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Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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CMS Director speaks at ACLA meeting; acknowledges that labs are alerting the agency to problems with Protecting Access to Medicare Act (PAMA) private payer market reporting, but did not say whether a delay in implementing either reporting or lab test fee cuts would be possible

WASHINGTON, DC—Last week, it was symbolic that, as members of the American Clinical Laboratory Association (ACLA) assembled for their annual meeting, members of the House of Representatives were preparing to vote on the first of several bills intended to “repeal and replace” the Affordable Care Act.

The symbolism comes from the fact that the nation’s medical laboratories and the United States Congress find themselves at major crossroad. For medical laboratories, the issue is the substantial cuts to Medicare Part B clinical laboratory test fees that are scheduled to take effect on January 1, 2018. Predicted by the federal Centers for Medicare and Medicaid Services (CMS) to be a total cut of $400 million in 2018 alone, many expect these Medicare fee cuts to be the single most financially-disruptive event to hit the medical laboratory profession in 25 years.

There’s a similar make-or-break issue unfolding in Congress. Republicans in the House and Senate are caught up in battles to design and pass a series of bills intended to “repeal and replace” the ACA. At their respective crossroads, it remains unclear which path forward each group will follow.

Clinical Laboratory Executives Conducted ACLA’s Yearly Conference

Last Thursday was the day when ACLA convened its annual meeting. That was also the same day that House Republicans were scheduled to vote on their first round of legislation designed to reform the Affordable Care Act. ACLA members did a better job of keeping their schedule than the House of Representatives. The ACLA annual meeting took place on time and without a hitch. Meanwhile, House leaders cancelled the scheduled vote on the first law intended to “repeal and replace” Obamacare and scheduled it to take place on the following day (last Friday).

And that vote was rescheduled to take place last Friday. However, lacking enough votes to pass the bill, House leaders shelved the legislation, rather than allow it to fail. It is uncertain when Republican leaders in Congress will again bring the bill to a vote.

New President and New Chair for American Clinical Laboratory Association

Meanwhile, over at the ACLA’s annual meeting, more than 200 lab professionals were in attendance, a record number for this event. The first order of business was for ACLA’s new President, Julie Khani, to open the conference. She assumed this responsibility in December when her predecessor, Alan Mertz, retired at the end of 2016 after more than a decade of service at the ACLA. Khani introduced departing ACLA Chairman Stephen H. Rusckowski, CEO of Quest Diagnostics (NYSE:DGX), who made his parting remarks. He then welcomed incoming ACLA Chair Curtis A. Hanson , MD, Chief Medical Director of Mayo Medical Laboratories.

Departing Chair Stephen H. Rusckowski (above), CEO, Quest Diagnostics, delivered the opening remarks at the 2016 American Clinical Laboratory Association (ACLA) annual meeting, held in Washington, DC, last week. He then recognized the ACLA’s new Chair, Curtis A. Hanson, MD, Chief Medical Director of Mayo Medical Laboratories. (Photo copyright: ACLA.)

Departing Chair Stephen H. Rusckowski (above), CEO, Quest Diagnostics, delivered the opening remarks at the 2016 American Clinical Laboratory Association (ACLA) annual meeting, held in Washington, DC, last week. He then recognized the ACLA’s new Chair, Curtis A. Hanson, MD, Chief Medical Director of Mayo Medical Laboratories. (Photo copyright: ACLA.)

CMS Officials Spoke about Clinical Laboratory Compliance and PAMA Price Rule

The CMS provided two speakers for the ACLA conference. First up was Karen Glassman, Senior Counsel, Office of Inspector General (OIG), Department of Health and Human Services (HHS). In a presentation titled, “Laboratory Enforcement and Compliance Issues,” Glassman covered a wide range of subjects, including items involving laboratories that are in the OIG’s work plan for this year, and a review of enforcement actions and civil settlements taken against clinical laboratories by the US Department of Justice.

Later in the day, the second speaker from CMS provided an update on key initiatives of interest to all clinical laboratory executives and pathologists. Carol Blackford, Director, Hospital and Ambulatory Policy Group at CMS, spoke about several of these initiatives.

CMS Official Discussed PAMA Market Price Reporting Rule

Probably no single issue has greater interest across the clinical laboratory industry than the PAMA private payer lab test price reporting rule. It includes the requirement that certain laboratories report to CMS the prices paid by private health insurers. This price data is to come from payments labs received from January 1, 2016, through June 30, 2016. Labs required to report must submit this data between January 1, 2017, and March 31, 2017. This reporting requirement is part of the Protecting Access to Medicare Act of 2014 (PAMA).

“Everyone is aware that CMS has received requests from a number of individual labs and industry trade associations requesting an extension to the reporting period,” stated Blackford, during her discussion on the PAMA rule. “What we have heard is that [these labs] have encountered many unexpected issues with compiling the data, having [third-party] software that may not be updated, and just a large volume of manual [work for] amanuenses.”

“So it’s turned out to be a bit more cumbersome than I think was anticipated,” continued Blackford. “We are actively reviewing these requests right now and we’ve been talking with senior leadership. Ever since we got the phone calls and letters we’ve raised this issue, understanding the sensitivity involved, and we are hoping to be able to make determinations as soon as possible.

