PAMA Report: ACLA Tries for Decisive Blow in Federal Court Case

Now that its lawsuit challenging the PAMA pricing scheme is back in the lower federal court, the American Clinical Laboratory Association (ACLA) went back on the offensive by moving for summary judgment on Oct. 15. ACLA contends that CMS’ scheme for implementing PAMA’s market-based prices for lab tests is “unreasonable” and contrary to the intent and terms of the statute. The agency’s decision to exclude hospital labs from data collection resulted in artificially low prices that don’t reflect true market rates, according to the ACLA. The new ACLA motion invites the court to rule in its favor without a trial.

The Larger PAMA Picture

Even if ACLA prevails on the summary judgment motion, CMS would likely appeal to the federal circuit court, just the way ACLA did last year when the roles were reversed and CMS won on summary judgment. Were it to ever happen, a decisive litigation outcome would require years, and maybe even a ruling by the U.S. Supreme Court. (For more on the PAMA court challenge, see Lab Compliance Advisor (LCA), Sept. 10, 2019.)

The real action as far as PAMA goes, is at the negotiating table. Negotiations between CMS and the lab industry have already yielded relief in the form of broadened “covered laboratory” criteria to include some hospital labs in PAMA pricing contained in the 2019 Clinical Laboratory Fee Schedule (CLFS). (For more on the 2019 PAMA changes, see,  Lab Compliance Advisor (LCA), Jan. 21, 2019). The ACLA court challenge increases the lab industry’s bargaining leverage and exerts pressure on CMS to make further concessions.

A similar dynamic is at work on the legislative front where a new bill called the LAB Act would delay PAMA reporting pending a thorough review of the CMS market-based pricing implementation scheme. Unlike the court case, the LAB Act could provide real, decisive and immediate relief. (For more of the LAB Act, see National Intelligence Report (NIR), July 16, 2019). But passing legislation is never easy, particularly during an election year and particularly in the current political environment.

 Takeaway: At long last, the lab industry seems to be making significant progress in its quest to get CMS to back away from its misguided and harmful PAMA pricing rules. The industry’s Plan A remains getting CMS to make regulatory concessions, the way it did with the new 2019 CLFS hospital lab reporting rules. Plan B is to reverse the CMS system via the LAB Act or other legislation. The lawsuit is only Plan C. And while a decisive court victory is the longest of long shots, pursuing the case keeps the heat on CMS and enhances the effectiveness of Plan A.