Question:

What does PAMA specifically say about CLFS payment rate decreases? I know that CMS has proposed reductions for 2018, and I just wonder how these comply with the original law.

Answer:

The Protecting Access to Medicare Act (PAMA) states that, for the first three years after implementation of the new payment system, a test’s payment amount cannot drop more than 10 percent of the previous year’s payment amount. For a subsequent three years, it cannot drop more than 15 percent per year.

Here’s an example that the Centers for Medicare & Medicaid Services (CMS) gave on its website:

If an existing test under the CLFS for 2017 has a payment rate of $20, but the weighted median private payer rate calculated during 2017 for 2018 (using January 1, 2016, through June 30, 2016 data) produces a payment rate of $15, then for 2018, the CLFS payment rate for the test becomes $18 ($20 minus $2)—the maximum 10 percent reduction allowed from the prior year’s price.

The following year, a 10 percent reduction would equal $1.80, lowering the total payment to $16.20 for 2019. The maximum reduction percentage allowed by the statute would continue to apply to the prior year’s payment until the reduction becomes less than the applicable percentage (10 percent or 15 percent), after which the fee schedule payment will reflect the weighted median of the private payer rates for the test.

For more on this, go to https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-06-17.html.

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