CMS’ proposed new fee schedule concerns lab community

Oct. 22, 2015
On September 25, the Centers for Medicare and Medicaid Services published a news release “CMS Proposes New Medicare Clinical Diagnostic Laboratory Tests Fee Schedule.” The agency wrote: “The Centers for Medicare & Medicaid Services (CMS) today announced its next step in implementing the Protecting Access to Medicare Act of 2014 (PAMA), requiring clinical laboratories to report on private insurance payment amounts and volumes for lab tests. This data will be used to determine Medicare’s payment for lab tests beginning January 1, 2017….

“Under the proposed rule, certain laboratories would be required to report private payor 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 payor data from July 1, 2015 through December 31, 2015 and report it to CMS by March 31, 2016. CMS will post the new Medicare rates by November 1, 2016; these rates will be effective on January 1, 2017.”

CMS provided a link to the proposed rule ( and indicated that a comment period will expire November 24, 2015. It rather sunnily described the plan as “another example of our commitment to spending health care dollars more wisely” that “demonstrates CMS’ dedication to collaborating with private payors to improve the delivery system.”

Not everyone agrees.

The American Clinical Laboratory Association (ACLA), for instance, issued a statement that warns that CMS’ proposed coding and payment proposals will jeopardize the advancement of personalized medicine.

“CMS’ proposed payment determinations for new codes paid under the Clinical Laboratory Fee Schedule (CLFS) in CY2016 include severe cuts to the set of nine codes for advanced diagnostic laboratory tests that are currently covered and paid for by Medicare through their respective local contractors. These proposed cuts of 33 percent to as much as 91 percent, if finalized, are in direct conflict with the agency’s precedent for establishing rates for these type tests through the local contractors, and this proposed rate-setting methodology is inconsistent with the vast majority of stakeholder input and the recommendations of CMS’ own Advisory Panel on Clinical Diagnostic Laboratory Tests.”

Says Alan Mertz, ACLA president: “President Obama has highlighted the clear potential for precision medicine to improve healthcare for patients and continue the country’s progress as a world leader in medical innovation. Slashing payment of these tests–some up to ninety percent—will have a profound impact on the success we’ve achieved thus far, thanks to life-saving diagnostic discoveries.”

The National Independent Laboratory Association (NILA) states the proposed CMS regulation threatens competition and access to laboratory testing:

“Under the proposed regulation, laboratory reporting would be required between January 2016 and March 2016, though final CMS regulations would not be published until the end of December 2015, at the earliest. CMS would then quickly evaluate the anticipated billions of reported data sets to issue new proposed rates by November 2016, issuing final Clinical Laboratory Fee Schedule rates by January 1, 2017—providing just two months for laboratories to comprehend the impact adjustments will have on their business and their ability to provide ongoing services.”

Says Mark Birenbaum, PhD, NILA administrator. “The law itself is fundamentally flawed, as it requires CMS to determine a weighted median of all the test rates/volumes reported in order to set new payment rates. Clearly, the largest players in the laboratory market—the two national publicly-traded laboratories—will drive the test volumes, and their rates will dominate CMS’s evaluation. The law does nothing to consider variances in the market and the impact that adjustments will ultimately have on community and regional laboratories.”

Industry sources have also expressed doubts. California-based CareDx and Veracyte, for example, have voiced concerns that established molecular diagnostic tests might be unduly impacted.

What are readers hearing and saying about the impact of the apparently imminent changes? We’d like to know your thoughts.