The Centers for Medicare & Medicaid Services (CMS) released, Sept. 25, a proposed rule that will significantly revise the Medicare payment system for clinical diagnostic laboratory tests (CDLTs) and advanced diagnostic laboratory tests (ADLTs) paid under the Clinical Laboratory Fee Schedule (CLFS) beginning in 2017.
The new payment system will base payments on a weighted median of private payer rates, as reported by certain laboratories during a specified period.
Method for Calculating Payments
Federal law limits the reduction in payment amounts that may result from implementation of a new payment methodology within the first six years.
For example, if an existing test under the CLFS for 2016 has a payment rate of $20, but the weighted median private payer rate calculated during 2016 (using July 1, 2015, through Dec. 31, 2015 data) produces a payment rate of $15, then the CLFS payment rate for the test in 2017 becomes $18. The following year, a 10 percent reduction would equal $1.80, lowering the total payment to $16.20. A 15 percent phase-in reduction is proposed for payment rates established in 2019-2021.
This phase-in reduction policy does not apply to new CLDTs or ADLTs.
Data Collection Requirements
Applicable laboratories will be required to report: (1) the payment rate that was paid by each private payer for each test during the data collection period; and (2) the volume of such tests for each such payer. The private payer rate will reflect the price for a test prior to application of any patient deductible and coinsurance amounts.
Labs Required to Report
CMS is proposing to define applicable laboratories at the Taxpayer Identification Number (TIN) level, rather than the National Provider Identifier (NPI) level.
The first round of data collection is scheduled for July 1 – Dec. 1, 2015. Laboratories that received at least $25,000 of its Medicare revenues from the CLFS during this data collection period will be required to submit the data by March 31, 2016.
Thereafter, data reporting will fall on the shoulders of entities that receive in a data collection period at least $50,000 in Medicare revenues from lab services and more than 50 percent of their Medicare revenues from lab and physician services.
Proposed collection periods:
Data Collection Data Reporting For CLFS Rate Years
7/1/2015 – 12/31/2015 1/1/2016 – 3/31/2016 2017-2019
1/1/2018 – 12/31/2018 1/1/2019 – 3/31/2019 2020-2022
Subsequent collection periods for CDLTs will occur once every three years. ADLT collection periods will be conducted annually.
Noncompliant entities could face civil monetary penalties of up to $10,000 per day for each failure to report and/or each misrepresentation or omission in reporting private payer prices for lab tests.
Coding and Documentation Provisions
CMS is also proposing to require laboratories to submit documentation to support their application for ADLT status; and to create temporary G codes to identify new and existing ADLTs and CLDTs that are FDA cleared or approved.
Regardless of whether your organization will be required to report, this rule will affect payments for all tests paid under the CLFS. You have until Nov. 24, 2015, to comment on this proposed rule. Physician laboratories and independent testing laboratories should read the proposed rule carefully and comment as appropriate. Also, determine if you are a lab that will be required to report. If so, be sure to read the final rule when it is released (probably by yearend) so you fully understand the reporting requirements.