Diagnostics companies, under pressure from proposed Medicare reimbursement cuts, are renewing calls for Congress to pass legislation that could provide relief by changing how data for setting laboratory test payment rates is collected.
A new clinical laboratory fee schedule proposed this week by the Centers for Medicare and Medicaid Services would usher in the cuts beginning next year. Lab service providers face payment reductions of 15% on 775 tests under the preliminary schedule for 2027, according to the American Clinical Laboratory Association.
Getting legislation through Congress that would avert the reductions will be a tough task, however. The House of Representatives is now in recess until after the November midterm elections.
The rate adjustment process was established under the Protecting Access to Medicare Act of 2014. The 15% cuts are the maximum allowed under the law, which was supposed to better align Medicare reimbursement rates with those of private payers.
The proposed rates “clearly reflect the underlying flaws in the Protecting Access to Medicare Act (PAMA) rate-setting process and the urgent need for Congress to enact sustainable, long-term reform through passage of the RESULTS Act,” Quest Diagnostics said in an email after the schedule was released this week.
Congress has been mulling a bill called the Reforming and Enhancing Sustainable Updates to Laboratory Testing Services Act, or RESULTS, that would direct the CMS to contract with an independent, not-for-profit commercial claims database to set payment rates. Quest said RESULTS is a “sensible and fair” long-term reform that would replace PAMA’s “incomplete and skewed data collection process” with a comprehensive and representative data process. The company noted that the American Medical Association, American Cancer Society and American Hospital Association are among the organizations that support its passage.
“We are pushing hard and furious for the RESULTS Act,” Quest CEO James Davis said at an investor conference earlier this month.
Congress doesn’t want to have to keep dealing with the structural flaws that are part of PAMA, said Davis. Over the past several years, legislators have acted to delay the payment cuts to labs.
“They would like a long-term fix just like we would,” Davis said. The lab industry is pushing for the RESULTS Act to be included as part of a broader healthcare package at the end of the year, he said.
The latest proposed fee schedule would reduce payments for almost 1,200 lab tests in total next year, according to ACLA, with further cuts to come in 2028 and 2029.
The trade group, along with the AHA, the College of American Pathologists and testing service providers Labcorp and Quest, this week repeated their calls for permanent payment reform.
Qihui “Jim” Zhai, president of the pathologists group, said this week that the 2027 fee schedule shows the current payment system is not sustainable.
“Cuts of this scale threaten the stability of the laboratory infrastructure that patients and physicians rely on for accurate and timely diagnoses,” he said in a statement.
TD Cowen analysts, however, predicted that lawmakers will again delay the cuts.
“We continue to think it is most likely that Congress will punt the 2027 PAMA cuts like it has done in previous years,” the analysts wrote in a Wednesday note.
Quest competitor Labcorp also said this week that it continues to support the RESULTS Act. Labcorp said it believes the CMS payment rates are based on data that is not fully representative of the broader commercial laboratory market and would threaten patient access to laboratory services.
In a securities filing, the company reaffirmed its long-term financial forecast, which it said anticipates continuation of PAMA-related reimbursement pressure.
The new rate adjustments for lab tests would save the government an estimated $1 billion annually, the CMS said when it announced them.
“Taxpayers and Medicare patients have been paying excessive rates to labs for years, but with some help from Congress, CMS is working to ensure that Medicare isn’t paying more than private insurers for the exact same tests,” CMS Administrator Dr. Mehmet Oz said.
