New Study Demonstrates GAO’s PAMA Report Based on Faulty Assumptions
May 22, 2019
In a XiFin blog post from April 5, we address that the Government Accountability Office (GAO) report entitled, “Medicare Laboratory Tests Implementation of New Rates May Lead to Billions in Excess Payments” appears to demonstrate a misunderstanding of how price and panel bundling work in laboratory billing and reimbursement.
The report appears to suggest that American Medical Association (AMA) panels, such as the basic metabolic, comprehensive metabolic, lipid, renal, and electrolyte, have been unbundled under PAMA, resulting in Medicare vastly overpaying for panel tests. CMS has stopped paying a bundled payment rate for certain panel tests, because it has not yet clarified its authority to do so under PAMA. However, the report’s primary fallacy is that the industry in general is vacating the use of the AMA-established Medicare CPT billing requirements and guidelines, and instead inappropriately billing for individual component tests.
Recently, the American Clinical Laboratory Association (ACLA) reported that a Braid-Forbes Health Research survey of more than 20 million publicly available laboratory claims demonstrates that the GAO assumptions were faulty. For the GAO’s assumptions to be correct, the volume of panel tests billed to Medicare would have decreased and the volume for the individual component tests would have increased dramatically. Instead, analysis found that volume for the comprehensive metabolic panel and the individual component tests have decreased. According to the study, after comparing the first two quarters of 2017 to the first two quarters of 2018 (post-PAMA), Medicare volume for comprehensive metabolic panels dropped 2%, and the individual component tests also decreased by an average of 5%.
In addition, James Cosgrove, GAO health care director and author of the report, acknowledged that the report findings were based on a hypothetical scenario and not on current industry practices. The ACLA said, “According to standard industry practices, clinical laboratories are required to bill Medicare for panel tests according to guidelines outlined by the American Medical Association (AMA) CPT codes.” As demonstrated in Braid-Forbes Health Research study, it appears that laboratories are consistently billing panel tests as required.
The good news is that the right revenue cycle management solution partner can help laboratories bill and bundle correctly. For example, XiFin RPM customers can automatically optimize bundling across ordered tests by using advanced consolidation rules. The challenges related to bundling can be especially tricky for hospitals, which tend to use RCM systems not built to address laboratory-specific needs.
The GAO’s puzzling conclusions are further evidence that PAMA’s consequences have yet to be properly evaluated, which is necessary to achieve a true market-based system.
We encourage ongoing dialogue with your legislators. Continuing to educate lawmakers about the impact of ill-informed recommendations is key to thriving as an industry.
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