For the fifth time, the Protecting Access to Medicare Act (PAMA) reporting and expected reimbursement reductions were delayed, this time until 2025. The next reporting period for payer payment data is scheduled for January 1, 2025, through March 31, 2025.
If PAMA had been enforced, tests on the Clinical Laboratory Fee Schedule (CLFS) could have seen cuts of up to 15% in January, and labs would have faced requirements to report new private payer data.
The Congressional Budget Office (CBO) determined that delaying PAMA would save $590 million over the next 10 years. The CBO found that the next payer payment survey—which would include hospital outreach rates—would increase CLFS rates1. Therefore, laboratories may continue to see PAMA postponed, resulting in no changes to CLFS.
PAMA, signed into law in 2014, originated because the Office of Inspector General determined that Medicare payments for laboratory tests were often higher than payments for commercial payers. The law’s intent was to update the CLFS and create competitive, market-based laboratory testing prices. However, the data collection methodology used to determine the new rates was flawed, resulting in devastating reimbursement cuts for many labs.
PAMA changed the way that Medicare calculates the CLFS, requiring that Medicare pay the weighted median rate of private payor payments for lab tests. After a confusing collection process, the weighted median became the new CLFS payment rates in 2018. Due to the skewed data collection process, data used to set pricing came from only 1,942 labs out of more than 250,000 labs, resulting in a poor representation of actual lab fees.
Under PAMA, the first set of Medicare CLFS payment rates resulted in reimbursement cuts for many lab tests—up to 10% each year for 2018, 2019, and 2020. Many commonly performed tests were reduced by 30% during this time. Across the three years of cuts, CLFS lab payments were reduced by nearly $4 billion.2
The Saving Access to Laboratory Services Act (SALSA), which has not yet been passed, intends to improve PAMA’s data reporting requirements and payment methodology and thus reduce the negative impact on laboratories. SALSA would require inclusion of private-payer rates from independent labs, hospital labs, and physician office labs to determine CLFS rates. SALSA currently has the support of 51 House members and four senators.1
For now, labs will not see any reimbursement cuts. However, will an indefinite freeze in the CLFS generate enough money to support laboratories in future economic situations with high inflation and ongoing staffing challenges?
- Klipp, J, ed. Medicare CLFS Rates Might Be Frozen Indefinitely. Laboratory Economics. 2023;18(12).
- ACLA and 25 provider organizations urge Congress to protect access to critical laboratory tests for seniors and all patients. American Clinical Laboratory Association. https://www.acla.com/acla-and-26-provider-organizations-urge-congress-to-protect-access-to-critical-laboratory-tests-for-seniors-and-all-patients.com. Published September 08, 2022.