The Centers for Medicare and Medicaid Services (CMS) is proposing more than $600 million in cuts to laboratory reimbursements beginning January 1, 2018, with total cuts rising to as much as $1.5 billion annually compared to current reimbursement levels by 2020. These cuts are part of a flawed implementation of the Preserving Access to Medicare Act (PAMA) passed in 2014.
Deeply Flawed Approach by CMS
- Define which laboratories would report data in the narrowest possible terms, resulting in 90% of reported data coming from independent laboratories. Hospitals and physician office laboratories provide 44% of Medicare services but represent just 8.5% of the reporting entities. Less than 1 percent of hospitals and physician office laboratories reported data. In 2016, HHS Office of Inspector General predicted 3,500 laboratories would report data, but 55% of that number actually did.
- Change reporting requirements and deadlines multiple times and then ignore concerns that reported data lacked any verification process, resulting in a data set that includes erroneous data points, dramatic outliers and magnitudes of difference between the calculated mean and median.
- Ignore the intent of Congress and publish rates for some highly used codes that will cut actual reimbursement by as much as 40% next year. For those HCPCS codes without a National Limitation Amount (e.g. 80061 Lipid Panel), CMS failed to set a reasonable benchmark for what laboratories are currently being reimbursed, and instead, proposes implementing the full cut in a single year.