PAMA Headquarters

PAMA stands for Protecting Access to Medicare Act of 2014 and was published by The White House Office of Management and Budget to modify the Medicare reimbursement rate methodology for lab services. The Final Rule was published on June 17, 2016.

Full details here, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/PAMA-Regulations.html.

CMS created the CLFS to guarantee the new fee schedule continues to ensure adequate access to lab services for Medicare beneficiaries. But, the pre-PAMA Medicare Clinical Lab Fee Schedule (CLFS) payments were based on 1984 cost data and sometimes updated for inflation. A limited reconsideration process was in place for new tests. 

The hope for the new CLFS was that by performing a market-based pricing exercise, pricing could be brought up to date and in-line with current practices. 

ALL Part B Medicare FFS lab billings are subject to pricing determined by PAMA, even if the laboratory was not required to participate in the reporting effort.

PAMA reporting requirements apply to any “applicable laboratory.” An applicable laboratory is a laboratory that receives a majority of its Medicare revenue under the CLFS, the Physician Fee Schedule (“PFS”), or the new section 1834A of the Social Security Act, as added by PAMA.  Those are:

Hospital Labs:

• Inpatients
• Outpatients
• Non-Patients (“Outreach”)

Physician Office Labs:

• Point of Care/Traditional Tests
• Provider-Performed Microscopy
• Pathologists’ Practices

Independent Labs:

• Standard Tests
• Drug Abuse Testing
• Molecular Diagnostics

The Final Rule defines it as:

• A laboratory, as defined in CLIA, that bills Medicare Part B under its own NPI
• And receives the majority of its Medicare revenue from the PFS or CLFS
• And receives more than $12,500 Medicare revenue from the CLFS in a year
• The $12,500 threshold does not apply to a single laboratory that furnishes an ADLT (but does apply to any CDLTs that the laboratory performs)

Submission accuracy will be the responsibility of senior official and penalties could be $10,000 a day per line item.

CMS is involved in the proposal to change payment rates which is linked to Congress passing the first major reform of the Clinical Laboratory Fee Schedule (CLFS) in April 2014─ § 216 of Protecting Access to Medicare Act of 2014 (PAMA).

CMS is needed to develop or clarify definitions of several key terms, determine when private payor rates must be reported and for what timeframe, build a technology platform capable of accepting millions of discrete pieces of data, and establish coding processes for certain new tests.

The PAMA legislation will have a substantial impact on the rates and transform Medicare's payment system for clinical laboratory testing while establishing significant new compliance demands. It also has the potential to impact other payors’ rates, as many private payors and state Medicaid programs base their reimbursement levels on Medicare rates.

Medicare rates for lab services are best determined when payment and volume data reflect true market rates for clinical lab testing.

PAMA requires laboratories to report private payor rates, excluding price concessions. Every rate paid by every payor for each test on a laboratory's test menu adds up to a lot of data. The applicable information required is:

• Volume of tests paid at each private payor rate
•  Include changes in rate during period – volume at rate 1, volume at rate 2

This data is required for each test on test menu, excluding unlisted / NOC codes/CPCS Code. In addition, the reporting entity executive (President, CEO, or CFO, or designee) must attest that data is accurate, complete, and truthful, and meet all the reporting parameters.

To report applicable information, reporting entities must:

• • Register in the Enterprise Identity Management system (EIDM)
  • Request a CLFS submitter or certifier role in the Fee-for-Service Data Collection System
  • The CLFS Submitter must be certified in PECOS as a User or Authorized User on the PECOS Medicare Enrollment forms (CLFS submitters must have their name appear within one of the following 855 application forms: A,B,C,I,R).

With the new fee schedule in place and ongoing reporting obligations, it's more important than ever to have a financially grounded revenue cycle management system that gives you the necessary visibility and auditability. You need a system that can capture the following information and aggregate the data into timely buckets:

• Date paid
• Payor / payor type
• Number of tests for each procedure code
• Amount allowed – $ paid by insurer plus patient share of cost
• Contractual rates, where applicable, including volume and other discounts

It is imperative to have a revenue cycle management system that can capture the necessary information, and that has been capturing the information for the capture/reporting periods.