Dive Brief:

• The American Clinical Lab Association's lawsuit seeking to halt the implementation of HHS' Clinical Laboratory Fee Schedule lowering Medicare payment rates was dismissed Friday by U.S. District Judge Amy Berman Jackson.
• The dismissal comes nearly a year after the ACLA sued HHS over the department’s "unlawful disregard and violation of Congress's statutory directives in a final rule purporting to implement the data-reporting requirements" in the Protecting Access to Medicare Act of 2014.
• In her decision, Jackson wrote that while ACLA’s "arguments on the merits raise important questions," Congress has "expressly precluded judicial review of issues such as these, and the Court has no jurisdiction to hear the case."

Dive Insight:

The dismissal comes as ACLA, AdvaMedDx, the American Hospital Association and other industry groups urge Congress to help mitigate the impact of the payment cuts, which they argue have led to reduced staffing at laboratories and fewer home care visits.

ACLA President Julie Khani told MedTech Dive in an statement that the group is "reviewing further legal options," following what she characterizes as an erroneous judgment by Jackson that the court lacks jurisdiction.

"The Court’s decision that it is powerless to require HHS to comply with the statutory requirements sets a harmful precedent that allows agencies to circumvent Congress' express directions at the expense of patient care," Khani said.

Jackson wrote that it is clear Congress precluded administrative or judicial review of the establishment of payment rates in PAMA, pointing to Section 216 of the law. She noted ACLA did not sue over the amounts to be paid for lab tests, but rather over the data reporting rules.

"There is no dispute that the purpose of the provision was to change how the amount of Medicare payments for laboratory tests will be determined," Jackson wrote. "The decision of which laboratories must report data is 'indispensable' and 'integral' to, and 'inextricably intertwined' with, the agency action's calculation of payment amounts based on that data and 'the establishment of payment amounts under' Section 216. Therefore, it is not subject to judicial review."

In its recent Medicare physician fee schedule proposed rule, CMS appears to have acknowledged some of the clinical lab industry's concern. It wrote that it is examining ways to expand the collection of data to reflect a broader swath of the national laboratory market to determine CLFS payment amounts.

But in comments on the proposal, AdvaMedDx noted that even if CMS amends which laboratories it collects data from in its final rule this year, payment rates will already have been impacted.

In a recent report, the HHS Office of Inspector General wrote that the new payment rate is set to save the government $670 million in 2018. In 2017, Medicare spent $7.1 billion on clinical lab testing.