Leading Health Groups Challenge GAO’s Flawed Report on Medicare Lab Billing

Contact: Apoorva Stull
Phone: 202-354-7102
E-mail: MEDIA@CAP.ORG

Washington, D.C. — In response to broad and misleading claims in a recent Government Accountability Office (GAO) report, leading clinical laboratory, diagnostic and provider organizations challenged the agency on a number of recommendations that could lead to disruption to seniors’ access to critical laboratory diagnostics.

The joint letter from AdvaMedDx, American Clinical Laboratory Association (ACLA), College of American Pathologists (CAP), National Independent Laboratory Association (NILA) and Point of Care Testing Association (POCTA) notes that GAO makes flawed assertions related to laboratory billing in the Medicare program and implementation of the Protecting Access to Medicare Act (PAMA). To view the full letter, click here. Highlights from the letter are included below:

• “While the report accurately details the problems with the Protecting to Access to Medicare Act of 2014 (PAMA) data collection process CMS conducted in 2017, the report makes flawed and dangerous assertions, and suggests that initial PAMA reimbursement reductions should have been more severe. The GAO recommendations ignore statutory requirements and demonstrate a serious misunderstanding of actual, real-world billing practices of clinical laboratories.”
• “PAMA was intended as an opportunity to reframe Medicare’s static payment system for laboratory diagnostic tests…Unfortunately, due to a flawed approach to data collection that excluded large portions of the laboratory market, implementation by the Centers for Medicare and Medicaid Services (CMS) has had the opposite result. Payment rates for the vast majority of laboratory tests are not based on market prices and as a result, cuts have far exceeded initial projections.”
• “…The report suggests that CMS should have phased-in PAMA cuts using ‘average’ Medicare payment rates as the starting benchmark. This recommendation ignores the statutory requirement under PAMA which restricted any cuts in the first three years of implementation to no greater than 10 percent compared to the prior year… By suggesting the average as the benchmark, GAO is recommending that many laboratories should have been cut by greater than the statutory limit of 10 percent in 2018. This proposed outcome is in direct conflict with the PAMA statute and would have resulted in disproportionate hardship…”
• “Most concerning in the report, however, is its discussion of billing of panel tests under PAMA. The discussion on panel test billing demonstrates a fundamental misunderstanding by GAO of actual, real-world billing practices of clinical laboratories. This misunderstanding leads to an inflammatory and false claim that Medicare is overpaying clinical laboratories for panel tests on the magnitude of billions of dollars.”
• “The primary false assertion is that the laboratory industry, writ- large, is abandoning Medicare billing requirements and billing guidelines…We strongly disagree that this is occurring. A survey of clinical laboratories conducted under attorney-client privilege by counsel on behalf of the American Clinical Laboratory Association (ACLA) found virtually no change in laboratories’ billing practices between 2017 (pre-PAMA) and 2018 (Year 1 of PAMA) for the test panels at issue. Out of tens of millions of claims, laboratories billed for individual codes in a panel, rather than the panel code, in less than one-tenth of one percent of claims. The percentages are comparable before PAMA rates were implemented and after."

ACLA is a not-for-profit association representing the nation’s leading clinical and anatomic pathology laboratories, including national, regional, specialty, hospital, ESRD and nursing home laboratories. The clinical laboratory industry employs nearly 277,000 people directly and generates over 115,000 additional jobs in supplier industries. Clinical laboratories are at the forefront of personalized medicine, driving diagnostic innovation and contributing more than $100 billion to the nation’s economy.

AdvaMedDx member companies produce innovative, high quality in vitro diagnostic tests that facilitate evidence-based medicine, improve quality of patient care, promote wellness, enable early detection of disease and can reduce overall health care costs. Functioning as an association within AdvaMed, AdvaMedDx is dedicated to the issues facing in vitro diagnostic companies in the United States and abroad.

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.

NILA members are independent community and regional clinical laboratories working with physician practices, hospitals, outpatient care settings, skilled nursing facilities and home health patients to provide essential clinical laboratory services to Medicare beneficiaries, particularly those in underserved communities and hard to reach care settings.

The Point of Care Testing Association seeks to facilitate access to safe, effective, and cost-effective patient testing at the time of treatment. The POCTA educates providers, payers, and patients about the benefits of point-of-care testing, and it advocates for public policies that foster innovation in and appropriate use of point-of-care testing. The POCTA works with public and private payers to develop reimbursement policies that can improve health outcomes by supporting access to point-of-care testing.