Reproposed SALSA Offers Real Chance of Long-Term PAMA Relief
After it failed to pass at the end of 2022, lab leaders and other insiders say they’re optimistic SALSA will pass this year.
The Protecting Access to Medicare Act (PAMA) was meant to establish predictable, market-based Medicare Part B prices for laboratory tests by ensuring that Medicare paid the same prices for lab tests that private payers paid in their specific markets. It was up to the Centers for Medicare & Medicaid Services (CMS) to determine those prices, and that’s where things have gone astray. By basing its pricing on data that excluded higher-reimbursing hospital- and community-based labs, the resulting cuts to lab test reimbursement went far beyond what the industry expected, threatening labs’ financial survival, innovation, and patients’ access to critical tests.
The CMS lab test pricing scheme, which has been widely criticized by both industry insiders and independent experts,1 would have resulted in further steep price cuts to lab test reimbursement had Congress not stepped in at the last minute, most recently in December 2022.2 After three years of such last-minute rescue, legislation that would provide permanent and fair PAMA relief may be at hand—the Saving Access to Laboratory Services Act (SALSA). The big question is whether SALSA will be passed in 2023 after failing to do so last year. Here’s why lab industry leaders and insiders close to the situation are cautiously optimistic that it will.
SALSA to the Rescue
For years, the lab industry and its allies have worked to undo the damage caused by PAMA. It has been a slow but steady slog across several fronts. The inflection point has been the deep 10 percent cuts that were scheduled to take effect in 2018, 2019, and 2020, rising to 15 percent in 2021. The good news is that after the 2018 cuts, Congress stopped the subsequent cuts with a series of one-year delays; the bad news is that the problem remains unresolved and 15 percent cuts to approximately 800 common lab tests are still scheduled to take effect on January 1, 2024.3
Why SALSA Failed in 2022 & May Not Pass in 2023
The 2023 SALSA is the same bill that Congress proposed last year. Like its predecessor, it’s a bipartisan measure that enjoys strong support in both houses. Its proposed solutions come recommended by the influential and nonpartisan Medicare Payment Advisory Commission (MedPAC). So, why isn’t its passage a slam dunk?
According to Congressional Budget Office (CBO) preliminary estimates, confirmed by sources G2 Intelligence recently spoke with, adopting SALSA would cost Medicare approximately $6 billion over 10 years. Under federal PAYGO (pay-as-you-go) budgetary rules, Congress must offset new spending with either specific tax increases or cuts in other programs.
Many in the industry believe this estimate is too high. In addition, “the long-term benefits of preserving lab access, improving care, reducing costs and maintaining innovation would more than offset these costs over time,” notes American Clinical Laboratory Association (ACLA) president Susan Van Meter, MA. However, she adds, these benefits are hard to quantify in precise dollars and the CBO tends to frown on the “dynamic scoring” approach of factoring general macroeconomic consequences into the costs of proposed legislation.
What that means is that Congress will need to find $6 billion to pay for SALSA. Unwillingness to pay that price tag was probably why SALSA didn’t make it across the finish line last year, according to Erin Morton, a partner at Washington, DC, lobbying firm CRD Associates, which is advocating for passage of SALSA on behalf of the National Independent Laboratory Association (NILA).
4 Reasons to Believe SALSA Will Pass in 2023
So, the lab industry finds itself in the same position now that it was in June 2022. SALSA is on the table, but it carries a hefty price tag. Still, while it’s still going to take a lot of work, insiders are cautiously optimistic that things are actually different this year. Here are four reasons why.
1. Greater Appreciation & Urgency
Experts agree that Congress now has a better appreciation of the issues involved than it did last year. “We’ve had more time to educate members of Congress and make them comfortable with SALSA,” Morton says. “After three years of last-minute fixes, there’s growing consensus on the need for a long-term solution,” says Van Meter.
“After the pandemic, there seems to be a deeper appreciation for the importance of preserving access to lab services, particularly in rural and underserved parts of the country,” adds Shannon Haymond, PhD, American Association for Clinical Chemistry (AACC) president. “SALSA is bipartisan, fair, and necessary.”
