MedPAC Supports ASCP Concerns about Medicare Payment Rates

ASCP’s concerns about Medicare laboratory payment rates have been validated by the Medicare Payment Advisory Commission (MedPAC), a nonpartisan advisory agency to Congress. MedPAC had been tasked by Congress to review two concerns that ASCP has been pressing federal policymakers on for years: (1) that the Centers for Medicare and Medicaid Services’ (CMS) Clinical Laboratory Fee Schedule (CLFS) payment rates were flawed, and (2) that the data collection process used by the agency were unnecessarily burdensome. 

Under the Protecting Access to Medicare Act (PAMA), Congress required CMS to revamp CLFS payment rates using private payer reimbursement data reported by clinical labs. The data used by CMS almost exclusively comes from independent laboratories. ASCP argued to CMS that more data was needed from hospital outpatient and physician office laboratories to make the rates more representative of  market rates, but CMS responded this would not alter CLFS rates.   

During its April 2 meeting MedPAC agreed with ASCP.  MedPAC staff reported that hospital outpatient and physician office laboratories tend to receive significantly higher payment rates--45 percent in hospital outpatient labs and 53 percent higher in physician office labs. Refining the payment rates so they are more reflective of the overall market for laboratory services would increase overall spending about 10-15 percent, MedPAC staff reported. 

In addition, MedPAC staff concurred with ASCP that a survey could be utilized to reduce the burden associated with laboratory reporting. MedPAC’s initial analysis suggests that a survey could be used to collect payment rate data, and this could reduce the number of labs that would need to report data by 70 percent—a massive reduction in overall burden. 

MedPAC’s discussion of the issues was not entire positive, as it raised concern about increased costs associated with certain tests like molecular pathology and multi-analyte algorithmic analyses, and it is likely that the agency will recommend new policies to manage the costs associated with these services. MedPAC is expected to outline their final findings and recommendations to Congress in a June report. 

ASCP will continue to press CMS to revise their payment rate methodology in an effort to payment rates more reflective of market rates.