New Law For Medi-Cal Aimed At Eliminating Retroactive Recoupments

by Jondavid Klipp | Aug 15, 2021 | Laboratory Regulations, Medi-Cal

New Law For Medi-Cal Aimed At Eliminating Retroactive Recoupments

On July 27, California Gov. Gavin Newsom signed a comprehensive health care budget trailer bill (AB 133), which prevents future retroactive reimbursement reductions and recoupments from labs and pathology groups that occur due to “a lack of timeliness in Medi-Cal updating their rates.” In the past, Medi-Cal fee schedule rate changes have been chronically delayed, which has often led the program to seek retroactive recoupments from labs and pathologists—a major administrative and billing headache.

In addition, the new law has made a minor adjustment to the methodology used for setting MediCal fee schedule rates for clinical lab tests and pathology services. Beginning on July 1, 2022, Medi-Cal rates will be based on the lowest of the following: 1) the amount billed; 2) the charge to the general public; 3) 100% of the lowest maximum allowance established by the federal Medicare program for the same or similar services; or 4) a reimbursement rate based on an average of the lowest amount that other payers and other state Medicaid programs are paying for similar clinical laboratory or laboratory services.

The California Department of Health Care Services (DHCS) will not adjust rates currently established on the Medi-Cal fee schedule that do not exceed the limitations mentioned above, according to a DHCS spokesman. Some labs and pathologists had hoped the new law would raise their Medi-Cal rates to 100% of Medicare rates next year, but it does not.

The DHCS spokesman confirmed that the DHCS will continue to conduct its triennial rate survey and adjust rates based on the average of the lowest amounts third-party payers are paying. The next rate survey will be based on third-party payer data collected from calendar year 2021, reported in 2022 and effective in July 2023.

The EKRA Law Banning Commission-Based Lab Sales Reps Remains In Effect

by Jondavid Klipp | Nov 15, 2019 | EKRA, Laboratory Regulations

The EKRA Law Banning Commission-Based Lab Sales Reps Remains In Effect

On October 24, 2018, The Eliminating Kickbacks in Recovery Act of 2018 (EKRA) became law (see LE, December 2018). EKRA was part of broader legislation (The SUPPORT Act) intended to address the national opioid crisis.

The EKRA law prohibits commission payments based on the number of patients referred to a laboratory, the number of tests performed, or the amount billed to or received from a “health care benefit program” (which includes commercial insurance plans as well as Medicare and Medicaid). EKRA applies to all laboratories (toxicology, molecular, routine clinical, anatomic pathology, et al.), not merely labs that perform testing for recovery homes and clinical treatment facilities. Violation of EKRA is punishable by a fine of up to $200,000 and/ or imprisonment of up to 10 years for each occurrence.

The American Clinical Laboratory Association and its largest member labs have lobbied to have EKRA narrowed so that it applies only to laboratories associated with substance abuse services. However, to date, no changes have been made to the EKRA law.

McDonald Hopkins’ attorney Rick Cooper says that although there are no changes to EKRA expected in the near term, there may eventually be some narrowing of the law made in the long horizon.

Does New Far-Reaching Anti-Kickback Law Apply To All Labs?

by Jondavid Klipp | Dec 15, 2018 | Laboratory Regulations

Does New Far-Reaching Anti-Kickback Law Apply To All Labs?

Hastily passed opioid legislation, signed into law by President Trump on October 24, outlaws the use of volume-based compensation for laboratory sales reps, regardless of the type of testing involved. The new law, Section 8122 of the “Eliminating Kickbacks in Recovery Act of 2018” (EKRA), authorizes criminal penalties for some conduct that is currently permissible under antikickback statute safe harbors.

The new law prohibits commission payments based on the number of patients referred to a laboratory, the number of tests performed, or the amount billed to or received from a “health care benefit program” (which includes commercial insurers as well as Medicare and Medicaid). As written, Section 8122 of EKRA applies to all laboratories, not merely labs that perform testing for recovery homes and clinical treatment facilities, and to all services covered by all payers, rather than only services covered by Federal healthcare programs.

Karen Lovitch, attorney at Mintz Levin, notes that Senators Marco Rubio (R-FL) and Amy Klobuchar (D-MN) introduced this provision in an effort to target patient brokers who recruit patients for addiction treatment centers and allegedly receive financial kickbacks in return. Brokers have reportedly paid for patients’ travel, rent, or other expenses to make it easier for them to seek treatment, and even helped uninsured patients obtain private insurance coverage by paying their premiums while in treatment.

Lovitch says the EKRA fails to carve out lab testing that has nothing to do with opioid or drug abuse. Furthermore, it applies to all labs when doing business with all payers. The legislative history fails to clarify whether Congress intended to construct this anti-kickback provision so broadly
with respect to laboratories and, if so, whether Congress had any rationale for doing so, according to Lovitch.

Lovitch believes that it’s unlikely that Congress will remove laboratories from the new law entirely, but expects that there will be significant pressure on Congress to limit its applicability to services related to opioid use and treatment.

GAO Warns Of Increased Costs From Unbundling Panel Tests

by Jondavid Klipp | Dec 4, 2018 | CLFS, GAO, Laboratory Regulations

GAO Warns Of Increased Costs From Unbundling Panel Tests

A new report from the U.S. Government Accountability Office (GAO) has zeroed in on the unbundling of common panel tests as a practice that could cause Medicare to overpay billions under PAMA’s new market-based CLFS.

The potential for overpayment stems from a loophole that enables labs to charge significantly more for common panel tests by billing for each component test individually (see LE, December 2017). Previously, Medicare had paid a lower bundled rate for routine panel tests such as Comprehensive Metabolic Panel (CPT 80053) and Lipid Panel (CPT 80061).

But starting January 1, 2018, PAMA limited CMS’s ability to automatically combine individual component tests into groups for bundled payment. Labs now have the ability to game the system for higher reimbursement by billing individually for tests in a panel. The GAO report has estimated that this practice could potentially increase Medicare expenditures by as much as $10.3 billion from 2018 through 2020.

The Department of Health and Human Services (HHS) commented that it is taking steps to address this issue. More specifically, HHS is developing an automated process to identify claims for panel tests that should receive bundled payments and anticipates implementing this change by the summer of 2019. In addition, HHS posted guidance on November 14, 2018, stating that for panel tests with billing codes, laboratories should submit claims using the corresponding code rather than the codes for the separate component tests beginning in 2019.

In addition, CMS says that it has been monitoring changes in panel test utilization, payment rates, and expenditures. CMS says that preliminary data indicates that Medicare payments for individual component tests of panel tests have, in fact, increased substantially in 2018.