Why You Should Worry About PAMA and Tests

Why You Should Worry About PAMA and Tests

Do you think you don’t have to worry about PAMA because you are a physician clinic? You may be wrong, and this assumption could cost you big bucks.


Section 216 of the “Protecting Access to Medicare Act of 2014” (PAMA) requires the Centers for Medicare and Medicaid Services (CMS) to change how it pays for clinical diagnostic lab tests.  CMS recently announced a final rule on how it plans to do this. Private payer rates will be used to calculate future Medicare payment rates for clinical diagnostic lab tests (CDLTs). For CMS to calculate the new CDLT rates, “applicable laboratories” are required to submit their private payer payment rates and volumes to CMS.

Implementation Date

CMS moved the implementation date of the new private payor rate-based Clinical Lab Fee Schedule (CLFS) to January 1, 2018. This will allow laboratories sufficient time after the publication of the final rule to collect and verify private payor rates before reporting this information to CMS.

Impact on Physician Offices

If your clinic holds a CLIA license, you need to determine whether the providers in your clinic meet the definition of “applicable laboratory” under PAMA.
Laboratories and physician offices are considered “applicable laboratories” and are required to report private payer rates and volume data to CMS if they meet all of the following requirements:

  1. the laboratory where the tests are performed is certified under CLIA;
  2. the lab tests performed in the CLIA-certified laboratory are billed to Medicare Part B under an individual provider number (NPI);
  3. the laboratory meets the majority of Medicare revenues threshold; and
  4. the laboratory meets the low expenditure threshold of $12,500.

Figuring out If Your Providers are Considered an Applicable Lab

Here’s what you should do to determine whether your clinic providers need to report private payer data to CMS.
Run a billing system report on each provider in your clinic (at the NPI level) that includes traditional Medicare Part B and Railroad Medicare payments. Do not include Medicare Advantage payments. Include the dates of service in the data collection period. For the initial data collection period the dates of service are 01/01/2016 through 06/30/2016.
This will be your total Medicare payments for each provider.
Next, run another billing system report for the same service dates on each provider (at the NPI level) and include traditional Medicare Part B and Railroad Medicare payments just for procedures paid under the CLFS. You can download a copy of the CLFS from CMS’ website and include just these procedure codes in your billing system query.
Now, compare the total Medicare payments and the CLFS payments for each provider. If the CLFS payments for the provider are less than 50 percent of the total Medicare payments for that provider, then that particular provider does not meet the definition of “applicable laboratory” and is not required to report any data to CMS.
If the CLFS payments are greater than 50 percent of the total Medicare payments for a provider, then this provider’s private payor data must be reported to CMS if at least $12,500 was received in CLFS payments. In this case, the provider would be considered an “applicable laboratory.”

Who Needs to Report Data?

The reporting entity (TIN-level entity) is responsible for reporting applicable information for all of its component NPI-level providers that meet the definition of an applicable laboratory.
CMS has made it clear if a NPI number does not meet the definition of “applicable laboratory,” they do not want the private payor data submitted voluntarily.

What Needs to Be Reported

  • The private payor rate for each test for which final payment has been made during the data collection period.
  • The associated volume for each test.
  • The specific HCPCS code associated with the test.

If an applicable laboratory has more than one payment rate for the same private payor for the same test, or more than one payment rate for different payors for the same test, the reporting entity will report each payment rate and the volume for the test at each such rate.

Private Payer Defined

The term “private payer” is defined as:
(1) A health insurance issuer and a group health plan (as defined in Section 2791 of the Public Health Service Act)
(2) A Medicare Advantage Plan under Part C
(3) A Medicaid Managed Care Organization (MCO) (as defined in Section 1903(m) of the Act)
Note: Applicable information does not include information on tests for which payment is made on a capitated basis, where payments do not reflect specific HCPCS code-level amounts (see below for additional information on payments made on a capitated basis). Therefore, private payor rates from Medicaid MCO plans are considered applicable information only to the extent that the individual HCPCS code for the test, private payor rate specific to the test, and the volume paid at the specific rate for the test can be identified.

Data Collection and Reporting Periods

The following table illustrates the data collection and reporting periods.

Data Collection and Reporting Periods for CDLTs Data Collection Period Six Month Window Data Reporting Period CLFS Rate Years that will use the Data
1/1/2016 – 6/30/2016 7/1/2016 – 12/31/2016 1/1/2017 – 3/31/2017 2018 – 2020
1/1/2019 – 6/30/2019 7/1/2019 – 12/31/2019 1/1/2020 – 3/31/2020 2021 – 2023
Continues every
third subsequent
calendar year
Continues every
third subsequent
calendar year
Continues every
third subsequent
calendar year
New CLFS rate
every third year

What’s the Risk for Not Reporting?

CMS is authorized to impose civil monetary penalties of up to $10,000 per day, adjusted for inflation as required by the Inflation Adjustment Act Improvements Act of 2015, for each failure to report or each misrepresentation or omission in reporting applicable information.

Maryann Palmeter

About Has 23 Posts

Maryann C. Palmeter, CPC, CPCO, CPMA, CENTC, CHC, has more than 30 years of technical and executive level experience gained through her work on both the government payer and professional billing ends of the healthcare spectrum. She is director of physician billing compliance at the University of Florida Jacksonville Physicians, Inc., and is responsible for providing professional direction and oversight to the billing compliance program of the University of Florida College of MedicineJacksonville. Palmeter served on the AAPC’s National Advisory Board from 2011-2013 and was subsequently selected to serve as secretary for the 2013-2015 term. She was named the AAPC’s 2010 “Member of the Year” and is the vice president for the Jacksonville, Fla., local chapter.

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