ACLA appeals lab payment suit to higher court

Dive Brief:

The American Clinical Laboratory Association Tuesday filed an appeal in its lawsuit against HHS to the U.S. District Court of Appeals for the District of Columbia Circuit, arguing the department exceeded its statutory authority in how it implemented the Protecting Access to Medicare Act.
The trade lobby argues that HHS' interpretation of PAMA excludes labs from submitting data to inform payment rates for clinical lab service. The most recent Medicare physician fee schedule final rule addressed some of the group's concerns, but ACLA argues Congress must "take immediate action" to address what it argues are shortcomings stemming from an earlier rule establishing data-reporting obligations.
Last week, the Government Accountability Office released a report that found Medicare's new method to establish payment rates could end up costing CMS up to $10.3 billion over three years, at odds with projections that PAMA would save the agency money. The legislation was meant to lower Medicare payment for lab tests to reflect private market rates.

Dive Insight:

The appeal is part of an ongoing fight between lab groups and policymakers over cuts to their payments stemming from the 2014 PAMA law.

The GAO report will not help the labs' case, some Washington analysts said.

Cowen Washington Research Group predicts the cuts "are unlikely to be reversed via legislation or in the courts," especially in light of the GAO report.

"While legislative relief would likely be perceived as a positive by industry, we still believe Congress would likely enact an across-the-board cut to the [clinical lab fee schedule] CLFS to pay for the legislation," Cowen's Eric Assaraf wrote.

In September, U.S. District Judge Amy Berman Jackson dismissed ACLA's lawsuit on grounds that the court did not have jurisdiction over the case. Notably, the judge wrote that the lab group's "arguments on the merits raise important questions."

ACLA now argues the Court of Appeals should not take the same approach.

"The Secretary’s egregious violation of the statutory requirements should not be shielded from judicial review. By rewriting the statute, the Secretary’s final rule exempts virtually all hospital laboratories from the data-reporting requirements, ensuring that the data collected does not accurately represent the private market as Congress intended," the ACLA appeal states.

In 2017, Medicare spending totaled $7.1 billion for 433 million lab tests, according to GAO. The new payment system took effect Jan. 1, 2018, with CMS projecting the changes would save $670 million in 2018.

ACLA argues the the cuts endanger beneficiaries due to increased risk that labs could go out of business, and that GAO's findings "fails to reflect the market reality."

"Seniors are bearing the direct harm from the Department's continued reliance on a failed process that directly contradicts the stated goals of Congress in protecting beneficiaries' Medicare lab benefits," ACLA President Julie Khani said in a statement.