PAMA-Geddon: Lab Industry Takes CMS to Court

The nearly three-year struggle between HHS and the lab industry over PAMA has entered a new phase. On December 11, the American Clinical Laboratory Association (ACLA) filed a lawsuit asking the U.S. District Court for the District of Columbia to intervene and resolve the PAMA fee schedule fiasco.

What ACLA Is Claiming
ACLA’s beef is not with the idea of basing Medicare Part B fees for lab tests on actual market rate but how CMS has gone about executing it, specifically its exclusion of hospital labs in determining market prices. The complaint asserts three basic claims:

1. CMS exceeded its statutory authority under PAMA to determine market prices by deliberately excluding hospital labs, which represent the vast majority of the lab market;
2. Not counting hospital labs was an unreasonable interpretation of PAMA—specifically the term “applicable laboratories”; and
3. The CMS pricing formula is “arbitrary, capricious” and an “abuse of discretion.”

What ACLA Wants the Court to Do
The ACLA is asking for “injunctive relief.” Interpretation: Rather than award money damages, the ACLA wants the court to take action to resolve the problem, namely:

• Bar CMS from putting its now final 2018 PAMA Clinical Laboratory Fee Schedule into effect (For the details, see “CMS Finalizes Controversial PAMA Fee Schedule, GCA, Nov. 2017, page 1); and
• Order CMS to obey PAMA by revising its pricing formula to include hospital labs as “applicable laboratories” for purposes of calculating market rates.