Friday, April 25, 2014

California Clinical Lab Association Protests CMS Authority for LCDs

The California Clinical Laboratory Association (CCLA) has filed a lawsuit in federal court in Washington, DC, challenging authority of CMS to delegate coverage decisions down to the authority of its local claims-processing contractors, or Medicare Administrative Contractors (MACs).    The CCLA press release is here, their law firm's announcement here, and the initial court filing, which is publicly available, is 77 pages long and can be found here.

As stated by the CCLA, key features of the complaint include:

  • Congress has unlawfully delegated regulatory power to the MACs;
  • MACs have implemented Medicare policy without following required federal rulemaking requirements;
  • MACs have developed LCDs based on criteria they are not permitted to consider;
  • HHS has eliminated any meaningful opportunity for laboratories to administratively appeal the application of LCDs and has not established a required mediation process;
  • HHS has not developed an effective plan to evaluate the appropriateness of adopting new LCDs nationally, as noted recently by the Office of Inspector General.
A Plain English Reading
I am not an attorney, but a plain English reading of the documentation suggests it is based on a 2013 Federal court case, Association of American Railroads vs. US Department of Transportation (721 F 3d 666).  The Department of Transportation is authorized to make rules and set and enforce fines that relate to the priority of passenger rail service and freight rail service when both services use the same lines at the same time.  It was asserted that the DOT unlawfully delegated too much of the policy-making and fine-setting to Amtrak.  (This is like the difference between your city setting standards for mowing and keeping a lawn that is not a nuisance, and your neighbor setting the laws and fines for when he thinks your lawn is a nuisance.)  The railroad association won, on the grounds that the federal authority for policy-making could not be delegated down to a private company, Amtrak, in the circumstances as they occurred.   

Since then, at least one case has asserted that CMS inappropriately delegated policy-making authority down to its contractors (in a case involving recoupments) but that case seemed to be unsuccessful (here).  

Congress Thinks LCDs are OK
There isn't any question that Congress thinks that MACs can do local coverage decisions (LCDs).   They are mentioned at least twice in the statute that creates the Medicare program, mostly recently in a section of text created by the April 2014 Medicare SGR bill (Protecting Access to Medicare Act, PAMA).  There, part of Section 216 states that local coverage decisions regarding lab tests should be made via LCDs.  So there is no question that Congress (and Congressional legal staff) has believed, and continues to believe, that LCDs made by local contractors are allowable.   The issues raised by CCLA are assertions that (1) the process runs very badly, and (2) even if it didn't run badly, it would be an inappropriate delegation of policy authority from the federal agency to a contracted company.

Appealing LCDs Can Be Difficult
There is no question that around the country, stakeholders (whether physicians, associations, labs, or companies) have sometimes submitted detailed policy change requests with attached publications to MACs, and after a month or two receive a very very short reply that "the material is reviewed, and no change is required."   This does not always occur, but when this occurs, it leaves the stakeholder uncertain how carefully the material was, in fact, reviewed.   Medicare has an online publication governing the LCD process (here) and posts LCDs in a national online database (here).

An Upside-Down World Without LCDs
It is a little difficult to imagine a world without any local coverage decisions.  For example, if an errant doctor ordered five MRI's a day on a patient, could a MAC deny those as unnecessary, or would that exceed its authority to implement CMS rules (there is no CMS federal rule about five MRI's a day.)   As far as federal decision-making, it's hard to imagine the entire breadth of healthcare for all possible drugs, services, visits, procedures, circumstances, for tens of millions of patients being covered by one written federal rulebook - its pages would probably stretch from here to Jupiter and back.   While the court case presents facts and examples about lab test LCDs, the underlying theory (whether MACs can write LCDs that affect reimbursement) seems to be general to all of healthcare and not specific to lab tests.

CCLA States....
In the press release, the President of the CCLA states “This law suit is being filed as a last resort."  The press release also closes with the remark, "The positions taken by CCLA in this action do not necessarily reflect the positions of all of its member organizations."

Other News
Readers with access to the Genomeweb website can read their May 6 story here.  A May 2 story at Pathology Blawg is here.