Very Brief Blog: GAO Releases Report on CMS Lab Overpayments and Risks

GAO has issued an unusual report that implementation of PAMA lab pricing "May Lead to Billions in Excess Payments."   This will probably be a head-spinning conclusion, to anyone watching lab payment rates fall annually under PAMA.

UPDATE Feb 2019:
ACLA and Advamed complained about the report, here.  See 360DX article in Feb 2019,  here.

• The GAO report home page is here.
• The one page summary is here.
• The full 47 page report is here.
• See comments in response, from HHS to GAO, page 38-40.
• Footnote 67 on page 30 references a House report language request to CMS that I cited in a blog on August 31.

Update:  Grassley asks CMS to follow up on the GAO report, January 2019, here, here.

I think I was one of the first to report in 11/2017 on the potential implications of CMS dropping its longstand practice not to pay more for clinical chemistry panel components than it would pay for the clinical chemistry panel.  GAO picks up this same issue in its summary now in 11/2018. In addition, their Figure 6 page 29 almost exactly replicates the figure I published in the bottom of my blog in 11/2017.

CMS stopped paying a bundled payment rate for certain panel tests (groups of laboratory tests generally performed together), as was its practice prior to 2018, because CMS had not yet clarified its authority to do so under PAMA, according to officials. CMS is currently reviewing whether it has the authority to bundle payment rates for panel tests to reflect the efficiency of conducting a group of tests. GAO estimated that if the payment rate for each panel test were unbundled, Medicare expenditures could increase by as much as $10.3 billion from 2018 through 2020 compared to estimated Medicare expenditures using lower bundled payment rates for panel tests.

In addition, I have previously published (e.g. in August 2018) panel pricing graphics that almost exactly match some later used by GAO.

click to enlarge.  Quinn graphic left, later GAO graphic right.

PAMA CLFS COMMENTS: DUE NOV 24; EARLY RETURNS

[UPDATE: SEE THE UPDATED DECEMBER 16 BLOG 

WRITTEN AFTER THE CLOSE OF THE COMMENT PERIOD: HERE.]

November 12, 2015:

Medicare issued proposed regulations for implementing PAMA's changes to the Clinical Laboratory Fee Schedule on September 23 (Federal Register final version, October 1, here).  The comment period runs til November 24, and comments can be typed up and entered online here.

As of November 12, 75 comments had been submitted.  About 15 are similar letters from employees of Quest Diagnostics.  Otherwise, most of the comments represent a lengthy form letter submitted from dozens of individuals.

My comment, focused only on the definition of ADLT, is here.

The Vague Advisory Panel for New Clinical Lab Tests

 Much attention has been aroused by the major reform of clinical lab test pricing in the Medicare system which occurred on April 1, 2014 (no joke) when President Obama's signature met the Protecting Access to Medicare Act (PAMA).  One of the major sections of the bill shifts the Clinical Laboratory Fee Schedule - how Medicare pays for clinical chemistry and genetic tests - to peg all the federal prices to market-average prices, beginning in 2017.   (For details, see our Foley Hoag summary of the CLFS provisions).  The bill also gives CMS a free hand in resetting the prices of all physician services, including pathology tests - more about that later.

As regards laboratory test payments, the PAMA reforms were generally well accepted by two of the largest trade organizations, ACLA and Advamed, but it has also been portrayed in the trade press as a mix of good news and bad news.