Countdown to PAMA
January 1, 2018. That's when the new clinical laboratory fee schedule (CLFS) will go into effect based on information reported under the 2014 Protecting Access to Medicare Act (PAMA). PAMA will substantially revise the Medicare reimbursement methodology for clinical diagnostic laboratory tests, and stands to significantly impact laboratory margins in the coming months. Understanding both reporting requirements and how the reported results will impact laboratory bottom lines is crucial to survival in this competitive space. By one estimate, a 10% cut in the CLFS will result in a 3-4% drop in laboratory profit margins. Are you ready?
As a leader and trusted source of laboratory reimbursement, XIFIN has been actively working to respond to and prepare for PAMA for over three years, both in terms of ensuring XIFIN clients are prepared to report as required, and that they understand and respond to the the financial ramifications.
Executive Chairman & CEO
XIFIN's Lâle White Speaks at Executive War College 2017
General Session Presentation:
Preparing for PAMA’s Part B Price Cuts: What XIFIN’s Impact Analysis Predicts for Labs Like Yours in 2018
Preparing for the Financial Impact of PAMA Market Price Reporting and New Developments with Medicare and Private Payers
XIFIN and PAMA—In the News
Current PAMA Schedule
Under the final rule:
- January 1, 2016 through June 30, 2016: First data collection period for determining calendar year (CY) 2018 CLFS payment rates.
- January 1, 2017 through March 31, 2017: First data reporting period for reporting entities to report private payor rate data to CMS for determining CY 2018 CLFS payment rates. Note: on March 30, CMS announced it will exercise enforcement discretion until May 30, 2017 with respect to the data reporting period for reporting applicable information under the CLFS. View the full announcement.
- Mid-July 2017: Annual laboratory public meeting for new tests. CMS will use cross walking or gap-filling to set rates for new tests (that are not new ADLTs ) for which there is no private payor data collected for CY 2018.
- Early September 2017: CMS publishes preliminary CLFS rates for CY 2018. The public will have approximately 30 days, through early October 2017, to submit comments on the preliminary CY 2018 rates.
- Early November 2017: CMS makes final CY 2018 rates available on the CMS website.
- January 1, 2018: Implementation date of new CLFS.
PAMA Solution - XIFIN RPM
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 current Medicare Clinical Lab Fee Schedule (CLFS) payments are based on 1984 cost data and sometimes updated for inflation. There currently is a limited reconsideration process for new tests.
CMS is currently working on a new CLFS, but CMS made a decision to delay the implementation of the new payment system until January 1, 2018.
PAMA applies to an “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:
- Non-Patients (“Outreach”)
Physician Office Labs:
- Point of Care/Traditional Tests
- Provider-Performed Microscopy
- Pathologists’ Practices
- 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).
It's important to have a financial management system, specifically a revenue cycle management system, that gives you the ability to respond to these new reporting requirements. It will be very difficult to use manual spreadsheets. 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.
Reduce and Minimize The PAMA Impact With XIFIN By Your Side
XIFIN's Revenue Performance Management (RPM) solution is designed to meet the needs of today's margin challenged diagnostic environment. XIFIN RPM is powered by the health economics optimization (HEO) platform that meets the high-volume data and transaction needs of laboratories. Deliver optimized billing for maximized revenue with:
Resources: Industry Webinars
To help you better understand the legislation and what will be required, Arnold & Porter and XIFIN have partnered to create a series of in-depth webinars, "Compliance with Final PAMA Rules" that help laboratories prepare to comply with the rules and succeed in the new reimbursement environment.
Part 1: Applicable Laboratories: Is Your Lab Required to Report?
CMS proposed to define an applicable laboratory so as to exclude many hospital laboratories and nearly all physician office laboratories. Will CMS change its policy and require more entities to submit private payer rates? Will median Medicare payment rates be more representative of the market as a result?
Part 2: Private Payer Data Reporting: What Information Must Be Reported, When, and How?
PAMA requires laboratories to report the rates paid by health plans in the commercial, Medicare and Medicaid markets, excluding price concessions. Every rate paid by every plan for each test on a laboratory’s test menu adds up to a lot of data. What are the immediate operational concerns for laboratories? How much time will they have to comply?
Part 3: Advanced Diagnostic Laboratory Tests: What Considerations for Launching a New Test?
PAMA gives special treatment to advanced diagnostic laboratory tests (ADLTs) including unique billing codes, Medicare payment at their list price at launch, and annual rate changes. CMS revised its definition of ADLT to include analyses of proteins, but to obtain ADLT status, tests must still provide new clinical information that can’t be gotten from other tests. What evidence will labs need to prove this, and what criteria will CMS use to evaluate it?