A quiet fight is brewing over how Medicare pays for laboratory tests.
A quiet fight is brewing over how Medicare pays for laboratory tests. (Achim Prill / HANDOUT)

With the apparent resurrection of efforts to repeal and replace the Affordable Care Act (ACA) — also known as Obamacare — health care policy once again is poised to dominate the 2017 Congressional agenda.

But throughout the ups and downs of the anti-Obamacare effort this year, another health care conversation has quietly continued within a clannish network of health care providers, payers, administrators, practice managers, manufacturers, legislators, Capitol Hill staffers, lobbyists, accreditors and activists. Much of the debate is unrelated to the ACA. Instead, it involves regulatory changes that, if fully implemented, will forever transform the way patients receive lifesaving clinical laboratory services.


By way of background, the "sustainable growth rate" enacted during the 1997 bipartisan budget deal set caps on Medicare compensation for physicians. Unpopular and unsuccessful, it triggered a series of temporary annual congressional fixes. The Protecting Access to Medicare Act of 2014 (PAMA) was intended to be such a fix. But as the bill was readied for floor action, the allies of the nation's larger laboratory conglomerates quietly slipped in language to alter the elaborate formula used to compute Medicare laboratory reimbursement rates, known as the Clinical Laboratory Fee Schedule (CLFS).

The new law, which took effect during the waning days of the Obama administration, requires some laboratories to periodically report to the Centers for Medicare and Medicaid Services (CMS) what they charge for certain laboratory tests. This data will be crunched to establish new, market-based rates starting in January 2018.

This change prompted a great deal of trepidation among organized medicine, major laboratory accreditors, hospitalists, and laboratorians. Much of this opposition dissipated when CMS announced that only 5 percent of clinical laboratories are subject to PAMA reporting requirements. Most hospital laboratory work is excluded, as are laboratories earning less than $12,500 in Medicare reimbursements annually.

But new concerns have been raised that the law will result in drastic cuts in reimbursements. According to recent research, a 10 percent cut to the top 25 tests under PAMA could produce a $400 million fee cut in 2018. Successive fee reductions could grow these reductions to $1.2 billion by 2020. By excluding so many laboratories from the data pool, many believe larger laboratory chains such as Qwest and LabCorp will benefit to the detriment of smaller, physician-operated laboratories with higher overhead expenses. The CEO of a laboratory in Greensboro, North Carolina wrote that PAMA will "threaten patient access, increasing the chances Medicare beneficiaries aren't diagnosed or fail to receive lifesaving treatments." A laboratorian in East Brunswick, New Jersey states that that the changes will, "cause dramatic multi-year cuts to Medicare rates and severely jeopardize skilled nursing facilities' access to timely patient results."

Further, lingering confusion exists as to how exactly data should be collected and reported to CMS. Last December, the Congressional Freedom Caucus made PAMA No. 80 on its hit list of 200 Obama-era regulations. A day later, a bipartisan group of 44 members of Congress sent a letter to the Obama administration seeking revisions to the law.

Health and Human Services Secretary Tom Price — who signed the aforementioned letter before he left Congress — extended the initial reporting deadline by 60 days. This summer, CMS signaled a willingness to extend the compliance deadline even further. But so far, efforts by organized medicine, accreditors and others to persuade Congress and regulators to engage in a meaningful attempt to address the funding cuts have failed.

For the patients and families served by impacted laboratories, the specter of reduced choice seems likely if the PAMA experiment is unsuccessful. Many patients prefer the convenience of testing performed during their regular visit with their family practitioner, as opposed to trekking to a remote reference laboratory, dealing with strangers, and enduring longer wait times. This concern is especially evident in underserved rural communities. Elderly patients, poor people dealing with transportation issues, and those coping with serious chronic ailments will feel the brunt of lost options. An estimated 70 percent of diagnostic decisions affecting patients are the result of work done in clinical laboratories. The obvious benefits close-to-patient testing yield will become less and less available as the number of POLs shrinks due to Medicare cuts.

Thanks to Hopkins Medicine, the University of Maryland Medical System, the National Institutes of Health, and many outstanding community-based hospitals and providers, Maryland is nationally regarded as a health care Mecca. Now across the state, providers large and small are scrambling to cope with new, poorly understood regulatory complexities and deadlines.

The fate of Obamacare will impact the future of health care. But the future of health care is more than Obamacare. In the wake of sweeping health care change, the rewards of success, and the responsibility of failure, rest with those who enacted them. Congress and regulators need to act now. Otherwise, patients will bear the ultimate consequences.

A former congressional staffer and gubernatorial speechwriter, Richard J. Cross III spent six years working for COLA, a national clinical laboratory accreditor based in Columbia. His e-mail address:rcrossiii@comcast.net.