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From Health Law Daily, September 28, 2015

Major changes afoot for Medicare clinical diagnostic test payment system

By Mary Damitio, J.D.

CMS is releasing a proposed rule that would significantly change how Medicare sets its payment rates for clinical diagnostic laboratory tests (CDLTs). The new payment system would go into effect on January 1, 2017, and would be based on private insurance payment and test volume data reported by participating laboratories. The proposed rule, which was announced in an advance release and is set for official publication on October 1, 2015, is intended to implement the Protecting Access to Medicare Act of 2014 (PAMA) (P.L. 111-93) by updating Medicare’s lab test fee schedule, which has not been significantly changed since 1984.

PAMA. Section 216 of PAMA requires CMS to make revisions to clinical laboratory tests payments made under the Clinical Laboratory Fee Schedule (CLFS). Medicare’s current fee schedule, which was implemented in 1984, has remained mostly unchanged except for when new test payments were set or across-the-board statutory payment updates were enacted.

Reporting requirements. The proposed rule would require certain laboratories that receive at least $50,000 in Medicare revenue and over 50 percent of their revenue from laboratory and physician services to report private payor rate and volume date. The laboratories would collect the private payor data from July 1, 2015, through December 31, 2015, and would be required to report the data to CMS by March 31, 2016. CMS will then post the new Medicare rates by November 1, 2016, which will be effective on January 1, 2017.

Updated rates. The new payment system will be updated every three years for CDLTs and would be updated every year for Advanced Diagnostic Laboratory Tests (ADLTs) to reflect private payor market rates. Generally, the payment amount for a CDLT will be equal to the weighted median of private payor rates determined for the test, which will be based on data collected by laboratories during the specified data collection period.

ADLTs. ADLTs are a subset of tests on the CLFS that will have their own data collection and reporting requirements and payment policies. According to CMS, an ADLT is a test that is covered under Medicare Part B and is offered by only a single laboratory. Additionally, in order to qualify as an ADLT, the test must analyze multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm, and must be FDA-approved and meet similar criteria established by the HHS Secretary. Tests that are considered to be new ADLTs will be paid at the actual list charge for a minimum of three quarters. Once the new ADLT initial period expires, payments for the tests will be based on the weighted private payor rate as reported by the single laboratory that performs the ADLT.

MainStory: TopStory ReimbursementNews CMSNews BillingNews LaboratoryNews PartBNews

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