The PAMA Act
Q: What is PAMA?
A: PAMA stands for The Protecting Access to Medicare Act. PAMA was passed in 2014, changing the way Medicare pays for, codes and covers clinical diagnostic laboratory tests, or CDLTs. The act was proposed as a way to update the prices of tests that may have changed due to changes in technology and provide a uniform system for pricing new tests.
Q: How did PAMA change CDLT payment?
A. Under the new requirements, the payment amount for most CDLTs has to be equal to the weighted median of private payor rates determined for the test, based on data collected from applicable laboratories. Applicable labs report how much private payors are paying for each of the laboratory tests and the volume of the tests they are performing, and the amount Medicare pays for the tests will be based off of that data.
Q: What is an applicable lab under PAMA?
A: CMS defines an applicable laboratory as having the majority of its Medicare revenues paid under the CLFS (Clinical Laboratory Fee Schedule). A laboratory is also excluded if it is paid less than $12,500 under the CLFS during a collection period (6 months). This threshold will largely affect independent labs and physician office laboratories. CMS estimates that “about 55 percent of independent laboratories and about 95 percent of physician office laboratories will be precluded from reporting private payor data as a result of the low expenditure criterion.” CMS does state that the physician labs and independent labs that are able to report, make up the majority of CLSF spending on physicians and independent labs, 92% for physicians and 99% for independent labs. Essentially, only 8% and 1% respectively of CLFS spending on independent and physician labs, is going to labs that are not represented, which is how the act justifies excluding these laboratories.
Q: How Does PAMA Impact Histotechnology?
A. Many in the laboratory professions have expressed concern over PAMA, because the new pricing is based off of data submitted by a small subsection of laboratories. The act is expected to reduce the reimbursement for many laboratory tests, which will decrease revenue for these laboratories.