CMS used this data to calculate
weighted medians for each CLFS
billing code, which then become the
new Medicare payment rates. These
rates apply to all Part B Medicare fee
for service claims. A cap structure
spreads the impact of large cuts out
over a period of years. The new
weighted median fee structure went
into effect January 1, 2018. These
rates are valid for every entity that
bills Medicare Part B for tests on the
CLFS. Market rate data collection
repeats every three years.
The New PAMA Paradigm
Before PAMA:
✓ Payment rates were based on lab
charges in 1984-1985, adjusted
annually for inflation
✓ Fifty-seven local fee schedules
✓ Same pricing schedule for all
categories of lab testing
After implementation of PAMA
(January, 2018):
✓ Payment rates for tests will be
based on private payer rates,
updated every three years
✓ Single national fee schedule
✓ Adds a new category of lab tests
—advanced diagnostic laboratory
tests (ADLTs)—with a different
pricing schedule
Additionally, the practice of bundling tests
into panels for payment is eliminated and the
new rates apply to each individual test
based on the individual median private payer
rates for those tests.
Problems with the survey
The data reporting process used for
the 2018 fee schedule has drawn ire
throughout the industry, and is the
basis for a lawsuit filed by the
American Clinical Laboratory
Association (ACLA) in December
2017, which has yet to be resolved.
“ With clinical labs facing
medicare cuts of up to
30% over the next 3 years
under the new CMS fee
schedule, the labs most
likely to survive are
those labs which are
operationally efficient,
financially fit, and
strategically diversified. ”
Irwin Z. Rothenberg, MBA, MS, CLS(ASCP)
The lawsuit charges that CMS
ignored congressional intent and
instituted a flawed data reporting
process. While this case is still
pending, it did not prevent the 2018
fee schedule from going into effect on
January 1, 2018.
The ACLA complaint asks the
court to set aside the regulations and
order CMS go back to the drawing
board to conduct a more truly
market-based reporting process.
market analysis mandated by
Congress became compromised.
2. The decision to impose a
retrospective data collection
period through rule-making did
not allow labs to make
arrangements to collect data
accurately or in totality.
3. Legislated requirement to use
weighted median methodology to
calculate price averages, instead of
a mean average, which skews
collected data to the highest
FOUR FUNDAMENTAL
volume rather than averaging all
ISSUES UNDERMINE THE
prices paid.
PAMA PROCESS:
4. Lack of a clear and transparent
1. The narrow definition of
mechanism to determine the
applicable labs that excluded
quality of submitted data.
nearly all hospital laboratories,
All “applicable” laboratories were
which represent almost half of the required to report under PAMA,
laboratory industry. With hospitals starting January 1, 2017, for a
almost universally excluded,
retrospective period. In 2015, the
reported pricing skewed lower
OIG projected that about 5% of US
than actual market pricing. F or
labs would be required to report
many reasons, hospital lab rates
under this definition, or an estimated
are generally higher than those at 12,437 labs. However, this 5 %
independent labs. Without these
represents 69% of all Medicare
rates represented in the mix, the
payments made to labs.
5