PAMA impact on physician practices remains unclear at this time
Our consulting team gets together each month to discuss how the latest developments in healthcare might impact our medical practice clients. At our last meeting, we discussed the new PAMA rule and what impact, if any, this new rule will have on medical practices.
Protecting Access to Medicare Act of 2014 (PAMA)
The Protecting Access to Medicare Act of 2014 (PAMA) supports CMS Medicare officials in the creation of a market-based payment system. The data collected from applicable facilities will provide a framework for CMS to create that new payment structure.
The rule requires that applicable practices performing a certain amount of laboratory services report to CMS what commercial insurance companies are currently paying them for these tests. Failure to report the data by March 31, 2017, if required to do so, will result in a $10,000 per day penalty to the practice. Beginning in January 2018, CMS will use the data to format a new CMS fee schedule, which will certainly result in lower reimbursement to medical practices performing these services. One of the most confusing aspects of PAMA is determining whether or not PAMA applies to a medical practice with a Physician Office Laboratory (POL).
Definition of an Applicable Laboratory
PAMA defines an “applicable laboratory” as one that receives the majority of its Medicare revenue from either the Physician Fee Schedule (PFS) or the Clinical Laboratory Fee Schedule (CLFS). The Secretary is given authority, but is not required, to establish a low volume or low expenditure threshold for excluding a laboratory from the definition of applicable laboratory.
It appears that there are over 100 pages of rules, and these are some of the most complex rules we have read. Members of our team have talked with CMS officials, healthcare attorneys and other industry experts and have yet to get a solid determination on whether the revenue from the PFS is laboratory-related only, which would confirm what some experts are estimating–that 95% of POLs will not be affected–or if it takes into account all revenue from the PFS. The latter would mean that all POLs are subject to the reporting requirements unless they made less than $12,500 during the set time. If the former applies, then unless the medical practice has an unusual lab situation or operates a large pathology lab, the vast majority of medical practices should not be affected by PAMA.
We will continue to share as we learn more information about PAMA. In the meantime, we encourage all practices to take a close look at PAMA to determine whether it might impact their practice. At $10,000 a day, the fines could financially cripple a practice!
PAMA Regulations (CMS):
PAMA Final Rule (Federal Registry):