Compliance Perspectives: CMS Reviews PAMA Reporting Basics for Hospital Outreach Labs

PAMA reporting is tricky business in which mistakes and omissions carry the risk of civil monetary penalties of up to $10,000 per day. So, whether you’re with a freestanding lab that’s been through the rigors or a hospital-based outreach lab that’s new to the process, a quick review of PAMA reporting principles is a valuable investment of your time. To simplify, we’ve boiled down the basics covered by CMS during its recent “refresher call.”

What’s Going On
PAMA, The Protecting Access to Medicare Act of 2014, requires “applicable laboratories” to report private payor rates paid for clinical diagnostic laboratory tests (CDLTs) to CMS for use in calculating Medicare payment rates.  CMS’ original definition of “applicable laboratories” excluded the majority of hospital outreach labs which skewed Medicare payments lower than they should have been.

• The good news: In issuing the 2019 Clinical Laboratory Fee Schedule (CLFS), CMS the definition of “applicable laboratories” to include more hospital outreach labs.
• The bad news: The newly included labs didn’t get a breathing period and have to participate in the next round of data collection, which began in 2019.

With this in mind, CMS hosted a Jan. 22, 2019 “refresher call” to go over the requirements for reporting private payor rates and volume data for clinical diagnostic lab tests paid under the CLFS in three crucial areas:

1. Which Hospital Outreach Labs Count as an “Applicable Laboratory”

PAMA defines applicable laboratory as one that has the majority of its Medicare revenues paid under the CLFS or Physician Fee Schedule. For reporting purposes, CMS originally defined “applicable laboratory” as an entity which, using its National Provider Identifier (NPI), receives the majority or more than 50% of total Medicare revenues from payments under the CLFS and the Physician’s Fee Schedule. The CMS definition of applicable labs excluded NPI level entities that receive less than $12.500 dollars from CLFS during the data collection period. The $12,500 threshold didn’t apply to some labs furnishing Advanced Diagnostic Laboratory Tests (ADLTs) for the ADLTs they furnish.

As of Jan. 1, 2019, CMS amended the definition of “applicable laboratory” to include certain hospital outreach labs provided that they meet the applicable criteria. The 2019 CLFS defines a “hospital outreach laboratory” as a hospital-based lab that furnished lab tests to patients other than admitted inpatients or registered outpatients of the hospital. CMS also clarifies the rules for hospital outreach labs to calculate Medicare lab revenues for purposes of determining whether they fall into the new “applicable laboratories” definition by:

• Excluding Medicare Advantage plan payments from total Medicare revenues;
• Requiring hospital outreach labs that bill for their non-patient lab services using the hospital’s NPI to use Medicare revenues from the Form CMS-1450 14x Type of Bill to determine whether they meet the majority of Medicare revenue threshold and low expenditure threshold;
• Requiring hospital outreach labs that bill Medicare Part B for non-patient lab services using the hospital NPI instead of their own NPI to determine applicable laboratory status from their Medicare revenue attributed to the form CMS 1450 14X TOB.

2. Which “Applicable Information” Must Be Reported

If the hospital outreach lab finds that it does meet the definition of “applicable laboratory,” it must report “application information” to CMS during data reporting periods. CMS clarified that the Taxpayer Identification Number (TIN) level entity, not the applicable laboratory, is responsible for reporting applicable information for each CDLT furnished by its component applicable laboratories. During the refresher call, CMS also explained that “applicable information” includes:

• The specific Healthcare Common Procedure Coding System (HCPCS) code associated with the test;
• Each private payor rate for which final payment was made during a data collection period (by date of final payment); and
• The associated volume of tests performed for each private payor rate.

CMS then listed examples of applicable information, including:

• Multiple payment rates for the same test—if a lab has more than one payment rate for the same private payor for the same test or more than one payment rate for different private payors for the same test, the reporting entity must report each such payment rate and the volume for the tests at each such rate;
• Resolved appeals;
• Non-contracted amounts for out-of-network labs or services; and
• Final payments from secondary insurance payors.

CMS then added that applicable information does not include:

• Unresolved appeals;
• Payments that don’t reflect specific HCPCS code level amounts;
• Remittances where the payor has grouped test-level payments into a claim level payment; and
• Denied payments.

3. Private Payor Data Collection and Reporting Policies

CMS then went on to explain private payor data collection and reporting policies, starting with the PAMA definition of private payor, i.e.:

• A health insurance issuer and a group health plan (as defined in section 2791 of the Public Health Service Act);
• A Medicare Advantage plan under Part C; and
• A Medicaid managed care organization (as defined in section 1903(m)).

Next, CMS outlined what should be reported to CMS as far as the private payor rate goes, including:

• All payment rates for a test;
• The final amount paid by a private payor for a CDLT after all private payor price concessions are applied; and
• Private payor payment rates for CDLTs paid for under the CLFS and any patient cost sharing amounts.

Private payor rates do not include:

• Private concessions applied by labs; and
• Information about denied payments.