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Clinical Laboratory Fee Schedule

Background

Starting Jan. 1, 2018, clinical diagnostic laboratory tests paid under the Clinical Laboratory Fee Schedule (CLFS) are based on private payer rates. The Protecting Access to Medicare Act of 2014 (PAMA) required this revised payment methodology and mandates that CLFS rates must be updated every three years.

To calculate the new CLFS, “applicable laboratories,” including some physician office laboratories, must collect and report private payer rate and volume data for lab tests to the Centers for Medicare & Medicaid Services (CMS). CMS uses this data to calculate the weighted median for each CLFS code, which becomes the new CLFS rate. 

The process of collecting, reporting, and repricing laboratory rates must be repeated every three years under PAMA. The first data collection period for “applicable laboratories” was Jan. 1 through June 30, 2016 and the first reporting period was from Jan. 1 through Mar. 31, 2017 (although CMS subsequently delayed the reporting deadline until May 30 due to widespread issues reporting the data). 

Congress implemented a phased-in reduction for CLFS rates that would be significantly reduced under the revised pricing methodology. For 2018-2020, a test price cannot be reduced by more than 10% per year(compounded each year); for 2021-2023, a test price cannot be reduced by more than 15% per year(compounded each year). 

The second data collection period was Jan. through June 2019 and the second reporting period for the CLFS was set to occur between Jan. 1, 2020 and Mar. 31, 2020, in order to calculate rates under the CLFS from 2021-2023. As part of the appropriation package signed into late in late December, Congress suspended the data reporting period set to occur on Jan. 1, 2020 by one year. Congress is also requiring that an independent entity provide recommendations on a less burdensome data collection method and more accurate reimbursement rate formula. This change means that any laboratory subject to data collection and reporting requirements does not need to submit data collected between Jan through June 2019 until Jan. 1, 2021.

 

Problems with PAMA Implementation

The new CLFS rates that went into effect on Jan. 1, 2018 have resulted in significant cuts for most clinical tests including those performed in a group practice setting. For tests that are commonly performed in a physician’s office, the revised CLFS amounts generally represent 35-45% reductions from 2017 rates.  Since these reductions are phased-in and compounded, the 2018 rate would be reduced by 10%, the rate paid in 2019 was a 10% reduction from the 2018 rate, and the 2020 rate will receive a 10% reduction from the already reduced 2019 rate.

Since CMS proposed regulations under PAMA, the Association has voiced concern that basing CLFS values on the private payer rates paid to independent labs alone would artificially deflate the price of lab services and consequently force POLs to cease offering point-of-care testing to patients. We’ve also urged CMS to implement PAMA in a manner that is least burdensome to medical group practices yet ensures that a representative share of labs report private market data. 

 

Resources

  • CMS PAMA CLFS landing page, with links to revised CLFS payment rates, FAQs, and information on data collection and reporting 

MGMA Advocacy

  • Oct. 23, 2017: MGMA voices concerns over 2018 CLFS rates
  • Sept. 8, 2017: MGMA signs-on to letter recommending changes to PAMA implementation
  • Mar. 30, 2017: MGMA joins stakeholders in urging delay of reporting deadline
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