Clinical OMICS

JAN-FEB 2017

Healthcare magazine for research scientists, labs, pathologists, hospitals, cancer centers, physicians and biopharma companies providing news articles, expert interviews and videos about molecular diagnostics in precision medicine

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34 Clinical OMICs January/February 2017 www.clinicalomics.com In the Lab C linical laboratories will learn later this year how much less Medicare will pay them for clinical diagnostic lab tests as a result of the Protecting Access to Medicare Act (PAMA). The implications of these new rates will be signifi- cant for smaller labs and hospital labs alike. Laboratories covered by PAMA have until March 31 to submit data they were supposed to collect from January 1– June 30, 2016, on private payer rates and volume of tests to the Centers for Medicare & Medicaid Services (CMS). PAMA requires reporting of data by independent labs and physician office labs exceeding $12,500 in Medicare revenues from lab services on the Clinical Laboratory Fee Schedule (CLFS), and receiving more than half their Medi- care revenues from lab and physician services during a data-collection period. CMS plans to post new Medicare CLFS rates based on weighted median private payer rates in November, with the new rates scheduled to take effect January 1, 2018. Because hospital labs aren't required to report private payer data under PAMA, Medicare's prices for tests are expected to align more with the largest commercial labs, said Roger D. Klein, M.D., J.D., principal of an eponymous consulting firm and chair of the Association for Molecular Pathology's Professional Relations Committee. Larger labs, through contracts with the largest insurers, should be able to counteract the effects of lower test reimbursement rates by providing a higher testing volume. Tests likely to see the largest reimbursement declines are the highest-volume, highly-automated tests. But, as prices fall, Dr. Klein added, due to the lower pay- ment rates, smaller labs won't be able to compete with the larger labs to offer those tests, and may opt not to perform them. This could cause increased consolidation among labs, as volume becomes a key driver of viability in the market . "The impact from PAMA will be significant for the clini- cal lab—a race to the bottom for reimbursement for routine, non-esoteric testing," said James Weisberger, M.D., execu- tive vice president, clinical, CMO, and laboratory director for BioReference Laboratories, an OPKO Health Company. Hospital labs are also bracing for impacts from PAMA. CMS seeks to reduce fees on the largest portion of their test volume—the 25 top lab tests for which Medicare Part B paid $4.1 billion out of the $7 billion spent on all lab tests in 2015. "If the rate that is reimbursed goes down for some of our tests to the point where our costs are not even covered, that might influence the ability of doctors to order those tests," said David D. Koch, Ph.D., director of clinical chemistry, toxicology, and point-of-care testing at Grady Memorial Hospital in Atlanta, and Professor of Pathology & Labora- tory Medicine at Emory University, and chair of the Ameri- can Association for Clinical Chemistry's Policy and External Affairs Core Committee. This may force hospitals to take a long, hard look at their in-house lab operations and reduce the number able to pro- vide on-site testing services. Price Pinch As PAMA Reporting Deadline Looms, Labs Brace for Medicare Rate Cuts Alex Philippidis, Senior News Editor Jovanmandic / Getty Images

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