On September 25, 2015, CMS posting a 131-page document announcing its proposed rulemaking to implement PAMA Section 216. Through the proposed policy and procedures, CMS will reset the 20-year-old Clinical Laboratory Fee Schedule to new prices based on market price surveys for clinical laboratory tests. More after the break.
The link to PAMA rulemaking is here.
Genomeweb's article here. ACLA's press release is here. Coverage at Gray Sheet is here.
CMS accepts comments until November 24, 2015. Since that will lead into the holidays, and since comments and complaints will be voluminous, final rulemaking may not appear until January or February.
Update: CMS itself posted a lengthy Q&A on the PAMA rule on October 8, 2015, here.
A few thoughts on first reading of this 131 page rule.
I'm assuming the reader has read something about PAMA 216 elsewhere for the purpose of the notes below. Also, the following remarks are PROVISIONAL -- as I have not rechecked the whole text word for word. In some cases I am not noting the largest features of the rule, but rather, the surprising things I couldn't have predicted or which I think might be wrong.
WHAT DEFINES A "REPORTABLE" PAYMENT LEVEL?
There have been debates that lab payments are complex - extended in time, appealed, re appealed, sometimes paid zero until appealed, and so on. How will CMS handle this complexity?
On first reading, CMS seems to have ignored most of these issues. CMS first defines the reportable period (e.g. July 1-December 31, 2015). This is when "payments by private payers" must be reported. So it seems that a lab's accounts receivables department would be the key gatekeeper. The date of service doesn't matter, only the date of payment of a rate for a test by a payer. How labs would handle claims under appeal (where a payment IS reported, but NOT final) is uncertain - CMS may leave it up to the lab to use its best judgment. CMS views its job as stating the reporting period (Day X to Day Y), that private payer rates net of discounts must be reported, and that's it.
IS CMS' NOVELTY REQUIREMENT FOR ADLTS FAIR OR WISE?
For Advanced Diagnostic Laboratory Tests (basically, MAAA tests) CMS has inserted a novelty requirement which is absent in statutory creation of ADLTs. I'd like to say: Nonsense! The statute defines ADLTs basically as sole source MAAA tests, and there is no platform for CMS to create novel sides of the definition. Further, I would argue that from a policy perspective, it is counterproductive. No one would ever be incented to bring out an ADLT in the same general field (Mammaprint versus Oncotype) because the second test would be so disadvantaged nobody would ever create it and invest in it, while the privileges for the first test go on forever. Even bringing out an improved test version by the same lab might meet the general ADLT definition but not the special CMS novelty test. Bad idea. I think that CMS was concerned about longstanding algorithms of common use not being ADLTs, but this is the wrong way to do it.
HOW CAN CMS DEFINE ADLTs AS ALWAYS REQUIRING DNA OR RNA?
PAMA says that an ADLT is a test of DNA, RNA, or protein biomarkers combined with an algorithm into a single patient specific result.
CMS says that this means that the MAAA (ADLT) must contain DNA or RNA. What? If you state, “Measurement of A, B, or C” is required, it doesn’t mean that if you measure A or B it is OK, and if you measure C instead it is wrong. It means you can measure A, or B, or C, or any two, or all three. CMS completely lost me in this bit of rulemaking as it interpreted the statute into regulation.
WILL NEW LDTs EVER GET PAID AT LIST PRICE FOR THREE QUARTERS?
PAMA says that new LDTs (in 2017 and later) should be paid at list price for 3 quarters, and then CMS should reset the price to the market price and recoup prior overpayments if list price was higher than market price. CMS says that the 3-quarter clock starts at the date the test if first offered for sale. Since ramping up sales and getting CMS coverage could take 6-18 months or longer, for most new tests, the "list price 3 quarters" will have expired before a MAC gets an LCD in place to cover the test.
DO HOSPITAL LABS REPORT PRIVATE PAYER PRICES?
Stakeholders have wondered whether hospital labs will be required to report private payer prices for CLFS tests. It seems not. It looks like no hospital labs report. The "lab" is defined at the level of the lab but the financial ratios under which > 50% of revenue must be from lab tests, are defined at the level of the whole TIN that reports. So almost no hospital or physician labs would report – only independent labs.
Additional, no lab with less than $50,000 revenues must report. CMS notes that this means about 95% of physician office labs and even about half of independent labs won't have to report under PAMA. Nonetheless, over 90% of revenue paid to POLs and independent labs will be captured by CMS, even with this exclusion of small stakeholders.
SLAP AT AMA CPT CONVENTIONS?
CMS says they will be compelled to report FDA approved tests separately, but CMS notes that many CPT codes include both (e.g. KRAS CPT Code includes both FDA KRAS and LDT KRAS). CMS states they will create HCPCS codes for the FDA version of the test, e.g. a KRAS test. However, it seems to me this will only affect payment reporting AFTER the codes are created in future years, not before, since labs don't have private payer data on FDA and non FDA tests today. This would change an AMA CPT coding convention which has always avoided giving any privilege to FDA kits for molecular tests. It also might lead to some argument about what is an FDA kit -- if you modify it by 10% does it become an LDT?
MAC CONSOLIDATION - TO BE OR NOTE TO BE?
CMS discusses that it could create 1-4 MACs that produce all lab LCDs, or consolidate all policies and claims processing for lab tests into 1-4 MACs. CMS requests comment on these two options, or other options. CMS notes that changing MAC structures would take years and be quite expensive.
RAISING THE BAR FOR FOIA PROTECTION?
CMS notes that data submitted under this project might be released through FOIA requests. CMS acknowledges that FOIA Exemption B(4) prevents release of trade secret and competitive financial information. However, CMS seems to state it is not enough to merely stamp documents with the title "FOIA (B)(4) EXEMPT, TRADE SECRETS." Rather, the applicant must attach an "[express claim of] substantial competitive harm" and demonstrate in a separate document "how the release would cause substantial competitive harm pursuant to the process in Executive Order 12600." [Draft rule, p. 48.] In the past I have seen attorneys instruct clients that stamping FOIA EXEMPT TRADE SECRET was the main action they needed to take.
To discuss how the changing healthcare system and Medicare policy affects your company, association, or investments, contact Dr Quinn through FaegreBD Consulting.