Presidents of Roche Diagnostics and Mayo Clinic Laboratories Discuss PAMA Reform and Upcoming Deep Cuts to Reimbursement for Common Lab Test
Organizations representing clinical laboratories and other critical healthcare providers urged Congress to pass the Saving Access to Laboratory Services Act by January 1, 2023, to prevent deep cuts in reimbursements
Lessons about the essential role of clinical laboratories during a pandemic was the central theme in a significant publication released recently. The authors were the presidents of two of the nation’s largest healthcare companies and their goal was to connect the value clinical labs delivered during the COVID-19 pandemic to the financial threat labs face should the Protecting Access to Medicare Act of 2014 (PAMA) fee cuts coming to the Medicare Part B Clinical Laboratory Fee Schedule (CLFS) be implemented.
The two healthcare executives are William G. Morice II, MD, PhD, CEO/President, Mayo Clinic Laboratories in Rochester, Minn., and Matt Sause, President of Roche Diagnostics North America in Indianapolis. On January 1, 2023, Sause will become Global CEO of Roche Diagnostics, Basel, Switzerland.
They published their article in RealClearPolicy titled, “Medicare Cuts for Diagnostic Tests Would Show the Government Has Taken the Wrong Lessons from COVID-19.”
In an article for RealClearPolicy, healthcare executives William G. Morice II, MD, PhD (left), CEO/President, Mayo Clinic Laboratories, and Matt Sause (right), President of Roche Diagnostics North America wrote, “Without PAMA reform, labs could face drastically reduced reimbursement for commonly performed lab tests for a host of diseases.” (Photo copyrights: Mayo Clinic Laboratories/Roche Diagnostics.)
IVD Companies and Clinical Laboratories Sound Alarm
Morice and Sause warn that—without PAMA reform—the nation’s vital medical laboratories will face “drastically reduced reimbursement” for commonly performed lab tests for diseases, including diabetes, heart disease, and cancer. Reimbursement cuts may cause clinical labs serving “the most vulnerable and homebound” to reduce services or close, they noted.
“To emerge from nearly three years of a pandemic by sending the signal that austerity is our nation’s health policy when it comes to testing and diagnostics would be a significant mistake,” they wrote.
“If the proposed cuts to reimbursements for diagnostic tests are allowed to take effect, disparities caused by challenges with accessing diagnostic tests will likely grow even further,” the authors continued.
However, they added, “The Saving Access to Laboratory Services Act [SALSA] would reform PAMA to require accurate and representative data from all laboratory segments that serve Medicare beneficiaries to be collected to support a commonsense Medicare fee schedule that truly represents the market.”
How PAMA Affects Clinical Laboratory Reimbursements
PAMA, which became law in 2014, was aimed at marrying Medicare Part B Clinical Laboratory Fee Schedule (CLFS) reimbursement rates to rates medical laboratories receive from private payers, the National Independent Laboratory Association (NILA) explained in a news release.
But from the start, in its implementation of the PAMA statute, the methods used by the federal Centers for Medicare and Medicaid Services (CMS) to collect data on lab test prices paid by private payers—which were the basis for calculating new lab test prices for the Medicare program—were criticized by many laboratory professionals and other health experts.
Critics frequently pointed out that several types of clinical laboratories were excluded from reporting their private payer lab test prices. Thus, the data collected and used by CMS did not accurately represent the true range of prices paid for clinical lab tests by private health insurance plans, said lab industry groups.
CMS regulations “exclude most hospital outreach laboratories and physician office laboratories from data collection. This approach depresses median prices and has led to deep cuts to lab reimbursement. Many tests were cut up to 30% in 2018 when the new system went into effect,” the America Association for Clinical Chemistry (AACC) noted in a statement.
On September 8, just weeks after publication of the article authored by Morice and Sause, 26 organizations representing clinical laboratories and diagnostics manufacturers sent a letter to Congressional leaders. In it they described the financial impact on labs due to the current law’s omission of some outreach and physician office lab testing, and they urged the passage of the SALSA legislation.
The organizations included the:
- National Independent Laboratory Association (NILA)
- American Clinical Laboratory Association (ACLA)
- American Society for Clinical Laboratory Science (ASCLS)
- American Society for Clinical Pathology (ASCP)
- Association of Public Health Laboratories (APHL)
- California Clinical Laboratory Association (CCLA)
- College of American Pathologists (CAP)
- And 19 others
“The significant under-sampling led to nearly $4 billion in cuts to those labs providing the most commonly ordered test services for Medicare beneficiaries,” the organizations wrote in their letter. “For context, the total CLFS spend for 2020 was only $8 billion.”
Reimbursement Cuts to Lab Tests are Coming if SASLA Not Passed
“Without Congressional action, beginning on Jan. 1, 2023, laboratories will face additional cuts of as much as 15% to some of the most commonly ordered laboratory tests,” the NILA said.
“Enactment of the Saving Access to Laboratory Services Act (SALSA/H.R. 8188/S.4449) is urgently needed this year, to allow laboratories to focus on providing timely, high quality clinical laboratory services for patients, continuing to innovate, and building the infrastructure necessary to protect the public health,” NILA added.
In an editorial she wrote for Clinical Lab Products, titled, “Be a Labvocate: Help Pass SALSA Legislation,” Kristina Martin, Clinical Pathology Operations Director, Department of Pathology, University of Michigan Medicine said, “The SALSA legislation provides a permanent, pragmatic approach to evaluating the CLFS, eliminating huge swings, either positive or negative as it pertains to Medicare reimbursement. It also allows for a more comprehensive evaluation of data to be collected from a broader sampling of laboratory sectors.”
According to an ACLA fact sheet, SALSA:
- Uses statistical sampling for widely available tests performed by a “representative pool of all clinical laboratory market segments.”
- Introduces annual “guardrails” aimed at creating limits for reductions as well as increases in CLFS rates.
- Excludes Medicaid managed care rates since they are not true “market rates.”
- Gives labs the option to exclude mailed remittances from reporting if less than 10% of claims.
- Eases clinical labs’ reporting requirements by changing data collection from three years to four.
Make Your Views Known
Proponents urge Congress to act on SALSA before the end of the year. Clinical laboratory leaders and pathologists who want to express their views on SALSA, test reimbursement, and the importance of access to medical laboratory testing can do so through Stop Lab Cuts.org. The website is sponsored by the ACLA.
—Donna Marie Pocius