Changes to the Clinical Laboratory Fee Schedule

Pursuant to the Section 216(a) Protecting Access to Medicare Act, which amended Section 1834A of the Social Security Act, the Center for Medicare & Medicaid Services (“CMS”) is making significant changes to how payments are made for clinical diagnostic laboratory tests (“CDLTs”) under the Clinical Laboratory Fee Schedule (“CLFS”).

Under the CLFS Final Rule, 81 Fed. Reg. 41036 (June 23, 2016), certain “reporting entities” must submit a report to CMS during a “data reporting period” with “applicable information” collected during a “data collection period” for their “applicable laboratories.” CMS-1693-P at 402.

“Applicable information” refers to “(i) Each private payor rate for which final payment has been made during the data collection period; (ii) The associated volume of tests performed corresponding to each private payor rate; and (iii) The specific Healthcare Common Procedure Coding System (HCPCS) code associated with the test.” 42 C.F.R. § 414.502. A “reporting entity” is an entity that reports tax-related information to the IRS using Taxpayer Identification Number (“TIN”) for its applicable laboratories components. Id.

An “applicable laboratory” is: (1) a laboratory; (2) which bills Medicare Part B under its own NPI; (3) which receives more than 50% of its total Medicare revenue from furnishing CDLTs and/or physician and other practitioner services under the physician fee schedule (“PFS”) (the “majority of Medicare revenue threshold”); and (4) receives at least $12,500 of its Medicare revenue (the “low expenditure threshold”). Id. Total Medicare revenue is the total payments received under Parts A and B, Medicare Advantage (“MA”) payments under Part C, prescription drug payments under Part D, and by beneficiary deductible or coinsurance. Id.

A “data collection period” is the six month period from January 1 through June 30, and the “data reporting period” is the three month period from January 1 through March 31 following a data collection period. Id. The first data collection period was January 1, 2016, through June 30, 2016, and the first data reporting period was January 1, 2017, through March 31, 2017.

The data collected during the first data reporting period formed the basis for payments for CDLTs beginning January 1, 2018, which was equal to the weighted median of the applicable information.

Many commenters noted that the data was collected from a relatively small sample of laboratories, that the criteria for applicable laboratories excluded hospital-based laboratories, and that the low expenditure threshold excluded many physician office-based and small laboratories. CMS-1693-P at 403-04. As CMS is attempting to obtain the broadest possible representation, it is proposing a change in how an applicable laboratory is determined and seeking comments on additional changes to this standard.