The American Clinical Laboratory Assn. (Washington, DC) has announced that Julie Khani is resigning as President effective November 26. Khani, who has been ACLA President since January 1, 2017, has accepted a position as Vice President of Government Affairs at Hologic (Marlborough, MA). The ACLA Board of Directors has begun a national search for her successor.
A former CMS official involved in drafting the initial Medicare rules that determined which labs must report their private-payer pricing data to CMS for calculating Medicare CLFS rates says that PAMA was specifically designed to exclude hospital labs. This flies in the face of the lab industry’s contention that the PAMA law intended pricing information from all labs, including hospital labs, to be included in the rate calculations.
Speaking at the Annual Meeting for the American Clinical Laboratory Assn. (ACLA), March 4, Marc Hartstein, a Principal with Health Policy Alternatives and former Director of CMS’s Hospital and Ambulatory Policy Group, said, “I provided technical assistance to the Senate Finance Committee, which wrote the statute, and I can tell you the intent was to exclude hospital laboratories. The provision was intended to get savings, and if hospital laboratories were included, that would have raised the payment amounts.”
Hartstein spent 26 years at CMS (1990-2016) and helped develop such major Medicare policies as the misvalued code initiative for the physician fee schedule, the hospital Diagnosis-Related Group system, the hospital two-midnight rule, as well as the regulations for implementing Medicare’s
new CLFS under PAMA.
At this point, the opinions of those involved in drafting the PAMA statute don’t really matter, said Hartstein, who noted that it’s now up to the court to issue a statutory interpretation of the law. “Courts rightly decide issues based on the words of the law, not the opinions of those involved in drafting or enacting the law,” he said. ACLA’s lawsuit challenging the implementation of PAMA (originally filed in December 2017) is now awaiting a ruling from Judge Amy Berman Jackson from the U.S. District Court for the District of Columbia. Judge Jackson initially dismissed the case, but ACLA won an appeal, and the case was sent back to her to make a ruling. All briefs and replies were submitted to Judge Jackson at the end of January, and a decision is expected by year’s end.
“The question is whether the secretary’s definition of ‘laboratory’ is a reasonable definition,” said Hartstein. “If a laboratory is only a laboratory and not its larger organization, the laboratory is going to get 100% of its [Medicare] revenues from the clinical laboratory fee schedule or physician fee schedule. I don’t understand what the majority revenues criterion would be in that circumstance. The majority of revenue criterion must have been drafted to eliminate somebody from this determination.”
Regardless, the second PAMA reporting cycle now requires hospital labs to report their privatepayer data for non-patients to CMS in the first quarter of 2021. The hospital data, along with data from independent labs and POLs, will be used to calculate Medicare CLFS rates for 2022-2024.
Finally, the Medical Payment Advisory Commission (MedPAC) is currently reviewing how CMS has implemented the private-payer-based CLFS under PAMA, giving the lab industry an opportunity to make its case for a different system, said Hartstein. The lab industry wants CMS to analyze the payment data it collects from labs using statistical sampling to ensure that all sectors
of the lab market are accurately represented.
On July 30, the U.S. Court of Appeals for the District of Columbia ruled in favor of the American Clinical Laboratory Assn. (ACLA) in its suit against the U.S. Department of Health and Human Services (HHS) regarding implementation of the Protecting Access to Medicare Act (PAMA). The ruling overturned a D.C. District Court decision that dismissed ACLA’s lawsuit on the grounds that PAMA law prohibits judicial review of CMS’s “establishment of payment amounts” for clinical lab tests.
However, before the case goes back to D.C. District Court for review on its
merits, HHS is likely to request either a rehearing of the D.C. Court of Appeals’ three-judge panel decision or petition for a rehearing en banc from a broader panel of judges.
The D.C. Court of Appeals concluded that the statutory provision stripping jurisdiction to review payment amounts does not cover the statute’s data-collection provision. It ruled that the case be sent back to D.C. District Court to determine whether or not HHS/CMS violated PAMA by excluding hospital outreach labs from the first private-payer payment survey used to set Medicare CLFS rates for 2018 to 2020.
HHS has 45 days to petition for either a rehearing or rehearing en banc. The D.C. Court of Appeals has ordered that the case be held from being sent back to the D.C. District Court “until seven days after disposition of any timely request for rehearing or petition for rehearing en banc.”
It’s unlikely that any request by HHS for a rehearing will be granted, but the process will delay final resolution of the lawsuit, which is now approaching two years since initially being filed in late 2017.
More likely than not, the D.C. Court of Appeals will uphold its initial decision and send the lawsuit back to D.C. District Court. But the D.C. District Court proceedings could be lengthy, taking anywhere from six months to more than two years, before a decision is rendered.
Nonetheless, the Appeals Court decision is a victory for ACLA that will put pressure on HHS/CMS to negotiate with ACLA for a potential settlement of the lawsuit. ACLA and its biggest members, LabCorp and Quest Diagnostics, are lobbying hard to delay the next private-payer payment data reporting period (currently scheduled for January 1 to March 31, 2020) by one year. In addition, the lab industry wants CMS to use statistical sampling when it calculates new CLFS rates for 2021 to ensure that all lab segments (independents, hospital outreach labs and POLs) are properly represented.
