Medicare Reimbursement: ACLA Court Appeal Maintains 2-Front War for PAMA Relief

It's official. The ACLA is appealing the September federal court decision to dismiss its PAMA lawsuit (ACLA v. Azar). Here's a quick rundown of the three things you need to know.

1. The Legal Argument

The ACLA contends that HHS' methods of implementing the PAMA market-based lab reimbursement exceeded its authority under the statute and defeated Congress's intent to establish real market rates for lab tests. The district court dismissed the claim citing the part of PAMA that exempts HHS—via CMS' determinations of lab payment rates from legal challenge. The ACLA argues that the heart of the case isn't so much about how HHS used the pricing data but collected it and that the district court was wrong to intertwine data collection with rate setting.

2. The Chances of Success

The ACLA has a roughly 50/50 shot at winning the appeal, says Jordan Keville of Davis Wright Tremaine LLP. Appeals courts generally give lower courts wide discretion to rule on the facts. But because this appeal turns on interpretation of the PAMA law, the normal deference rules don't apply. According to Keville, ACLA has a viable argument that Congress didn't intend to exempt CMS' data collection under PAMA from review because the exemption language refers only to rate-setting. Conversely, government agencies are typically entitled to some level of deference in interpreting the statutes they're charged with administering.

3.What's Really Going On

ACLA may be pursuing a two-prong strategy based on the recognition that negotiation rather than litigation represents the most likely source of PAMA relief. Continuing the lawsuit keeps up the pressure on CMS and increases the industry's leverage in the negotiations over PAMA changes. And in case negotiation does fail, the lawsuit and chance to secure a favorable court ruling gives the industry another avenue for PAMA relief.