Independent laboratories have been pushed to the brink of financial instability in recent years due to the price cuts mandated by the Protecting Access to Medicare Act of 2014 (PAMA). However, as part of a yearslong effort to rectify the problematic pricing and reporting regulations implemented by CMS under PAMA, the Saving Access to Laboratory Services Act (SALSA) was reintroduced by Congress on March 28.
After being introduced in June 2022, there were expectations that SALSA would be included in the year-end spending bill passed in December to avoid a federal government shutdown. Unfortunately, the bill was excluded from the final package.
The consequences of continued inaction would be significant: despite the Congressional Budget Office (CBO) initially projecting $2.5 billion in reimbursement rate cuts over a decade when PAMA was enacted in 2014, the program has already reduced Medicare Part B lab payments by nearly $4 billion in just three years. To add to the pain, an additional 15% reduction in funding is set to take effect next year.
“SALSA will strengthen our nation’s clinical laboratory infrastructure, ensuring access to diagnostic testing for seniors and enabling our community and regional laboratories to better respond to emerging public health threats,” said Mark S. Birenbaum, PhD., Executive Director of the National Independent Laboratory Association, in a recent press release.
RELATED ON-DEMAND WEBINARS:
- How the Saving Access to Laboratory Services Act Would Fix Clinical Lab Repricing
- Preparing for PAMA Data Reporting
Proposed changes under SALSA
SALSA, which has gained the vocal support of the NILA and most other medical lab advocacy organizations, among others, would primarily introduce three major changes to the current PAMA reporting structure, which requires labs to report their private payer data for select codes on the Clinical Laboratory Fee Schedule (CLFS) to CMS.
- Set caps for annual rate reductions and reduce reporting frequency:
SALSA would set annual limits on rate reductions and increases. Currently, PAMA limits how much a test’s reimbursement can be reduced each year in the first six years, but there are no limits on payment reductions in future years. This resulted in many tests seeing annual rate reductions of the maximum 15% during recent rounds of PAMA cuts.
The time between data collection periods would also be lengthened from three years to four.
- Draw from a statistically representative sample of the entire clinical lab market:
SALSA would require statistical sampling to gather private payer data from independent labs, hospital labs and physician office labs. A “widely-available test” is a test that is both performed by more than 100 National Provider Identifier (NPI) entities and has a Medicare reimbursement rate under $1,000. For tests that are not widely available CDLTs, all labs performing that test, above the current minimum revenue threshold, would report their market data to ensure an appropriate data set (the same as current law for these tests).
- Adjust information reported to CMS and definition of “applicable lab”:
Under SALSA, Medicaid managed care rates would be excluded from required payer data since those rates cannot exceed Medicare rates by law. The law would also create the option for labs to exclude manual (physically mailed) remittances from reporting if these remittances do not exceed more than 10% of the lab’s claims.
Furthermore, SALSA would eliminate the part of the definition of “applicable laboratory” as a lab that gets most of its Medicare revenues from one or a combination of the CLFS or Physician Fee Schedule, while keeping the part of the definition of a lab that receives at least $12,500 in payments from Medicare. This move should help include more hospital-based labs in the reporting pool.
What’s Next?
While expressing support for the Saving Access to Laboratory Services Act to your local Congressional representatives in the coming months will be key to helping the bill advance, labs should also understand whether they’re required to report under the existing PAMA structure should the new law not go into effect prior to the beginning of the next reporting cycle on Jan. 1, 2024. Under the current reporting structure, required labs who fail to report on time may face penalties of up to $10,000 a day.
If you’re seeking additional guidance on the Saving Access to Lab Services Act or PAMA or would like to discuss improving your overall RCM strategy, contact us today for a free consultation.