CBO Scoring Could Determine Fate of Medicare CLFS: Reprinted with Permission from the Laboratory Economics Newsletter

Medicare Clinical Laboratory Fee Schedule (CLFS) reimbursement rates have been frozen for the past five years (2021-2025). This is largely because the Congressional Budget Office (CBO) had estimated that freez-ing the implementation of PAMA cuts and the next round of PAMA data reporting would save the federal government hundreds of millions of dollars over a ten-year period. However, the CBO is updating its forecasting model for the CLFS and as a result, another one-year freeze to CLFS rates in 2026 is far from guaranteed, according to Erin Morton, Washington Representative for the National Independent Laboratory Association and Partner atCRD Associates (Washington, DC).

The CBO prepares cost estimates (aka “scores”) for nearly all bills reported by Congressional committees, helping Congress understand the financial implications of proposed legislation. Previously, the CBO’s forecasting model had assumed that private insurance companies were adjusting the rates they pay for lab tests by annual inflation (as measured by the Consumer Price Index). Under this assumption, future PAMA private-payer payment surveys would result in higher Medicare CLFS rates. Consequently, the CBO estimated that freezing the implementation of PAMA would save money.

However, Morton says that the CBO has now realized that private insurance companies do not typically adjust their lab fee schedules for inflation. The CBO is now updating its forecasting model for estimating Medicare CLFS payments. As a result, delaying the implementation of PAMA in 2026 might not be scored to save money and thus it would be harder to pass into law.

This has raised the urgency of getting a new “PAMA-fix” bill introduced and passed into law as quickly as possible, notes Morton. The previous bill—Saving Access to Laboratory Services Act (SALSA)—would have ensured that all labs, especially highly reimbursed hospital labs, were fairly represented in future surveys used to formulate Medicare CLFS rates. SALSA had support from both Democrats and Republicans in both the Senate and House. However, the CBO had scored SALSA to cost $6 billion, and it failed to get passed into law as part of a broader spending packagelast year (see LE, October 2024).

The American Clinical Laboratory Association (ACLA) is currently working to draft a new PAMA-fix bill. ACLA is aiming to introduce a new bill within the next few weeks (see LE, March 2025). Speed is important because it will take time to educate and build support from Senators, House members and their staff. The goal is to get a PAMA-fix inserted into a year-end spendingpackage this fall.

The key is to ensure that the next PAMA private-payment survey includes data from all labs. The challenge is to craft a bill that is simple to understand and can obtain a reasonable cost estimate from CBO, explains Morton.

Support for a new PAMA-fix bill is expected to come from Senator Thom Tillis (R-NC) and from Reps. Brian Fitzpatrick (R-PA), Gus Bilirakis (R-FL) and Richard Hudson (R-NC). Without new legislation, the next phase of PAMA will take effect Jan. 1, 2026. This would include Medicare CLFS rate cuts of up to 15% for approximately 800 lab tests. In addition, independent labs, hospital outreach labs and POLs will be required to report their private-payer payment data from 2019 to CMS by March 31, 2026. This data will be used to calculate Medicare CLFS rates in 2027-2029.