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

Analysis shows new rule requires data gathering effort that favors larger medical laboratories and thus threatens community labs that serve smaller towns and rural areas

When The Centers for Medicare and Medicaid Services (CMS) issued their Final Rule for lab test market price reporting under the Protecting Access to Medicare Act of 2014 (PAMA) last month, it put the clinical laboratory industry on a path that will have significant financial consequences for all labs, whether large or small. Some experts believe this will be the most disruptive event to the medical laboratory industry in the past 30 years.

By now, the story is well known among pathologists and clinical laboratory directors. That story comes from CMS, which issued the Medicare Clinical Diagnostic Laboratory Tests Payment System Final Rule—AKA the Clinical Laboratory Fee Schedule (CLFS)—that directly affects clinical labs. Under this Final Rule, published in the Federal Register, June 17, 2016, “laboratories and physician offices are required to report private payer rate and volume data if they have more than $12,500 in Medicare revenues from laboratory services on the CLFS and they receive more than 50% of their Medicare revenues from laboratory and physician services during a data collection period. Laboratories will collect private payer data from January 1, 2016 through June 30, 2016 and report it to CMS by March 31, 2017.

“The first data reporting period (that is, the period during which data from the collection period will be submitted to CMS) will be from January 1, 2017, through March 31, 2017. All subsequent data collection and reporting periods for CDLTs [Clinical Diagnostic Laboratory Tests], except for ADLTs [Advanced Diagnostic Laboratory Tests], will follow this same data collection and reporting schedule, every three years. Reporting of private payer rates for ADLTs will occur on the same schedule except it will be on an annual basis,” states the Final Rule. (more…)