CAP Files Legal Brief Supporting Challenge to Correct Scheme for Setting Medicare Fees for Clinical Laboratory Tests

Apoorva Stull
Phone: 202-354-7100, ext. 7102
Email: astull@cap.org

The CAP argues the administration failed to follow congressional intent when establishing market-based payment reforms for clinical laboratory services.

WASHINGTON — The College of American Pathologists (CAP) filed an amicus brief in support of the American Clinical Laboratory Association’s (ACLA’s) appeal to overturn a decision dismissing its lawsuit to correct the Department of Health and Human Services’ (HHS’) execution of reforms to Medicare’s clinical laboratory fee schedule. 

The brief filed by the CAP, with AdvaMed and the National Association for Support of Long Term Care joining the filing, on December 11 supports an appeal by the American Clinical Laboratory Association (ACLA) to reverse a U.S. District Court decision in September that dismissed ACLA’s efforts to set aside how the HHS implemented market-based reforms to clinical laboratory fees mandated by the Protecting Access to Medicare Act (PAMA) of 2014. HHS’ implementation of reforms, which disregarded Congress’s clear intent to set Medicare rates reflective of true market rates for laboratory services, has led to severe cuts that now threaten patient access to clinical laboratory tests.

The U.S. District Court for the District of Columbia ruled in September that it lacked jurisdiction and could not compel the HHS to follow statutory requirements. PAMA limited judicial review of established payment amounts but did not limit its rulemaking authority which set the parameters for data collection. The CAP states the court has the legal authority and outlines precedent to support the U.S. District Court of Appeals returning the case to the lower court for reconsideration.

The CAP argues that the HHS did not follow congressional intent set by PAMA. Specifically, the HHS broke with sections of the statute detailing the data collection process and calculation of market-based rates for clinical laboratory services. Reporting data is required for applicable laboratories across the United States, but the HHS excluded the vast majority of laboratories from submitting data by redefining what it means to be an applicable laboratory.

The CAP states that less than 2,000 out of 61,000 laboratories were included as applicable laboratories under the HHS’ rules. This included just 21 hospital-based laboratories. Further, because of HHS rules, independent laboratories accounted for 90% of the test volume during the reporting period although independent laboratories account for 29.5% of test volume in the laboratory market.

By filtering out data from hospital laboratories and including data predominately from independent laboratories, the HHS all but ensured that laboratories would receive lower Medicare reimbursement for clinical laboratory tests, the brief states. This is because independent laboratories generally receive lower rates due to economies of scale and purchasing power. Hospitals, on the other hand, serve inpatients and outpatients who have immediate needs during hospital visits, may offer around-the-clock services, and frequently provide the most complex clinical laboratory tests.

“And that, in turn, will threaten the existence of certain laboratories, particularly in settings where costs are higher, including in rural markets, nursing facilities, and hospitals,” the CAP states.

Read the full amici curiae brief field in the United States Court of Appeals for the District of Columbia.

In addition to the legal challenge, the CAP is working with Congress to amend PAMA to ensure reimbursements for clinical laboratory tests are accurate and truly reflect the costs for patient care. Pathologists remain concerned over how the administration executed PAMA reforms and the CAP reaffirms its calls to fix a broken payment system that now threatens seniors’ access to vital patient services. 

As the world's largest organization of board-certified pathologists and leading provider of laboratory accreditation and proficiency testing programs, the College of American Pathologists (CAP) serves patients, pathologists, and the public by fostering and advocating excellence in the practice of pathology and laboratory medicine worldwide. For more information, read the 2017 CAP Annual Report at CAP.ORG.