Taking a Closer Look at the Finalized Clinical Laboratory Fee Schedule and What It Means for Physicians

Last Updated: Jul 19, 2016

On June 23, 2016, the Centers for Medicare and Medicaid Service (CMS) published its final rule on the Medicare Clinical Diagnostic Laboratory Test (CDLT) Payment System.

CMS has revised the payment system as required by Protecting Access to Medicare Act of 2014 (PAMA). PAMA requires that CDLT payments be based on a weighted average of private payer rates as self-reported by applicable laboratories beginning January 1, 2018.

The Pennsylvania Medical Society's (PAMED) Practice Support Team has analyzed the rule to determine how it affects Pennsylvania physicians and practices.

What is an applicable laboratory?

CMS defines "applicable laboratories" as meeting the following three criteria:

  1. An entity that has at least one component performing laboratory testing and meeting the designation of laboratory as defined by Clinical Laboratory Improvement Amendments (CLIA).
  2. An entity – based on National Provider Identifier (NPI) – that receives more than 50 percent of its revenue as paid under the Clinical Laboratory Fee Schedule (CLFS) and Physician Fee Schedule (PFS) collectively.
  3. An entity whose revenue paid by Medicare under CLFS exceeds $12,500 during the data collection period.

How does this affect my practice?

CMS estimates this will affect roughly 5 percent of physician practices due to the applicable laboratory criteria. For those practices, laboratories will report the private payer rates for each test for which final payment has been made during the data collection period. The lab will also report the associated volume for each test, and the specific HCPCS code associated with each test. If a laboratory has more than one payment rate for different payers for the same test, or more than one payment rate for the same payer for the same test, the lab will report each payment rate and the volume for the test at each rate.

The initial data collection period is Jan. 1, 2016 through June 30, 2016. The data must be reported to CMS Jan. 1, 2017 through May 30, 2017.

Applicable laboratories will used a web-based data collection system through CMS to report the data collected. Registration will be available through CMS' Identity Management (EIDM) system as early as October 2016, and CMS will be ready for data collection on Jan. 1, 2017. Laboratories will be able to report information through two options:

  1. File upload in .csv format
  2. Manual data entry

What is CMS doing with this information?

CMS is proposing to use the reported data to calculate a weighted median per test. As of Jan. 1, 2018, the CLFS is aligned to the weighted median, phased in at a maximum of 10 percent reduction each year until 2020, and 15 percent in years 2021-2023.

More Resources

CMS offers the following resources with more information on the CDLT Payment System:

PAMED members with questions can also contact our Knowledge Center at (855) PAMED4U (855-726-3348).

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