“I want to emphasize that [CMS] is committed to implementing the statutory requirement, and that we are committed to working together to ensure that our fee schedule payments are accurate and transparent,” observed Blackford. “We appreciate the very collaborative relationship we have with the ACLA and we would like that to obviously continue as we work through this issue. We appreciate your willingness to keep us apprised of the challenges that you are facing with your data recording. We hope that we can continue those conversations during this phase of the PAMA implementation, and future efforts at data collections. …We want to hear your suggestions on how to make this work.”

There was obvious disappointment in the room after Blackford declined to provide specific information about the possibility that CMS might delay implementation of the Part B lab test fee cuts that are scheduled to happen on January 1, 2018.

Blackford then discussed the progress of collecting data. She noted that CMS is carefully monitoring the process labs use to upload their data and said that no serious issues had happened to date with that web-based system. “What we are seeing so far—in terms of volume—is that we have a good number of registrations,” said Blackford. “Totals are picking up, as you would expect them to, as we near the end of the data collection period.

“We are seeing the reported data fields for the majority of HCPCS [Healthcare Common Procedure Coding System] codes, but the volume overall is lower than what we expected,” noted Blackford.

Blackford’s comment that, as of this date, CMS has received data from fewer labs than anticipated may be telling. “Lower than expected” gives no hint as to whether the actual data reported is much less than expected.

However, if the data received by CMS as of last Thursday, just eight days before the March 31 reporting deadline, is significantly less than expected, that would not surprise anyone with knowledge of:

1. How clinical laboratories operate; and

2. The limitations of the software and information technology they use to collect and use data.

Is Complexity of PAMA Reporting Responsible for Shortfall in Data Collected?

The Dark Report predicted that many labs could find it difficult to assemble and report their private-payer-lab-test price data. One reason would be that the people who crafted the language of the reporting requirement in the PAMA law, and the people who wrote the final rule to implement this section of the PAMA law, are not well-informed about how chaotic it is when private health insurers remit payment to clinical labs.

This chaos is related to the complexity of how one lab test might be used for multiple disease states and health conditions—with each use of that lab test governed by a different insurer’s coverage guidelines. Then, multiply that by thousands of different lab tests, along with thousands of individual health plans, each with their own unique coverage guidelines. And that is just one side of the problem!

The other side of this problem is that all clinical laboratories—the two billion-dollar behemoth lab companies can be included in this statement—have billing software that may be decades old, can be unwieldy, and is probably incapable of assembling the specific data as required by the final rule for PAMA market price reporting. This is why some knowledgeable experts within the clinical lab industry have quietly observed that CMS officials face a nearly impossible task in their attempt to gather this data from the labs required to report it.

Blackford’s comment about “less data than expected” as of this date leaves unsaid the actual shortfall between CMS’ expectation for the number of labs that it thought would have reported and that actual number. Is it just a little less or substantially less? Is it so much less as to be worrisome to the officials in charge of this program?

California’s Medi-Cal Clinical Laboratory Reporting Shortfall

There is a precedent for a government agency finding it close to impossible to gather private-payer price data from laboratories in its jurisdiction. Under Medi-Cal, a recently-enacted law that’s part of California’s Medicaid program, requires medical laboratories to report lab test price data from private health insurers. Last year was the first year that this data reporting requirement was in effect. The Dark Report alerted the lab industry to the fact that Medi-Cal found itself with price data for 2015 from just 9% of the 742 labs required by state law to report. It should not be overlooked that all these labs face substantial penalties for their failure to report.

Could it be that CMS is experiencing a similar problem as did Medi-Cal officials in California? Might it happen that, as the March 31 deadline for PAMA price reporting arrives, the federal agency is confronted with a reality that it has not received market price data from a substantial number of those labs required to submit this data?

That is a situation not anticipated nor addressed in the guidance issued by CMS. Can CMS officials go forward to determine a weighted private payer market price average if they have not received price data from a substantial proportion of the labs required to report? Can CMS go forward with data from, say 80% of labs required to report, but not 70%? What if—similar to the Medi-Cal experience—CMS ends up with data from less than 50% of the labs required to report?

These questions will be moot if CMS publicly discloses that a high percentage of labs required to report did indeed submit full sets of price data. Events in coming weeks will answer the question of what CMS would do should it determine that a substantial number of clinical laboratories failed to comply with the reporting requirement. That would deny CMS access to the private-payer price data held by these labs and leave the agency with a flawed pool of lab test market price data.

—Michael McBride

Related Information:

Protecting Access to Medicare Act: Clinical Laboratories, Laboratory Professionals, Physicians Urge HHS to Delay PAMA Implementation

CMS Issues PAMA Final Rule That Aims to Cut Medicare’s Clinical Laboratory Test Price Schedule Sharply Beginning in 2018

Coming PAMA Price Cuts to Medicare Clinical Lab Fees Expected to Be Heavy Financial Blow to Hospital Laboratory Outreach Programs

Nation’s Smaller Community Medical Laboratories Have Major Concerns about Financial Survival Once Medicare Officials Implement Deep Price Cuts to Lab Test Fees in 2018

PAMA Lab Test Market Price Reporting: What EVERY Lab Must Know, Which Labs Must Submit Data, and Why Reporting Labs Are at Risk!

New Federal Law Has Potential to Financially Devastate Local Clinical Laboratories, While Favoring Larger National Medical Labs