OMB Reviewing Final Rule on Medicare Lab Test Payment System

By Stephanie Murg, Managing Director, G2 Intelligence

Despite ongoing efforts to delay the changes to the Clinical Laboratory Fee Schedule (CLFS) directed by the Protecting Access to Medicare Act of 2014 (PAMA), the Centers for Medicare & Medicaid Services’s final rule implementing the PAMA-mandated reforms is now under review by the White House Office of Management and Budget (OMB). The highly anticipated statute is expected to require Medicare payment for clinical laboratory tests to be based on private payor rates beginning January 1, 2017.

OMB began its review of the final rule on April 21. Regulatory clearance—and subsequent publication in the Federal Register—is widely expected to be imminent. CMS estimates that the new payment system will reduce Medicare CLFS payments by $360 million in FY 2017 and by $5.14 billion over 10 years.

A proposed version of the rule, published in the Federal Register on October 1, 2015, outlined CMS’s plan for determining commercial rates. It called for collecting price data from laboratories that receive at least half of their Medicare revenues from lab-test reimbursement. The potential of this approach to effectively exclude hospital-based labs raised concerns from across the industry that the resulting CLFS rates would not be representative of overall market rates.

The schedule for implementation of CMS’s new reporting and payment methodology is also a key concern. “We believe the critical alterations to the CLFS must be accomplished in a deliberate and measured manner, so that laboratories have sufficient time, once the final rule and sub-regulatory guidance are issued, to comply,” wrote House Ways and Means Health Subcommittee Chairman Pat Tiberi and 26 other committee members in a March 31 letter to Acting CMS Administrator Andy Slavitt. “Given the delays in the rulemaking process, the Jan. 1, 2017, effective date for the new CLFS payment methodology is not feasible and should be delayed.”

Coming Soon: Get full details on the final rule in an upcoming webinar sponsored by G2 Intelligence and the American Clinical Laboratory Association. Details of the event will be posted as soon as the final rule is published.