Effective January 1, 2018, new lab reimbursement rates will be implemented under Protecting Access to Medicare Act (PAMA) regulations mandated by CMS.
|The Centers for Medicare & Medicaid Services (CMS) released its final ruling and new reimbursement rates in the Clinical Laboratory Fee Schedule (CLFS) on November 17, 2017.
The new laboratory reimbursement rates under PAMA establish a market-based pricing system for lab tests in which Medicare payment for a test is based on the weighted median average of private payor rates.
|The new rates create a single national fee schedule and go into effect January 1, 2018. This could lead to Medicare payment cuts for many lab tests; however, any reductions in the CLFS are capped at 10% per year for the first 3 years of the PAMA program.|
|Payment rates for the CLFS will be based on current rates from private payers, and updated every three years using current data. The legislation caps the amount that can be cut annually:
|No major change to how practices submit codes or reimbursement.|
All labs with testing reimbursed from the CMS Clinical Lab Fee Schedule.
Key Dates for the 2018 PAMA Lab Reimbursement Changes
June 17, 2016
CMS released a final rule implementing Section 216(a) of PAMA, requiring laboratories performing clinical diagnostic laboratory tests to report the amounts paid by private insurers for laboratory tests
November 17, 2017
CMS posted new reimbursement rates for lab tests
January 1, 2018
The new rates go into effect as a single national fee schedule (part of the CLFS)
Why are these lab reimbursement changes happening?
- PAMA was passed in 2014 to require applicable laboratories to report private payor data so that CMS could align Medicare rates with the private market
- Medicare pays for clinical diagnostic laboratory tests (CDLTs) under the CLFS. The CLFS provides payment for approximately 1,300 CDLTs, and Medicare pays approximately $7 billion per year for these tests
- Due to the new published rates, CMS estimates it will save approximately $670 million in Medicare Part B payments in 2018
How should you prepare for this PAMA regulation?
Laboratory testing plays a significant role in healthcare decisions, patient satisfaction and increased operational efficiency. Seventy percent of physician decisions rely on a lab test for diagnosis and treatment.
If you are an independent or physician office lab that receives significant portions of your revenue from the CLFS, you may wish to work with your McKesson Medical-Surgical Account Executive to perform a business review to help ensure the health of your lab and practice.
Here are some ways to help prepare your lab:
- Value-based care: Physician office labs can recover some or all reimbursement decreases in improved patient satisfaction and quality that in-office testing can bring – two indicators that comprise reimbursement under new MIPS/MACRA incentive payments
- Automate reporting requirements: Implement software systems that automate reporting to CMS for the test reimbursement data you receive from your payers to make compliance easier and more cost efficient
- Improve your lab’s efficiency: Perform a lab optimization analysis to help improve staff efficiency, and to determine the appropriate mix of diagnostic tests you should be performing for optimal reimbursement
Additional Resources for Healthcare Providers
For more details about PAMA, visit CMS’s PAMA Regulations webpage.
Our Laboratory Implementation Team helps with initial lab setup and implementation, ensuring you have enough space for lab equipment, verifying hazard protocols, validating and testing equipment and more. This team can help set up single pieces of lab equipment or help build an entire new lab. Email us today to get started.
Be advised that information contained herein is intended to serve as a useful reference for informational purposes only and is not legal advice. This information is intended for use only by competent healthcare professionals exercising judgment in providing care. McKesson cannot be held responsible for the continued currency of or for any errors or omissions in the information.