CMS delays new lab test payment system until 2018

A new method for Medicare payments of clinical laboratory tests will be based on private payer rates, though CMS is pushing off implementation of the system by one year.

The final rule issued by the agency June 17 is just the second update to the Clinical Laboratory Fee Schedule (CLFS) since it was first introduced in 1984.

“In general, the payment amount for a test on the CLFS furnished on or after January 1, 2018, will be equal to the weighted median of private payor rates determined for the test, based on the data of applicable laboratories that is collected during a specified data collection period and reported to CMS during a specified data reporting period,” CMS said in a press release.  

Another change from the proposed rule deals with how CMS will determine which labs fall under these reporting requirements.

Rather than using Taxpayer Identification Numbers to define applicable labs, the final rule sets a low volume threshold. A lab will generally be excluded if it had been paid less than $12,500 under the CLFS in a data reporting period.

“We estimate that about 55 percent of independent laboratories and about 95 percent of physician office laboratories will be precluded from reporting private payor data as a result of the low expenditure criterion,” CMS wrote. “However, even though the low expenditure threshold will substantially reduce the number of physician offices and independent laboratories for which private payor rates must be reported, we estimate those physicians and laboratories for which private payor rates will be required to be reported account for approximately 92 percent of CLFS spending on physician office laboratories and approximately 99 percent of CLFS spending on independent laboratories.”

The American Clinical Laboratory Association (ACLA) said in a statement it’s still reviewing the changes in the final rule, but supports some of the changes made by CMS, including the delay in implementation.

“Since Congress began consideration of reform of the CLFS, ACLA has advocated for a system that bases Medicare reimbursement on the broad scope of the laboratory market, encourages innovation, and protects access to laboratory services for Medicare patients," said Alan Mertz, President of ACLA. "The establishment of a market-based system for determining Medicare reimbursement for laboratory services was clearly preferable to the alternative – unlimited cuts to payment rates by CMS through its technological changes authority, as well as across the board reductions to the CLFS by Congress.  ACLA's next step is to evaluate completely this final rule, and consult with our membership."

The changes could mean a substantial difference in payments. Bloomberg estimates CMS currently pays about $8 billion annually under Medicare for about 1,300 tests covered under the CLFS. The new system could reduce that amount by about $360 million.