House Passes SGR Patch Legislation Containing Clinical Laboratory Payment System Provisions

On March 27, 2014, the U.S. House of Representatives passed, without change, a bill for a one-year SGR "patch." The U.S. Senate is expected to vote on the bill on Monday, March 31.

The bill includes language that attempts to overhaul how clinical laboratories are paid for Medicare laboratory services. Following is a summary of the major provisions in relation to clinical laboratories: 

• Beginning on January 1, 2016, clinical laboratories with a majority of their Medicare revenues from Medicare's Clinical Laboratory Fee Schedule (CLFS) or Medicare's Physician Fee Schedule (PFS) are required to report payor information from all commercial carriers, Medicare Advantage, and Medicaid Managed Care contractors for every test for which they receive payments.  Reporting is to occur every three years. Failure to report risks financial penalties of up to $10,000 per day for each failure to report.

• Allows, but does not require, CMS to exclude certain low-volume laboratories from having to report their payor information.

• Beginning in 2017, adjusts Medicare laboratory payment rates after examining the reported payor information mentioned above. Adjustments to Medicare's payment rates for individual tests are limited to no more than 10 percent each year between 2017-2019 and no more than 15 percent each year between 2020-2022.

• Eliminates CPI adjustments to the CLFS as of 2017.

• Increases the specimen collection fee for nursing home and home health services by $2.00.

• Establishes a new process and CMS-based advisory panel to support the pricing evaluation of new diagnostic laboratory tests.

• Asks GAO to evaluate the impact all changes have on access to laboratory services and the laboratory market.

• Asks the Office of the Inspector General to do an annual evaluation of Medicare laboratory expenditures, focusing on the top 25 laboratory tests driving expenditures. 

NILA has been in discussions with congressional committees for over a year on how to improve the Medicare payment system in a way that does not disproportionately affect community and regional laboratories.  NILA is not supportive of several of the provisions included in this legislation, and we’re continuing to engage lawmakers.

NILA is seeking clarification on whether the new legislation repeals the current final rule in effect by CMS, which allows the agency to examine and adjust current Medicare payment rates based on “technological change,” beginning in 2015.  

There is no across-the-board cut included as part of the legislative plan. If the legislation passes in its current form, the CLFS will first be adjusted beyond current statutory adjustments (1.75% Obamacare cuts, productivity adjustments, sequester 2% cuts) in 2017. 

When this passes, CMS will initiate a rulemaking process that is required to occur by June 30, 2015. If the legislation remains unchanged, laboratories will be able to engage CMS and others as this rulemaking process proceeds.

Please click here to view the House SGR legislation. The section on clinical laboratories begins on page 35 (section 216) and continues through page 58.