Understanding PAMA Changes and Managing its Effects

At the recent National Independent Laboratory Association (NILA) 2018 Lab Leaders Forum and Mid-Winter Meeting, XIFIN, Inc. Executive Chairman and CEO Lâle White presented on recent PAMA pricing cuts, and the implications for laboratory billing.

At first glance, PAMA cuts seem to primarily affect nursing homes. But the reality is that the PAMA reporting exercise was far from a market-based analysis, and the CMS definition of an “applicable lab” excludes the majority of hospital labs and other organizations that were heavily impacted.

The Truth About Recent PAMA Changes

Reporting lab organizations comprised just 34% of the lab market, with the two major labs representing 80% of the volume. Hospitals and physician office labs comprise half of Medicare CLFS volume; yet they only represent 8.5% of the reported data used by CMS to calculate PAMA rates. The result has been skewed data, upon which changes to PAMA were based. The truth is that PAMA directly affects every lab doing Medicare Part B billing and indirectly effects all labs.

Over the next few years, lab reimbursements are expected to drop significantly due to PAMA, affecting many of the most commonly run tests. However, it is equally important to understand what tests in fact saw substantial increases, including a more than 750% increase to urine screens for bacteria (HCPCS Code 81007).

Check out these sample slides from the presentation,

How to Offset the Impact of PAMA

Now more than ever, laboratories and the diagnostic providers need to focus on maximizing revenue, reimbursements, and cashflow. 

Strategies for labs to offset the impact of PAMA include:

  • Private payor contract negotiations
  • Diverse testing menu and capabilities
  • Ensuring the right tools are in place to collect all potential revenue
  • Implementing cost reduction processes to help alleviate clerical error

XIFIN revenue cycle management solutions play a critical role in helping labs implement these strategies. Now more than ever healthcare technology and medical billing companies are crucial for laboratory success. Regardless of lab type or size, PAMA affects all lab entities, and XIFIN’s scalable, customized solutions are vital to lab profitability in this next phase of healthcare.

While PAMA presents obstacles, it is not believed to be insurmountable for laboratories to overcome as long as they prepare properly. According to XIFIN CEO Lale White. “Labs have to think about the region they service, what the needs of the region are and how they can improve outcomes and get value aged pricing and maybe specialize in some areas that are significant where they can actually help the physician manage their business, patients and outcomes better.” Many thought leaders mirror Lâle’s sentiment, including Jane Hermansen, Manager, Outreach and Network Development, Mayo Clinic / Mayo Medical Laboratories, who recently published an article in Medical Lab Management on Finding the Silver Lining in PAMA stating, “though the act is not ideal, the sky is not falling. Frankly all laboratories must face the future of PAMA in place and establish a framework for moving ahead in our industry's new reality.”

To learn how XIFIN can help your lab thrive amidst PAMA changes, request to speak with a lab billing specialist.

Published by XiFin
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