The Protecting Access to Medicare Act (PAMA) of 2014 set clinical laboratory fee schedule (CLFS) reimbursement rates on an unsustainable course of multiyear double-digit cuts. Under PAMA, the first set of Medicare CLFS payment rates resulted in cuts of 10% per year in 2018, 2019, and 2020.
As a result of the COVID-19 public health emergency, no reductions were introduced in 2021 or 2022. However, without government intervention, the laboratory industry could see CLFS reimbursement cuts up to 15% per year in 2023, 2024 and 2025. Under PAMA, the reduction percent is capped at 15% per year, but that cap is set to expire in 2026.
New legislation called the Saving Access to Laboratory Service Act (SALSA) stands to make major permanent modifications to PAMA requirements related to determining the Medicare CLFS lab testing rates. Introduced in June 2022, SALSA is intended to permanently reform PAMA and return the Medicare CLFS to a more sustainable path.
PAMA CLFS Rate Reduction Cap
2018, 2019, 2020 – 10%
2021 and 2022 – 0%
2023, 2024, 2025 – 15%
2026 and beyond – Not applicable
Numerous organizations, including ACLA, AACC and NILA, support SALSA and have produced several advocacy resources. According to the website Stop Lab Cuts, sponsored by the ACLA, more than 37 advocacy groups and 26 provider groups have sent letters to congress urging them to enact SALSA this year. There is hope that SALSA can get passed as part of the larger end-of-year Medicare spending package, making it critical for lobbying efforts to happen now.
Key Provisions of the SALSA Legislation
Statistical Sampling – Requiring CMS to use a statistically representative sample of private payor rates from the laboratory market to determine clinical lab test rates. The maximal brewer selection method, as described in the June 2021 Medicare Payment Access Commission Report, will be used to establish a statistically valid sample. The report sampling would also reduce the reporting burden by requiring fewer laboratories to report.
Widely Available Test – Requiring reporting on widely available laboratory tests, defined as tests with reimbursement rates on the CLFS less than $1,000 and offered by more than 100 laboratories. ADLTs are not widely available tests and will remain under current PAMA requirements. An ADLT is a test offered by only a single lab.
Frequency of Data Collection and Reporting – Increasing the length of time between data collection periods to four years (currently three years), with the first reporting period in 2026 based on 2025 data.
Definition of Applicable Information Reporting – Changing the definition of “applicable information” required for reporting to help ensure the CLFS rates are more reflective of the market and ease the significant reporting burden. Providing two exclusions to the definition of “applicable information":
- Excluding Medicaid managed care rates which cannot exceed Medicare rates;
- Excluding physically mailed remittances from reporting, if these remittances do not exceed more than 10% of the lab’s claims.
Majority of Medical Revenues Removed – Removing the “Majority of Medicare Revenues,” threshold from the definition of an applicable lab. Retains the low expenditure threshold defining applicable laboratories as laboratories that receive at least $12,500 in payments from Medicare.
Annual Limits on Rate Change – Setting annual limits on CLFS payment rate reductions and increases. Under PAMA, rate reductions are capped for only the first six years. This limit would freeze the CLFS in 2023 and lower the cap on annual reduction rate cuts to 2.5% in 2024 and to 5% in 2025 and each subsequent year.
SALSA CLFS Rate Reduction Cap
2023 – 0%
2024 – 2.5%
2025 – 5%
2026 and beyond – 5%