PAMAgeddon: Congress Tables Bill to Delay Next Round of Price Reporting for One Year

The PAMA data collection process has been a lightning rod for criticism from almost the moment CMS unveiled it. And now Congress may be getting ready to intervene. A newly proposed bill called Laboratory Access for Beneficiaries (LAB) Act would delay the reporting of lab payment data required by PAMA by one year. Here’s a rundown of what you should know about the LAB Act.

The PAMA Payment Data Reporting Controversy

Price data reporting is, of course, crucial to the lab industry because it serves as the basis of what are supposed to be the market-based rates for lab tests under Medicare Part B mandated by PAMA. Under the statute, CMS is responsible for collecting this data. The problem is that instead of assembling a database representative of private payor rates, CMS ended up collecting a sample representing less than 1% of the market. CMS price data reporting left out huge swaths of labs including hospital labs that command higher prices for lab tests.

In addition to overweighing data from large firms with cost structures lower than typical labs, such as Quest Diagnostics and LabCorp, the exclusion of higher-price labs artificially skewed rates by more than 30% across a broad range of diagnostic tests. In 2017, the American Clinical Lab Association (ACLA) filed a lawsuit challenging the legality of the rate setting process. A lower federal court dismissed the case in 2018 but ACLA maintained the pressure by filing an appeal. (For more about the ACLA PAMA lawsuit, see National Intelligence Report (NIR) Dec. 15, 2018.)

Last December, the CMS gave some ground by broadening reporting labs to include hospital outreach labs that submit Medicare claims using 14X billing. The agency also tweaked the formula labs must use to determine the percentage of revenue generated by the Clinical Laboratory Fee Schedule or Physician Fee Schedule in a way that will likely lead to more labs having to report payment data.

While the welcoming the changes, lab industry groups continue to insist that they don’t go far enough. “Our most vulnerable seniors are at the whim of a flawed data collection and reporting process that is fundamentally at odds with the quality care they deserve,” according to a press release from ACLA President Julie Khani. “They have seen the impact of PAMA’s misguided implementation already—laboratory closures, reduced test menus and longer wait times for care.”

The LAB Act Bill

In addition to litigating and seeking to negotiate with CMS, the lab industry has been working with Congress in hopes of securing much needed PAMA relief. And it now appears that those efforts have borne fruit. In late June, a bipartisan group of U.S. House members introduced the LAB Act bill to delay the next round of PAMA reporting for one year.

Congressmen Leading the Fight for PAMA Relief

The six Congressmen that proposed the LAB Act come from both parties and include Rep. Scott Peters (D-Calif.), Rep. Gus Bilirakis (R-Fla.), Rep. Bill Pascrell (D-N.J.), Rep. Kurt Schrader (D-Ore.), Rep. Richard Hudson (R-N.C.) and Rep. George Holding (R-N.C.).

Explanation: The most recent PAMA payment data collection period just ended, running from January 1, 2019 to June 30, 2019. Labs are slated to report this payment data between Jan. 1, 2020 and March 31, 2020, with rates based on that data to be implemented starting Jan. 1, 2021.

The LAB Act would delay that process by a year during which new payment data reporting requirements would be explored. The bill also calls for the National Academy of Medicine to provide recommendations to Congress on less burdensome data collection methods and representative reimbursement rate calculations that result in the reliable, sustainable, market-based system originally intended by Congress.

“The LAB Act is a meaningful step forward to achieving comprehensive PAMA reform for clinical laboratory services. We applaud Reps. Peters, Bilirakis, Pascrell, Schrader, Hudson and Holding for their leadership in protecting Medicare beneficiaries and urge Congress to prioritize the LAB Act before seniors face another round of cuts,” said Khani in the press release.