The Centers for Medicare and Medicaid Services’ (CMS’) preliminary 2018 prices for clinical laboratory tests issued under the Protecting Access to Medicare Act (PAMA) came as a big disappointment to the laboratory industry. First, other than for some advanced tests, the prices were lower than expected. Secondly, implementation of the new PAMA payment system will not be delayed and will take effect Jan. 1, 2018. Lastly, CMS stuck to its controversial approach of excluding hospital laboratories from its pricing formula. The intent of PAMA is to base Medicare payments for specific tests on the weighted median of private payer rates for that test. Since 2014, CMS has been gathering data from "applicable laboratories" to calculate these rates. The proposed Clinical Laboratory Fee Schedule (CLFS) for 2018 represents the agency’s first attempt at setting prices using the new formula. While embracing the idea of market-based pricing, the laboratory industry has objected to CMS’ methodology of not including hospital and community labs in its definition of "applicable laboratories." Because these labs charge higher rates, excluding their pricing data was bound to artificially skew rates in a downward direction, the laboratory industry argued. Payment Cuts The CMS’s CLFS proposal confirms the laboratory industry’s […]