Labs Face Multiple Medicare Threats in New Legislative Year

With Medicare sure to be targeted this year during deficit reduction battles in Congress, the clinical laboratory industry is keen to ward off three major threats: further cuts to the Part B lab fee schedule, introduction of a lab copay, and competitive bidding. The imminent threat is the cut of 2 percent under automatic across-the-board sequestration cuts set to take effect in March. This affects all Medicare providers, and whether Congress will heed calls from hospital and medical groups to repeal the cut is too hard to call, say industry sources. On a recurring reform proposal, namely, imposition of a 20 percent Part B lab copay, there are conflicting reports. At present there is not much Democratic support, while some GOP members of the House are reportedly looking into it as part of making copays uniform across all Medicare services. Lab services have had both the deductible and copays waived since the Part B fee schedule was established in 1984. Advocacy for lab competitive bidding has come from circles outside Congress, including academic journals, research reports, and a think tank position paper, so it is hard to gauge interest among lawmakers to revive this payment approach. Regulation of laboratory-developed tests (LDTs) is also a big concern for clinical lab and pathology groups. The Food and Drug Administration (FDA) has yet to finalize its plan to use its enforcement discretion to conduct oversight of LDTs based on the level of risk they present. To oppose this, lab and pathology groups are expected to pursue reintroduction of a bill, similar to the bipartisan one proposed in the previous Congress by Rep. Michael C. Burgess (R-Texas), that would give the Centers for Medicare and Medicaid Services (CMS), not the FDA, the lead authority over LDT regulation. The groups also face challenges in CMS payment policy for 2013, in particular, ensuring that reimbursement, to be determined by the gap-fill method based on local pricing patterns, is appropriate for 114 new molecular pathology codes added to the Part B lab fee schedule and getting relief from the 52 percent cut in payment for the technical component of CPT 88305, the most commonly ordered surgical pathology code.