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ADVANCE Discourse: Lab

CMS Reconsiders Reimbursement Cap

Published December 19, 2013 4:49 PM by Michael Jones

Across the country, laboratories and laboratory professionals have been bracing themselves for substantial cuts to Medicare reimbursements planned to move forward in the coming year. According to a press release from ASCP, the proposed cuts would have limited reimbursements for some laboratory tests by up to 80 percent, reducing total revenue by an average of 25 percent for independent labs and 6 percent for pathologists by estimates from the Centers for Medicare and Medicaid Services (CMS). In a recent decision, CMS has decided against the Medicare reimbursement cuts. Despite applauding the choice not to pursue the proposed cuts, ASCP noted additional concerns regarding other pieces of regulation.

Among the concerns regarding the proposed regulatory cuts were going to have a substantial impact on independent laboratories by limiting their reimbursement to the same level of larger facilities like hospitals. In a recent interview with ADVANCE, Steven Kroft, MD, FASCP, professor of pathology at the Medical College of Wisconsin and president of ASCP, commented on the potential impact of capped rates. He pointed out the larger facilities have larger economies of scale and more complex business models to support smaller reimbursements, while smaller laboratories can’t rely on those additional services.

“This ruling would have probably forced a lot of labs out of business -- a lot of local, free-standing laboratories out of business, including some that did fairly niche or esoteric testing that might not be routinely performed in a hospital laboratory and ultimately possibly reduce access or even availability to some of this testing,” explained Kroft.

Additionally, ASCP voiced concerns over a proposal moving forward, which will “bundle reimbursements for specific outpatient pathology and laboratory services rather than paying them separately as is done now” according to the press release. Kroft pointed out that the consequences of this new regulatory measure remain to be seen as it is not yet clear how the policy will be implemented. Along with this, CMS will be moving forward with a large-scale re-evaluation of all clinical laboratory fee schedule codes -- a decision viewed with skepticism in the laboratory industry.

“CMS believes that technological advances will have brought down the unit cost of performing some of these services,” continued Kroft. “And, so, they want to go back and go through every one of these codes and see how much they actually cost currently as opposed to when they were originally created.”

A major cause for concern regarding the initial proposal for the code re-evaluation is the idea that testing had become less expensive over time with the introduction of more advanced technologies with no speculation that it could have also become more costly. According to Kroft, CMS has since acknowledged that the codes could be adjusted up instead of simply down with cuts. Along with reconsidering the possibilities of code re-evaluation, CMS has also allowed the process to be open to public nomination.

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