§1395m–1 Improving policies for clinical diagnostic laboratory tests

Summary

Labs must send Medicare the prices paid by private insurers and the number of tests done so Medicare can set payment rates. Starting January 1, 2016, labs that get most of their revenue from Medicare must report that information for each test during a time the Secretary sets. Advanced diagnostic tests must be reported every year; other tests were to be reported every 3 years, but no reporting is required from January 1, 2020, through April 30, 2026, then reporting is required May 1, 2026 through July 31, 2026, and every 3 years after that. Reports must show the actual payment rates (including discounts, rebates, coupons, and other price cuts) and volumes for each private payor, and a lab officer must certify the reports. Labs must report each different rate when payors or contracts pay different amounts. Information is confidential and payors are not named publicly. The Secretary may exclude very small labs, set rules for data collection (by June 30, 2015), and can fine labs up to $10,000 per day for missing or false reports. Medicare payments for tests furnished on or after January 1, 2017, will be the weighted median of the reported private payor rates from the most recent data period. Those payments stay in place until the next data period and are not changed for geography or other adjustments. Reductions in yearly payment are limited: up to 10% per year for 2017–2020, no reduction for 2021–2026, and up to 15% per year for 2027–2029. New or changed tests get temporary pricing by cross-walking to similar tests or by “gapfilling” using charges, resources, and other payor payments. Advanced diagnostic tests that were not paid under the old fee schedule before April 1, 2014, get an initial price based on the list charge for three quarters, must be reported soon after, and Medicare will later set a payment by the weighted-median method; if the initial price was more than 130% of the later price, Medicare will recoup the difference. The Secretary must create temporary HCPCS codes for new advanced or FDA-cleared tests (effective up to 2 years unless extended), assign unique codes and publish payment rates by January 1, 2016 for existing qualifying tests, convene an expert advisory panel, limit local coverage processes to the usual rules, and may name up to 4 contractors to set coverage or handle claims. No administrative or court review is allowed of how these payment amounts are set. The law also adds $2 for samples taken in skilled nursing facilities or by labs for home health agencies and provides transfers of $4,000,000 per fiscal year for 2014–2018 and $3,000,000 per fiscal year for 2019–2023 to run the program. During April 1, 2014 through December 31, 2016, prior pricing and coding methods applied for advanced tests.