August 11, 2017 – The Centers for Medicare & Medicaid Services is preparing to implement the Protecting Access to Medicare Act. This requires CMS to collect information about private payor reimbursement from all parts of the laboratory market, and base the Clinical Laboratory Fee Schedule (CLFS) payments on the weighted median of these rates. However, as a result of CMS’s flawed interpretation of the PAMA statute, vast segments (almost 95%) of the clinical laboratory market have been prohibited from providing information. CMS excluded all hospital and most physician office laboratories even though they compete in the same marketplace. The majority of independent labs are also excluded.
This interpretation of the statue will likely cause drastic multi-year cuts to Medicare rates and severely jeopardize skilled nursing facilities’ access to timely patient results. At my laboratory, Aculabs, we have provided basic laboratory services to over 320 skilled nursing facilities and assisted living facilities across four states (New Jersey, Pennsylvania, Maryland, and Delaware) for more than four decades. Much of our growth can be attributed to the void left in the marketplace when the larger commercial laboratories shifted focus away from skilled nursing and assisted living facilities. Whereas large laboratories utilize drivers to go from doctor’s office to doctor’s office to collect specimens during the day and generate test results overnight, specialty labs serving the patients of skilled nursing and assisted living facilities are required to collect their specimens (typically at 5:00 am) and report the laboratory results within hours (typically by 2:00 pm). This logistical model is hugely labor intensive – since it requires the lab to turn around the results within hours of collection. On average, 13% of the blood we perform has a “critical” value associated with them (more in line with hospital patient acuity) which requires even more resources to report these findings.
To be successful, Aculabs, along with the other successful labs serving the patients of skilled nursing and assisted living facilities, concentrate our focus and provide a highly specialized service. Given our patient population, Medicare is the force behind over 95% of our revenue. If PAMA goes into effect, in spite of the exclusion of hospital and physician office laboratories, it is highly likely that Medicare payment rates will fall well below the costs associated with our services. If these specialized laboratories are not paid fairly for these bedside services, fewer (if any) laboratories will offer services to these patients and access to important testing will be compromised. There is a misconception that all laboratories are the same and that the void left by one will be taken up by the others. This is not the case. Labs servicing the SNF and AL populations are already the last line of defense in geriatric healthcare, and a drastic cut to the Medicare CLFS will create a hole that cannot be filled. As laboratories exit this market segment, skilled nursing facilities will be forced to transport elderly and often frail patients to nearby, more expensive hospitals for lab testing – a logistical nightmare which will create a host of challenges, jeopardize timely access to laboratory results and ultimately cost more.
The immediate solution is for CMS to collect data from all segments of the laboratory market so that Medicare rates are truly market-based and to consider new payment models for these services. I urge long-term care providers to join me in contacting members of Congress and request that CMS delay PAMA. We should want to create a rational payment system which will protect Medicare beneficiaries in skilled nursing and assisted living facilities and guarantee access to these mission-critical services.