Clinical OMICs - Issue 4 - (Page 13)

www.clinicalomics.com Photo © Lisa F. Young-Fotolia.com the economies of scale needed to cut costs. "We believe that Congress and CMS should assess the overall impact of some of these provisions on hospitals and small laboratories before implementing them," James H. Nichols, Ph.D., medical director of clinical chemistry at Vanderbilt University Medical Center and chair of AACC's Government and Regulatory Affairs Committee, told Clinical OMICs. "These facilities have higher per test costs, because of the roles they play in their communities. Yet they will be asked to accept the lowest fees that the government can pay. "These payment reductions may force some labs out of business and others to scale back their services, particularly in underserved areas," Dr. Nichols added. Effective January 1, 2016, labs that receive most of their Medicare reimbursement through the Clinical Laboratory Fee Schedule (CLFS) or Physician Fee Schedule (PFS)-most clinical labs-must report every payment from private payors, and the volume of payments per price point, per test. Based on that data, CMS will calculate a "weighted median" payment amount per test, as a market price set to take effect in 2017. The process will be repeated every three years for most tests-but annually for a new category, "advanced diagnostic laboratory test" offered and furnished only by a single lab and not sold for use by that lab. Advanced tests will be paid PAMA will force labs and providers to implement new test coding systems that will add potentially thousands of new codes. at "list price" for three quarters, then on market prices-though CMS can recoup payments that are more than 130% of market price. CMS is supposed to finalize rules for the reporting provisions June 30, 2015. For existing tests conducted before 2017, current CPI, productivity, and even last year's sequestration will apply to CLFS. Thus, reimbursement is expected to continue dipping 1%-3% a year until market-based payments take effect January 1, 2017. Until then, CMS will set rates for new tests based on two current methods. In "gapfilling," local Medicare Administrative Contractors set first-year fee schedule amounts, the median of which becomes CMS' national rate. "Crosswalking" involves benchmarking payments for new codes to the same rate for comparable, existing test(s) or code(s). PAMA requires creation of an advisory panel by July 1, 2015, to make recommendations to CMS for gapfilling or crosswalking of new tests, as well as establishment of payment rates and factors determining coverage and payment. Danielle M. Sloane, a member of the law firm Bass Berry & Sims, noted that while Medicare rates will decrease, most lab income is from government or commercial payors. Labs will have a limited ability to increase test prices unless they can negotiate higher prices with larger commercial labs. "The ability to negotiate with commercial payors depends on bargaining power," Sloane told Clinical OMICs. "Labs will all likely look at numerous (continued on next page) May 29, 2014 Clinical OMICs 13 http://www.Fotolia.com http://www.clinicalomics.com

Table of Contents for the Digital Edition of Clinical OMICs - Issue 4

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Clinical OMICs - Issue 4