MedPAC Discussion of CLFS Presents Challenges

The Medicare Payment Advisory Commission (MedPAC) discussed Medicare’s clinical laboratory fee schedule (CLFS) on September 8, and its discussion should raise concerns for the laboratory community. While the discussion was intended to focus on the Centers for Medicare and Medicaid Services’ (CMS) methodology for calculating CLFS payment rates, MedPAC commissioners focused instead on the cost of laboratory tests, referring to them as “widgets” rather than services. 

Under Section 216 of the Protecting Access to Medicare Act (PAMA), CMS requires applicable clinical laboratories to report price and volume data on the tests they perform. CMS uses this data to calculate median wages for the CLFS. The laboratory community has long been concerned that CMS’s payment rates over-represented independent clinical laboratories and under-represented hospital and physician office laboratories. 

The staff presentation provided data indicating that this is indeed the case, noting that independent clinical laboratories account for approximately 48 percent of tests reimbursed under the Medicare CLFS, but make up 90 percent of the data used by CMS to calculate new payment rates. Hospital laboratory data, the presentation noted, accounts for 29 percent of Medicare CLFS tests reimbursements but accounted for only 1 percent of the data used to calculate new rates.

Unfortunately, when the Commission began its discussion, much of the focus shifted to concerns related to recent increases in overall costs for and the utilization of laboratory tests, especially for expensive molecular tests. During this discussion, MedPAC commissioners discussed whether new policy changes, such as eliminative the PAMA phase-in caps that apply to price cuts, instituting competitive bidding, or others are necessary to further lower the cost of laboratory testing. Obviously, ASCP leadership is concerned about the MedPAC discussion and will be closely monitoring MedPAC’s review of the CLFS as it prepares policy recommendations for Congress.

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