain about exactly which labs must report data to CMS, and the answer will, in turn, impact both the labs’regulatory costs, as well as the final CLFS payment rates.

“CMS will have to determine what types of laboratories are encompassed by the term ‘applicable laboratories’,” states Alan Mertz, president, American Clinical Laboratory Association (ACLA), in an open letter to CMS’ Glenn McGuirk. For instance, the rulemaking process will decide whether Congress intended for CMS to look at an entire hospital’s revenues, or just the revenue of the hospital laboratory when determining if the lab is an applicable lab, Mertz points out in the letter.

Lab preparation time: The law allows labs six months to prepare for sending data to Medicare — from the June 30, 2015 regulation deadline to the January 1, 2016 reporting deadline. Industry experts had already expressed concern about that narrow timeframe, but the regulation delay has spawned more apprehension and comments.

“We ask that [CMS] keep open the reporting window for the submission of required data for at least six months from the publication date of the final rule,” said William G. Finn, MD, FASCP president of the American Society for Clinical Pathology (ASCP) in an open letter to CMS’ deputy administrator, Sean Cavanaugh. And “we urge CMS to publish as soon as possible a template outlining the format, data elements and content which CMS will utilize for collecting and analyzing laboratory claims information.”