Labs Get One-Year Reprieve under Final PAMA Rule, New Rates Delayed until 2018

Labs must now begin preparations in earnest to comply with private payor rate reporting requirements under the Protecting Access to Medicare Act of 2014 (PAMA). After much lobbying, debate and delay, the Centers for Medicare & Medicaid Services (CMS) final rule implementing the PAMA changes to the Clinical Laboratory Fee Schedule (CLFS) was released this month.

The good news is that the final rule delays the effectiveness of new payment rates under the CLFS to Jan. 1, 2018, rather than a mere six months away in January 2017, as planned in the proposed rule. The American Clinical Laboratory Association and the American Association for Clinical Chemistry both issued statements applauding CMS for delaying implementation of the new rates until 2018.

The timeline for implementation now requires data be collected for the period Jan. 1 through June 30, 2016 (data collection period). This six-month collection period will be repeated in subsequent collection periods rather than the one-year periods originally contemplated.

Data reporting must be accomplished between Jan. 1 and March 31, 2017 (reporting period). In early September 2017, CMS will publish preliminary CLFS rates for public comment with final CLFS rates published in November 2017 and effective Jan. 1, 2018.

Here’s a run down on some of the key changes in the final rule:

• Applicable labs are those that receive more than 50 percent of total Medicare revenues under the CLFS or Physician Fee Schedule (PFS) (unchanged from proposed rule)
• Applicable labs will be determined by revenue under their National Provider Identifier (NPIs) (rather than by Taxpayer Identification Numbers (TINs) as proposed). Commentators predict this change may bring more hospital outreach rates into the data collected
• Applicable labs will not include labs paid less than $12,500 under the CLFS during the data collection period (rather than $50,000 threshold originally proposed)
• Hospital outreach laboratories will need to report if at least 50 percent of Medicare revenues are from CLFS and PFS services, with at least $12,500 from the CLFS.
• The definition of Advanced Diagnostic Laboratory Tests (ADLTs) includes “tests that are solely an analysis of proteins” (The proposed rule defined ADLT to be an analysis of RNA or DNA and may include proteins but protein-only tests wouldn’t qualify as ADLTs). One other change that has been introduced into the ADLT criteria is a requirement that labs present evidence and attest to the test’s unique algorithm.

Takeaway: With the much-awaited arrival of the final rule implementing PAMA, labs must now get to work preparing there systems to generate the date needing to be reported and bracing for the changes to come for the CLFS.

Editor’s Note: A G2 Intelligence webinar, hosted June 28, 2016 in partnership with the American Clinical Laboratory Association, provides analysis of the new final rule. To purchase a recording of the webinar, The PAMA Final Rule: What You Need to Know and Do NOW to Comply with the New Payment Rules and Protect Your Lab Revenue, visit our website or contact customer service at 1-888-729-2315.