ACLA Keeps the Pressure on CMS by Appealing Dismissal of PAMA Lawsuit

The American Clinical Laboratory Association (ACLA) is not backing down. For more than three years, the association has waged litigation warfare challenging the legality of CMS’s methodology for setting PAMA “market-based” reimbursement rates for lab tests under Medicare Part B. Twice that lawsuit has been dismissed, most recently in March 2021. But on May 28, the ACLA said that it’s filed a notice of appeal.

The ACLA’s Apparent Strategy

The lawsuit, ACLA v. Azar, has ping-ponged between the US District Court for the District of Columbia and the US Court of Appeals for the DC Circuit since 2017. At issue is whether CMS went beyond its legal authority in the way it established PAMA reimbursement rates, specifically its decision to exclude hospital labs as “applicable laboratories” required to submit the private payor pricing data relied on to set the Clinical Laboratory Fee Schedule (CLFS) rates for particular tests.

The issues in the case relating to CMS’s legal authority to implement PAMA are fairly technical and complex. (See, Lab Compliance Advisor, Feb. 26, 2018) for an analysis.) Many believe that ACLA has a solid case. But the one thing upon which most attorneys following the case agree is that it’s extremely difficult to persuade a federal court to overturn the regulations authored by the executive branch agency charged with implementing a statute. The previous two dismissals are evidence of that.

The ACLA clearly understands that winning the lawsuit remains a bit of a long shot. But while victory in court would be its first choice, filing the appeal furthers the ACLA and lab industry constituents’ PAMA pricing agenda by keeping up the pressure. The appeal pins down CMS on the judicial front while what’s shaping up to be the real battle is waged on the legislative and regulatory fronts.

“While we continue our advocacy in the courts, it is even more critical for Congress to take legislative action on PAMA reform,” noted ACLA president Julie Khani in a statement issued after the appeal was filed. “ACLA will continue to work with policymakers to establish a Medicare Clinical Laboratory Fee Schedule that is truly representative of the market and supports continued innovation and access to vital laboratory services, as Congress originally intended.”

Takeaway

The ACLA’s leadership in challenging the warped CMS PAMA pricing scheme has proven quietly effective. Significant regulatory progress was made in 2019, when CMS agreed to an ACLA proposal to revise the “applicable laboratory” qualifications to include a larger sample of hospital outreach labs. Legislative progress was also made in December of that year when Congress passed the LAB Act (Laboratory Access for Beneficiaries Act), to delay the reporting of lab payment data required by PAMA. The March 2020 CARES Act (Coronavirus Aid, Relief, and Economic Security Act) provided another one-year delay from PAMA reporting requirements as well as a one-year delay in the implementation of scheduled rate cuts.