The CARES Act — Not Much In It For Labs

by | Apr 15, 2020 | CARES Act | 0 comments

The enormous $2 trillion Coronavirus Aid, Relief and Economic
Security Act (CARES Act) was signed into law on March 27, but provides little in direct relief to the nation’s laboratories. The American Clinical Laboratory Assn. (ACLA) had lobbied for $5 billion in new federal funding designated specifically for labs performing Covid-19 testing to cover uncompensated testing services, staffing and the purchase of analyzers, reagents and collection kits. Instead, the cornerstone healthcare provision of the final law is an ambiguous $100 billion fund for entities “that provide diagnoses, testing, or care for individuals with possible or actual cases of Covid-19.” Below we summarize key provisions in the CARES Act that pertain to laboratories. 

$100 Billion Fund for Eligible Healthcare Providers
The single paragraph of the CARES Act that establishes the $100 billion fund is vague and leaves the Department of Health and Human Services (HHS) with a major role in distribution decisions.

Eligible healthcare providers, including hospitals, physician practices and laboratories, must submit an application to HHS that includes their tax ID number and “a statement justifying the need of the provider for payment.” Provider expenses that may be reimbursed include “personal protective equipment and testing supplies.” Lost revenues that are attributable to coronavirus are also eligible to be reimbursed, but the Act does not explain how this will be calculated.

It’s unclear how the $100 billion will be divvied up. Applications will be reviewed by HHS on a rolling basis, but there are no details on how or when the money will be disbursed. HHS says it will be providing additional information on how healthcare providers and suppliers can access these funds in the coming weeks.

Coverage of Covid-19 Testing
Health plans/insurers are required to provide coverage, without cost sharing (including deductibles, copays and coinsurance) or prior authorization to hospitals and labs for all Covid-19 testing. Reimbursement is set at the negotiated rate for contracted labs. Non-contracted labs will get paid their list price, but are required to publish their test price on their website. For comparison, the Medicare CLFS rate for Covid-19 testing (CPT 87635) is set at $51.33.

Medicare CLFS Rate Freeze
The Act freezes Medicare Clinical Laboratory Fee Schedule (CLFS) rates in 2021. Under PAMA, CLFS rates for most high-volume tests had been scheduled for cuts of 10% to 15% next year.

The Act also delays labs’ responsibility to report their private-payer data to CMS under PAMA by another year to January –March 2022. This follows a previous one-year delay achieved with the year-end spending package.

Medicare Sequestration Temporarily Suspended
The annual 2% cut, or “sequester,” in Medicare fee-for-service claims (including the Medicare CLFS and Medicare Physician Fee Schedule) has been temporarily suspended from May 1 through the end of this year. However, the sequestration policy has been extended by an extra year (through 2030) in exchange for this temporary suspension. The 2% reduction has been in effect since 2013 under the Budget Control Act of 2011.

Add-On Payment for Hospital Covid-19 Patients
Hospitals will receive a payment increase of 20% for patients diagnosed with Covid-19 and later discharged during the emergency period. The discharge will be identified based on diagnosis codes, condition codes or other necessary means. This means Medicare’s payment for these types
of hospital stays could go from $10,000 to $12,000, depending on the severity of the illness.

ACLA on Lack of Dedicated Funding
“For the third time, Congress has failed to provide the necessary funds to support ‘free testing’ for all Americans. Our members remain in an untenable situation, absorbing growing, uncompensated costs for testing specimens with no assurance that they will be appropriately or fairly reimbursed for the tests they are performing,” according to a March 26 statement from ACLA President Julie Khani.