At laboratory

As discussed in several transmittals including the Quarterly Update for the Clinical Laboratory Fee Schedule (CLFS) and Laboratory Services Subject to Reasonable Charge Payment, the CLFS data reporting period will be delayed. To maintain compliance, it is important for labs, and healthcare regulatory and compliance professionals to be aware of the details. Also offered is a brief review of the reasonable charge payment policies for 2021. Compliance and regulatory teams should review policies like these to safeguard laboratory compliance.

2021 Laboratory Costs Subject to Reasonable Charge Payment

As you may know, hospital outpatient claims are paid under a reasonable charge basis, with some provisions making specific rules about the charge.

According to these regulations, the reasonable charge must not exceed the lowest actual charge of the customary or current charge for the previous 12-month period ending June 30, correlated with the inflation indexed update. For 2021, the Consumer Price Index (CPI) update is 0.60 percent. Understand that the inflation-indexed update is calculated based on the change in the applicable CPI for the 12-month period which ends on June 30 of each year. CMS states that “Manual instructions for determining the reasonable charge payment can be found in Publication 100-04, Medicare Claims Processing Manual, Chapter 23, Section 80 through 80.8. If there is not sufficient charge data for a code, the instructions permit considering charges for other similar services and price lists.”

For services that detail HCPCS codes set specifically for independent dialysis facility patients, Publication 100-04, Medicare Claims Processing Manual, Chapter 8, Section 60.3 mandates that the reasonable charge basis will apply.

Should the services be done for hospital-based renal dialysis facility patients, expect payment to be completed on a reasonable cost basis. When the services are completed for hospital outpatients, payment will be hospital outpatient.

CDLT Data Reporting Period

Section 1834A of the Act, as established by Section 216(a) of the Protecting Access to Medicare Act of 2014 (PAMA), mandated important changes in the way Medicare pays for Clinical Diagnostic Laboratory Tests (CDLTs) under the CLFS. As a reminder, the CLFS “Medicare Clinical Diagnostic Laboratory Tests Payment System Final Rule (CMS-1621-F)” was published in the Federal Register on June 23, 2016 and implemented section 1834A of the Act.

Under the CLFS final rule, reporting entities must provide CMS with certain private payer rate information (applicable information) for their component applicable laboratories.

The data collection period is defined as the period where required information from an applicable laboratory is gathered from claims for which the laboratory received final payment during the period. This period started on January 1, 2019 and went through June 30, 2019.

With the arrival of Section 105 (a) of the Further Consolidated Appropriations Act, 2020 (FCAA) (Pub. L. 116- 94, enacted December 19, 2019) and section 3718 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136, enacted March 27, 2020), some key revisions are set to impact the next data reporting period for Clinical Diagnostic Laboratory Tests (CDLTs) which are not classified as Advanced Diagnostic Laboratory Tests (ADLTs) along with the phase-in of payment reductions under the Medicare private payor rate-based CLFS.

According to CMS:

  • The next data reporting period of January 1, 2022, through March 31, 2022, founded on the original data collection period of January 1, 2019, through June 30, 2019.
  • Following the next data reporting period, there is a three-year data reporting cycle for CDLTs that are not ADLTs, (that is 2025, 2028, etc.).

Along with these revisions, the statutory phase-in of payment reductions resulting from private payor rate implementation is extended through 2024. CMS notes there is a 0.0 percent reduction for 2021, and payments will not be lowered by more than 15 percent for 2022 through 2024.

Check out our Laboratory Compliance Manager to track the latest lab regulatory, CPT® coding changes, and compliance news every month so that your lab codes correctly, safeguards against audits, and remains compliant throughout the year.

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