No doubt PAMA will change payment rates. Still unanswered: When, and how?
There’s a good chance that, starting in January, your physician customers will experience a change in reimbursement for point-of-care testing for Medicare patients. At press time, it wasn’t clear just how much that change would be, or even in which direction – up or down – it would go.
The Centers for Medicare & Medicaid Services was expected to post new reimbursement rates in the Clinical Laboratory Fee Schedule (CLFS) this fall.
The expected changes are a result of the Protecting Access to Medicare Act (PAMA) of 2014. The law called for a sample of labs to report the amounts paid by private insurers for laboratory tests. Medicare intends to use those private insurer rates to calculate Medicare payment rates for lab tests paid under the CLFS beginning Jan. 1, 2018.
For the first three years after implementation, the statute limits any reduction to 10 percent per year; then to 15 percent per year for the following three years. (Payment rates under the revised CLFS will be updated to reflect market rates paid by private payers every three years for most tests, according to CMS.)
“For now, the unknown piece is how CMS decides to survey payer information for point-of-care tests (POC) versus the central lab,” says Brad Thompson, director of vendor relations for NDC. “Will they consider separating central lab and POC payer results? If that’s the case, tests in the POC sector may even see a reimbursement increase. Let’s keep our fingers crossed.”
In the midst of the uncertainty, the distributor sales rep can act “as a reliable and credible information resource as it relates to the new payment system MIPS/MACRA,” advises Charles Starr, director of sales, West, Clinical Lab Group, Henry Schein Medical. In other words, even if reimbursement does take a dip, physicians can recover some or all of that in improved patient satisfaction and quality that in-office testing can bring – two indicators that comprise reimbursement under MACRA.
Medicare pays approximately $7 billion a year to Medicare-enrolled laboratories for more than 1,300 types of clinical laboratory tests on the CLFS, reports CMS. Medicare’s current fee schedule rates have remained relatively unchanged since 1984, apart from setting payments for new tests or implementing across-the-board statutory payment updates, says the agency.
Though the new rates will apply to all labs (national chains and stand-alone physician offices alike), CMS was relying on data gathered by a representative sample to set them. These so-called applicable labs were those that receive at least $12,500 in Medicare revenues from laboratory services paid under the CLFS, and more than 50 percent of their Medicare revenues from laboratory and/or physician services. They were required to report lab-related revenues from private payers for the period between January 1 and June 30, 2016. (Originally, they were to have completed their reporting by March 31, 2017, but CMS later extended it to May 30, 2017.)
Controversy has surrounded the data collection method.
“It was very difficult to assemble the data because things like co-pays, etc., had to be included in the amount reported,” says John Daly, M.D., chief medical officer, COLA, an accrediting agency of medical laboratories. “The retrospective reporting added to the complications of reporting.”
Adds Starr, “The challenge physicians have is lack of resources to gather the data, certify the data and handle payers that bundle. As a result, physicians may not submit at all for fear of submitting wrong data and suffering penalties.”
Some organizations, including the National Independent Laboratory Association, argued that the representative sample from applicable labs was not only small (roughly about 5 percent of all labs), but weighted toward big reference labs, which routinely discount heavily to private payers.
“PAMA was intended to be a market-based exercise,” says Starr. “Due to some lab testing entities being excluded from having to report data to CMS, it is believed that there won’t be a true picture of what the reimbursement rates really are, and will result in an inaccurate reset of the CLFS.”
Others argued that the math that CMS was using to calculate the new payment amount – that is, a weighted median versus weighted average – would contribute to the negative repercussions on reimbursement.
Though implementation was scheduled for January 1, 2018, at press time, that was up for question.
“There are lobbying efforts related to the definition of applicable lab, difficulties encountered in reporting (not just by office labs, but by virtually all labs), and concerns about setting the reimbursement at the weighted median rather than the weighted average of all fees collected for a given test,” Daly told Repertoire in late August. “How successful these efforts will be remains to be seen.”
One of those organizations expressing concern is the Advanced Medical Technology Association, or AdvaMed, which represents medical device manufacturers. “Laboratories have raised serious concerns about the data reporting process, and that the payment rates established based on reporting will not accurately reflect the private market,” says Don May, executive vice president, payment and healthcare delivery. “Therefore, AdvaMedDx has supported calls from the laboratory community for an administrative delay in implementation.” (AdvaMedDx is a division of AdvaMed comprising manufacturers of lab tests and equipment.)
“[PAMA] will be very problematic for physician office laboratories, smaller independent laboratories and small hospitals, many of whom depend for the revenue from the outreach laboratory to supplement the laboratory and hospital budget,” says Daly. “Because the break-even point for laboratory testing in office laboratories, small independent laboratories and small hospital laboratories is so close to the cost of providing the service, many could and probably will close if the cuts are too drastic.”
Says Starr, “Those POLs that can weather the storm and become streamlined will still have the advantage of near-patient testing, and this could in turn help them with patient satisfaction and when it comes to the new MIPS/MACRA incentive payment.
“Distributor reps need to make sure they are versed in the language of PAMA and what it means to their customer,” he continues. “They should also be ready to provide a solution, if needed, as to the software systems that will make it easier to comply and automate the reporting requirement to CMS for the test reimbursement data they receive from their payers. There should also be test menu evaluations, where it would be practical to add those types of tests for which reimbursement won’t be affected as drastically, or which maybe even see a possible increase, such as molecular and other esoterics.”
Says Thompson, “Stay informed by first reviewing the CMS Clinical Laboratory Fee Schedule when published for 2018 on the higher volume tests you sell. You can immediately inform your customers on potential opportunities for higher reimbursement tests if applicable.”
The case for POLs
In a March 2017 letter to CMS Administrator Seema Verma, a number of professional organizations made a good case for physician-office-lab testing. They wrote:
“POLs provide essential, rapid point-of-care testing to their patients. The foregoing is consistent with the focus of payment delivery reform to center medical services around the patient to enhance coordination and to optimize compliance and improved health outcomes. If clinical testing at the point-of-care is no longer available, it undermines this overarching effort. In addition, there are a number of point-of-care clinical tests that provide accurate and rapid results that are important to address important public health goals, such as antibiotic stewardship, by ensuring appropriate and judicious prescribing of antibiotics.
“Requiring elderly and medically fragile Medicare beneficiaries to wait additional time for testing results or to seek clinical testing outside of their physician’s office, particularly those in geographically remote or underserved areas, imposes additional burdens on this vulnerable patient population and their caregivers.”
- American Academy of Family Physicians.
- American College of Physicians.
- American Medical Association.
- American Osteopathic Association.
- Infectious Diseases Society of America.
- Medical Group Management Association.
Editor’s note: COLA has launched a website – www.nearpatienttestingmatters.org — that explains in layperson’s terms the personal and public health benefits of near-patient testing.