1. Budget & Regulatory Environment in DC Alan Mertz President ACLA
CCLA
November 4, 2016

2. Summary Budget/Reimbursement Regulatory
PAMA
Gapfill
CLFS 2017 Update
Regulatory
FDA/LDTs
Election & What It Means For Labs
Reimbursement
Confidential – Do Not Distribute

3. PAMA In Context CMS Was Proceeding With Repricing Before PAMA
Experience with CMS Instructive
OPPS 75%
Gapfill 60%
Congress Was Going to Cut CLFS in Addition to CMS
Labs Did Not Have Anything to Negotiate As With Past Threats
Statute Provide Some Guardrails
Annual Caps on Cuts
No Cuts Before 2017, Later 2018
Tech Adjustment Authority Repealed
ADLTs
Confidential – Do Not Distribute

4. PAMA Proposed -- Final Rule
Applicable Lab Defined by TIN – Defined by NPI
Inadequate Time For Implementation – Delay to 2018
Data Collection Period One Year – Reduced to Six Months
No Specific Gap Between Data Collect & Report – Six Months
Data Reporting Period Three Months Established
Data Reporting at CLIA level – Data Reporting at TIN Level
Applicable Information Unclear – Patient cost sharing included, bundled payment & zero payment excluded
ADLT excluded protein tests – ADLT included protein tests
Confidential – Do Not Distribute

5. Gapfill & 2016 Final Pricing Determinations
Process lacks transparency, results in drastic cuts to innovative tests
CMS should instruct MACs to provide rationale for rates
Without data as basis for rates, can’t evaluate accuracy or fairness
Final gapfill rates dramatically lower than private payor rates
Final gapfill rates for innovative tests Medicare prices on order of 60%
Rates are all over the place, no basis to the criteria for setting rates
ACLA filing requests for reconsideration of some codes
Confidential – Do Not Distribute

6. CLFS Update 2017 No Cuts in 2017 from PAMA or Productivity Adjustment
Assume 2016 Rates
Only Unknown is Whether CPI Will be Applied
CMS will Announce Whether CPI (Approx +1%) is When Final CLFS Rule Issued in November 2016
Confidential – Do Not Distribute

7. The Battle Over Regulation of LDTs
Congress Looking At Alternatives to FDA Guidance
After Issuing Draft Guidance in October 2014, No Final Guidance as Of November 2016
Law Requires FDA to Notify Congress 60 Days Before Issuing Final Guidance, With Summary of Guidance
Two Initiatives in 2016 That Impact Issuance of Final Guidance
Both House & Senate Committees Looking at New Pathway for LDTs
House Energy & Commerce Committee
Senate HELP Committee
Important Stakeholder Activity
House Appropriations Committee Report Language
What Happens in 2016, Next Year?
Confidential – Do Not Distribute

8. Election & What It Means for Labs
Control of Congress
Watch for Major “Reconcilation Legislation” in 2017
Reimbursement Issues
FDA
Confidential – Do Not Distribute

9. Thank You!
Alan Mertz