1. American Clinical Laboratory Association
Laboratory Medicare Reimbursement in the Crosshairs – Threats to Reimbursement & How The Industry is Fighting Back
Alan Mertz
President
American Clinical Laboratory Association
CCLA Annual Meeting
November 2013

2. Introduction & Summary
The Best of Times, The Worst of Times
Age of Personalized Medicine, Innovation in Molecular DX
Age of Unprecedented Budget Cutting & Regulation
Key Reimbursement Threats Fall 2013
CMS Proposal to Cut 39 PFS AP Codes – “HOPPS”
CMS Proposal to “Adjust” All 1200 Codes
CLFS on Chopping Block (Again) to Pay For SGR
Congressional Budget Conference Seeks Entitlement Cuts
GapFill Process
MAAA’s
How Laboratory Industry Is Fighting Back

3. “Why is the Government Cutting Lab Reimbursement?”
Big Picture – External Factors
“Low Hanging Fruit” Already “Picked” by ACA & Other
Annual SGR Extension, Provides Vehicle & Need for $$
Endless Debt Ceiling & Government Funding Showdowns
More Aggressive CMS Cost Cutting Initiatives
Specific to Laboratory Services
CLFS Overall Viewed by Some as Out of Date
Lab Utilization Up
Outside Organizations Studies (OIG, MedPAC, Others)
Labs Got “Pass” in 2013 SGR Payfor.

4. CMS Proposes Deep Cuts in 39 Pathology Codes (PFS)
Capping PFS Pathology Codes TC to Hospital Outpatient PPS (HOPPS)
Major Codes Include Flow, IHC, FISH
Overall 26% Cut, Some Codes Cut 81%
Hospital Outpatient Reimbursement Rates for Codes Never Intended to Set per Code Rates in PFS
Reimbursement Below Direct Costs
Advocacy Campaign to Stop Proposal is One of Largest Ever for Lab Community
Deadline: September 6, 2013 Comments, Final Rule November 2013, Would Take Effect January 2014

6. CMS CLFS “Adjustment” Proposal from 2014 PFS Rule
CMS Proposes Authority to Adjust CLFS Codes to Account for “Technological Changes”
Statutory Basis
Which Codes?
Process for Adjustments
What is “Technological Change” (TC)
ACLA and Industry Reaction
Putting “Guardrails” on Process
Limiting Codes
Fighting Presumption that TC Only Reduces Cost
Transparency & Stakeholder Involvement

7. Medicare Payment for Lab Test
Clinical Lab Fee Schedule (CLFS) Created in 1984 with Annual Update for Inflation… But Payments Have Increased Only 7 Times in Past 30 Years
$21.81
Updated for Inflation
Medicare Payment for Lab Test
($10 in 1984)
Now, let me turn to what is happening to reimbursement for labs under the CLFS. When it was created in 1984, the fee schedule was supposed to be automatically updated each year by the CPI (not medical inflation, mind you).
As the chart demonstrates, the CLFS has no where near kept up with CPI. In fact, by 2010, a $10 test was actually being reimbursed for less than it was in 1984, in REAL TERMS! Whereas a $10 test would have been $21.81 had it been adjusted for CPI, it was actually paid $8.32.
Year
1984
2010

9. FOR IMMEDIATE RELEASE Contact: Adjoa Adofo July 9, AMERICAN CLINICAL LABORATORY ASSOCIATION STATEMENT ON CMS PROPOSED PHYSICIAN FEE SCHEDULE RULE WASHINGTON, DC – The American Clinical Laboratory Association (ACLA) issued the following statement on the proposed rule published today in the Federal Register by the Centers for Medicare and Medicaid Services (CMS), “Medicare Program: Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions for Part B for CY 2014” (the “Proposed Rule”): ACLA is deeply concerned with two provisions in the Proposed Rule which would reduce payments to clinical laboratories and could threaten patient access to life enhancing and life-saving laboratory services. First, absent any discussion with clinical laboratories, patients, and other stakeholders, CMS proposes to identify codes and propose revised payments in the Clinical Laboratory Fee Schedule

10. Other Key Threats CLFS As “Payfor” to Fund SGR Extension
President’s Proposal for 8 More Years of Cuts
Permanent or Short Term “Patch?”
Budget Conference
Copays, Competive Bidding?
Gapfill
MAAAs

11. What Can Laboratories Do To Impact Government Reimbursement & Regulatory Policies?
Laboratories CAN Make a Difference:
Examples
Competitive Bidding Repealed
Federal Lab Tax Defeated
Coinsurance Defeated
MAAA’s rule delayed
FDA IVD/MIA Guidance Shelved
FDA LDT Guidance Still not Issued (3 Years)
Be an Active Member of Industry Associations (ACLA, C21st Med, CCLA), & Professional Associations (CAP, etc)
Get to Know Your Local Member of Congress & Contact Them on Issues of Concern
File Comments on CMS, FDA Proposed Rulemaking
Contact your Local Media on Issues of Concern (Letters, Op Eds)

12. Thank you For follow-up, please contact: Alan Mertz President ACLA
PLEASE utilize for more information and use the grassroots network to easily contact your member of Congress and Federal agencies on important issues!