2. Recognition that PAMA Pricing & Reporting Needs Fixing
Apart from CMS, nearly everyone involved in the healthcare industry seems to recognize that the current PAMA pricing and reporting system is ridden with problems. In June 2021, MedPAC published a report to Congress concluding that the CMS data collection process did, indeed, lead to deeper payment cuts than what would have been made had price reporting been representative of the lab industry as a whole. MedPAC also called on Congress to address the problem by requiring a representative-sampling approach to collecting lab price data while also reducing the number of labs required to report data to alleviate the administrative burden on labs. The SALSA bill incorporates all these measures.6
PAMA in Court
MedPAC wasn’t alone in finding fault with the CMS PAMA scheme. On July 15, 2022, the D.C. Circuit Court ruled in a lawsuit brought by ACLA that CMS’ PAMA regulations are “arbitrary and capricious” because they don’t “reasonably explain” the agency’s use of National Provider Identifier (NPI) numbers to identify lab revenue. Specifically, the court reasoned that the PAMA statute’s definition of “applicable laboratory” as one that receives most of its Medicare revenue from the CLFS and Physician Fee Schedule would include hospitals without NPIs that the CMS definition excludes. However, while agreeing with ACLA on the merits, the court stopped short of striking the regulations down because of language in the statute barring federal courts from reviewing PAMA payment amounts [Am. Clinical Lab’y Ass’n v. Becerra, 2022 U.S. App. LEXIS 19545, July 15, 2022].7
3. The SALSA Bill Itself
The other big thing SALSA has going for it is that it follows MedPAC recommendations and offers what seems to be a fair and moderate solution to the PAMA reporting and pricing problems. Among other things, the bill:
- Requires CMS to use a more statistically representative sample of private payer rates from independent labs, hospital labs, and physician office labs to determine CLFS rates, which would not only make Medicare prices more accurate but also lighten the administrative burden of price reporting by reducing the number of labs that must report;
- Imposes annual limits on year-to-year price cuts (and increases) that can be imposed on a particular test, starting in 2024 and establishing a permanent cap of five percent thereafter;
- Requires applicable laboratories to report pricing data once every four years, starting in 2026, rather than once every three years, which would reduce reporting burdens and make CLFS rates more stable.
PAMA/SALSA CLFS Price Cut & Increase Caps
|Maximum PAMA Cut/Increase
|Maximum SALSA Cut
|Maximum SALSA Increase
|2028 and thereafter
Proposed Changes to Scope of PAMA Reporting Rules
· Medicaid-managed care rates, which by law must be below Medicare rates for the same services; and
· Physically mailed remittances to the extent those remittances don’t exceed more than 10 percent of the reporting lab’s total claims.
4. The Lab Industry’s Unity
There’s another factor that has people on the inside feeling optimistic about SALSA—the unity of the lab industry. Strong support for SALSA is widespread across the healthcare sector, as shown by a recent letter to Congress involving 34 provider organizations.
Published on May 22 and including organizations such as ACLA, AACC, NILA, the American Hospital Association (AHA), and the American Medical Association (AMA), the letter called on House and Senate leaders to pass SALSA before the end of the year. “Without congressional action, Medicare reimbursement cuts—a fourth round scheduled to begin January 1, 2024—could jeopardize access to many clinical laboratory tests that are used to diagnose, monitor, prevent, and manage common diseases for Medicare beneficiaries,” the letter states.9
ACLA has also launched the Stop Lab Cuts campaign and a corresponding website (StopLabCuts.org). The site offers information about the looming PAMA cuts, their impact on care, and the proposed SALSA legislation, along with a portal that users can use to email their lawmakers in Washington to express support for passage of the bill.3
The X Factor
“The industry doesn’t rally behind a regulatory issue very often,” says Mark S. Birenbaum, PhD, executive director of the American Association of Bioanalysts (AAB) and a seasoned veteran of lab advocacy, “but when it does, it tends to get results.” Birenbaum compares the current push for SALSA to “what happened in 2006 when the industry came together to oppose competitive bidding of Medicare lab services, and again in 2010 when we pushed back on a proposed requirement to include physician signatures on requisition forms.” In each instance, the effort culminated in success.
He’s cautiously optimistic and hopeful that the pattern will repeat, and SALSA will pass before the end of the year. The sentiment seems to be the same among those close to the situation who have so much on the line by finally securing permanent PAMA reform.
|Ornament in Search of a Christmas Tree
Congressional dynamics will also come into play. When and if SALSA passes, it will unlikely do so on its own but as an add-on to a larger bill, like an ornament to a Christmas tree. In 2022, the potential Christmas tree was the $1.7 trillion federal spending bill that passed on December 23, which did include other Medicare ornaments but not SALSA.10 It’s unclear what this year’s Christmas tree bill will be. As a lobbyist attuned to the ways of Congress, Morton says that this year’s Christmas tree will look a lot like last year’s, “some kind of end-of-year omnibus spending bill that passes at the 11th hour.”
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