Update 1/4/2022: Since the publication of this blog, legislation was passed to halt the 2022 reimbursement cuts and reporting requirements. Visit XiFin’s PAMA Headquarters to view the revised PAMA schedule.

After two years of PAMA reporting delays and one year of 0% PAMA related fee cuts, applicable laboratories (including hospital outreach laboratories) need to start preparing for 2022 PAMA reporting requirements and payment cuts.

The Protecting Access to Medicare Act (PAMA) implemented significant changes to how Medicare pays for clinical laboratory tests on the Clinical Lab Fee Schedule (CLFS). Under PAMA, the CLFS reimbursement rates are based on the median average laboratories are paid by private payors. Applicable laboratories are required to report to CMS private payor reimbursement which CMS will utilize to calculate the Medicare CLFS reimbursement rates.

The goal of this rate calculating methodology is to align Medicare reimbursement rates more closely with commercial payor rates. The intent of the legislation was to ensure the new Medicare payment rates for clinical laboratory tests were based on data from the full spectrum of laboratories, including hospital, independent, and physician office laboratories.

Round One PAMA Reporting Impact

Applicable laboratories are required to report information to the CMS CLFS data collection system using a file transfer process or through manual online data entry. For each clinical diagnostic laboratory test (CDLT) billed, applicable labs are required to report per test:

• Specific HCPCs code billed and associated volume
• Private payor allowed amount – paid by insurance plus patient cost share

Current CLFS rates are based on data collected from applicable labs, during the 2016 collection period reported to CMS in 2017. The first set of Medicare CLFS payment rates established under PAMA resulted in cuts of 10% per year in 2018, 2019, and 2020.

Hospital-Outreach Laboratories Required to Report Data

While hospital-based outreach laboratories were impacted by the 10% CLFS cut between 2019 and 2020, the flawed definition of an applicable laboratory in the original legislation excluded most hospital laboratories from the 2017 round one data reporting requirement.

Under the updated definition of an applicable laboratory, established in 2019, most hospital-based outreach laboratories will be required to report.

Under the revised final policies for the new Medicare CLFS, an applicable laboratory is defined as a laboratory that:

• Is Clinical Laboratory Improvement Amendments (CLIA) certified
• Bills Medicare Part B under its own NPI or for hospital outreach laboratories on the Form CMS-1450 under TOB 14x
• Meets a “majority of Medicare revenues” threshold, that is, in a data collection period it receives more than 50% of its Medicare revenues from one or a combination of the CLFS or PFS during the data collection period
• Meets or exceeds low expenditure threshold—that is, it receives at least $12,500 of its Medicare revenues from the CLFS during the data collection period

2022 PAMA CLFS Rate Reduction

PAMA legislation requires CLFS payment adjustments to be phased in with cuts between 2018 and 2020 not to exceed 10% and between 2022 and 2024 not to exceed 15%. There was a 0% payment reduction in 2021 as result of the Covid Public Health Crisis.

Preparing for PAMA With Strong RCM Support

The inclusion of hospital outreach laboratories in the PAMA data analysis process should result in CLFS rates aligning more closely with full spectrum of laboratories, including hospital, independent, and physician office laboratories, which is the intent of PAMA.

However, many hospital outreach laboratory programs may face challenges in collecting the required data especially if their billing solution doesn’t retain detailed payment rate data at the CPT level in their RCM system. Per CMS, applicable labs could face penalties up to $10,000 per day if reporting is not accurate, complete, and timely. Therefore, applicable laboratories should begin reviewing the required data now to ensure the 2022 reporting deadline is met.

In addition, with an anticipated CLFS reimbursement cut of up to 15%, it is essential providers have efficient billing procedures in place to ensure timely billing and denial tracking. Laboratories should work with their RCM provider to develop an impact analysis to determine how the upcoming CLFS rate cut will impact 2022 anticipated revenue.

Additional XiFin PAMA Resources:

Download XiFin’s Step by Step Guide to Preparing for the Next PAMA Reporting Period checklist to walk through:

1. Status Confirmation – confirming applicable lab status
2. Revenue Cycle Management Data Review – ensure RCM solution can provide required details
3. Project Team – create a project team to prepare for data submission
4. Documentation – begin compiling and storing payment source documentation
5. Data Review – compile and review data to ensure quality and integrity
6. Contracts – review and renew contracts prior to next data collection period
7. Authorize and Submit – compile finalized, formatted CMS data, authorize and submit

Visit XiFin’s PAMA Headquarters to stay up to date.