Big Changes Proposed to Medicare Payments for Clinical Lab Tests

BNA’s Health Care Daily Report™ sets the standard for reliable, high-intensity coverage of breaking health care news, covering all major legal, policy, industry, and consumer developments in a...

By Michael D. Williamson

Sept. 25 — The CMS Sept. 25 released a proposed rule aimed at significantly changing how the Medicare program pays for clinical diagnostic lab tests.

The CMS is proposing to use data collected from clinical labs about how much they are paid by private insurers for tests to determine Medicare payment rates for lab tests beginning Jan. 1, 2017.

The proposed changes could result in $360 million less in Part B payments in fiscal year 2017 for Medicare-covered clinical lab tests. The payment changes could save $2.94 billion over five years and $5.14 billion over 10 years, the proposed rule said.

Medicare’s current fee schedule for lab tests was first adopted in 1984 and has remained relatively unchanged except to establish payments for new tests or implement across-the-board statutory payment updates, the CMS said in a Sept. 25 release. Moreover, the Medicare agency pays roughly $8 billion a year for clinical diagnostic laboratory tests, the agency said.

Reporting Requirements 

Under the proposed rule (RIN 0938-AS33), certain laboratories would be required to report private payer rate and volume data if they receive at least $50,000 in Medicare revenues from laboratory services and more than 50 percent of their Medicare revenues from laboratory and physician services.

Laboratories would collect private payer data from July 1, 2015, through Dec. 31, 2015, and report it to CMS by March 31, 2016, according to the proposed rule. The CMS proposed then using the data to determine new Medicare payment rates that would be posted by Nov. 1, 2016.

A Sept. 25 CMS fact sheet said the agency didn't anticipate hospital labs meeting the definition of facilities affected by the proposal.

“[W]e estimate that more than 50 percent of independent laboratories and more than 90 percent of physician offices will be precluded from reporting private payor data,” the CMS said.

The Protecting Access to Medicare Act (PAMA) of 2014 required the CMS to gather the private payer data from clinical labs, the CMS press release said. President Barack Obama signed PAMA April 1.

The proposed rule is expected to run in the Oct. 1 Federal Register.

According to the press release, comments (CMS-1621-P) on the proposal are due Nov. 25. However, a prepublication version of the proposal, which is subject to change without notice, said comments are due Nov. 24.


In a statement provided to Bloomberg BNA Sept. 25, Alan Mertz, president of the American Clinical Laboratory Association (ACLA), said altering Medicare's payment system “for clinical laboratory services is a complex undertaking and ACLA is committed to ensuring the end result works for clinical labs, CMS, and Medicare beneficiaries.”

However, the group is “extremely disappointed” with how the CMS determined which laboratories will be subject to the proposal's reporting requirements, Mertz said.

Mertz told Bloomberg BNA the proposed rule's reporting requirements appear to be “at odds with both the statutory language and Congressional intent.”

Long Anticipated 

Marc Hartstein, director of the CMS Hospital and Ambulatory Policy Group, told an ACLA meeting in May that the agency wouldn't meet a June 30 deadline for issuing a rule.

At the time, Hartstein said the proposal would contain information about how the CMS will collect market data and set new rates for Medicare payment to clinical labs

When Hartstein announced that the proposal would be delayed, Julie Khani, a senior vice president at the ACLA, told Bloomberg BNA in a May e-mail that the lack of a rule would “significantly compress an already tight time frame for laboratories to prepare and submit data to CMS.”

In addition, Hartstein’s acknowledgment meant that “PAMA implementation will be complex and challenging for both labs and for CMS,” Khani said at the time.

To contact the reporter on this story: Michael D. Williamson in Washington at

To contact the editor responsible for this story: Brent Bierman at