As clinical laboratories and pathology groups prepare to operate outside of the Covid Public Health Emergency for the first time in years, many are turning an eye toward Medicare fee schedule cuts that could be reinstated after years of delays.

According to Ann Lambrix, Vice President of RCM Solutions for Lighthouse Lab Services, annual Medicare and Clinical Laboratory fee schedule reductions for labs and pathologists are nothing new. However, she says asking providers to work for substantially lower fees after the fallout caused by the PHE will create an even greater strain for these physicians.

“What’s happening is the only areas that can be cut for providers to stay above water is salary and services,” Lambrix says. “It’s pushing providers to a level where they are struggling to focus on quality of care because the only way they can make up this lost revenue is by stretching themselves thinner.”

Here are the major Medicare cuts labs and pathologists could experience in 2023:

• Medicare Physician Fee Schedule (MPFS): A 4.4% overall reduction due to budget neutrality requirements. Overall allowed charges for pathology and independent labs are also projected to be reduced by 1%. (See impact by CPT code)
• Clinical Lab Fee Schedule (CLFS): roughly 800 CLFS tests set to see reductions of up to 15% on Jan. 1, 2023. (See full impacted list)

However, labs and pathologists are now rallying around a set of legislative fixes that would delay or mitigate both sets of cuts – bills Lambrix says it is crucial for providers to get behind now and make their voice heard.

 

Potential Fixes on the Horizon

Currently, a number of provider advocacy groups are working to advance the Supporting Medicare Providers Act, bipartisan legislation to stabilize Medicare for physicians. This bill would stop 4.4% of the Medicare cuts related to the budget neutrality adjustment in the MPFS. The proposal would also call for Congress to examine annual fee schedule changes and find a more viable solution to ease cuts moving forward.

Meanwhile, the pathway to delay CLFS reductions put in motion by the Protecting Access to Medicare Act (PAMA), which requires some labs to report private payer data to CMS in an effort to help the agency set median rates, is tied to a longer-term legislative fix titled: the Saving Access to Lab Services Act (SALSA).

Introduced in late June, SALSA would require CMS to gather a more statistically representative sample of the entire lab market, as opposed to primarily drawing payer data from large national labs. It would also reduce the administrative burden on laboratories by requiring fewer laboratories to report private payer data and increasing the time between reporting periods from three to four years.

Of the two bills, SALSA currently has a more viable path to passage due to versions of the bill existing in both the House and Senate. However, the overall goal for both bills is to get them included in the annual government funding package that must be approved by Congress in December.

 

Next Steps and Expressing Support

Both bills will need to continue to gather grassroots support in order to gain stronger consideration from Congress. During a recent Lighthouse Lab Services webinar on supporting SALSA, Erin Morton, a Partner with Washington D.C.-based CRD Associates, acknowledged Congress likely won’t advance these bills without significant input from the clinical labs, pathologists, and patients these fee schedule cuts are impacting.

“The incentive for them to act really comes from hearing from their constituents that this is important to the sustainability of your business,” says Morton, whose firm lobbies on behalf of the National Independent Laboratory Association, which has been a key advocate of SALSA. “The more people who are commenting, the more people who are weighing in, the more likely we are to get this passed.”

MORE: Sign on to NILA’s letter of support for SALSA

As for delaying Medicare Physician Fee Schedule cuts, the Zotech Political Action Committee is currently offering a template to contact legislators with statements describing the potential impact of these cuts if they are allowed to go into effect on Jan. 1, 2023.

Lambrix says her clients and the industry at large understand some fee schedule cuts are always going to be inevitable, but that she hopes Congress can have their eyes opened to some of the staffing shortages and budgetary layoffs that make this a particularly poor moment to move forward with revenue reductions.

“It truly is a crucial moment for the healthcare industry as a whole as we transition out of many of the changes that were introduced during the pandemic,” Lambrix points out. “Expressing support for these bills by detailing the restraints continued cuts will place on your ability to provide quality care is going to be what makes the difference.”

 

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