Wednesday, April 25, 2018

Very Brief Blog: ACLA 42-page Response in PAMA Court Case

Several months ago, ACLA filed suit against CMS/HHS for improper implementation of PAMA Section 216, which uses market surveys to reprice the CMS Clinical Laboratory Fee Schedule.

While I don't have access to all filings, the April 16, 2018, issue of DARK REPORT provides a multi-page summary of filings by ACLA, NASL, AdvaMed, CAP, and AAB.   It also discusses HHS's motions in regard to dismissing the case for lack of standing and similar grounds. 

One publicly available window into the case is the ACLA 42 page response to HHS, which was filed in on April 6, 2018.  See the PDF at the ACLA website here, and coverage at Dx360 here.  The ACLA document recapitulates many of HHS's assertions in order to rebut them.  The case is ACLA vs Azar, 17-cv-2645.

The ACLA document linked above includes, at PDF page 38, a letter from BioReference, the large NJ-based laboratory, requesting a redetermination of claims asserted to be underpaid due to PAMA.  The letter to Novitas is signed by BioReference's chief counsel Jane Pane Wood.


I'm not an attorney, but as a policy observer, it seems to me neither HHS nor ACLA want to admit that the Statute here is very badly worded and very hard to apply to hospital labs.   HHS needs the statute to be clear enough that HHS has come up with a wise and appropriate implementation that cannot be legally challenged since it is a rationale implementation of what must be, therefore, a rationale statute.    ACLA probably recognizes the problems in implementing the statute-as-written, but argues strongly that it is not up to ACLA to figure out its implementation, that is CMS's job.

The statute requires the Medicare A/B revenue of the lab to be >50% from Part B fee schedules (CLFS or PFS).   If you define "lab revenue" as "revenue" from line item bills on fee schedule then hospital labs would always qualify, so the rule seems meaningless.  (That is, you would define Part A overhead as "not revenue of the lab" because it is "revenue of the hospital.")   If you include lab revenue from fee schedules AND revenue or financial support filtered in from hundreds of millions of dollars of Part A hospital stays and Outpatient care where lab tests are now bundled to surgeries and office visits, it gets complicated quickly and would become a rat's nest of hospital accounting rules.   CMS avoided this rat's nest by defining "revenue" per NPI but this takes the implementation far from what the statute seemed to intend. 

It's easy for physician labs to qualify as getting >50% of physician office revenue from Part B fee schedules (even if it's only 1% lab fee schedule per se.)  Whether you defined the revenue basket as "the physician office" or "the lab inside the physician office" (sic) either way it's mostly or entirely fee schedule based.