Protecting Access to Medicare Act (PAMA) for Laboratories

In 2014, Congress passed the Protecting Access to Medicare Act, or PAMA (P.L. 113-93), to reform the Medicare clinical laboratory fee schedule (CLFS) to a single national fee schedule based on private market data from all types of laboratories that service Medicare beneficiaries, including independent laboratories, hospital outreach laboratories, and physician office laboratories (POLs). Unfortunately, the first round of data collection in 2017 failed to capture an adequate and representative sample of private market data, leaving out virtually all hospital outreach laboratories and significantly under-sampling POLs. The significant under-sampling led to nearly $4 billion in cuts to those laboratories providing the most commonly ordered test services for Medicare beneficiaries. For context, the total CLFS spend for 2020 was only $8 billion, less than 3% of Medicare Part B spending.

As of August 2023, Congress has intervened on a bipartisan basis four times to delay the next CLFS reporting periods and three times to delay cuts to maintain access to laboratory services for patients. However, without a sustainable solution to this problem, laboratories will face further rounds of cuts.

On July 15, 2022, the US Court of Appeals for DC ruled in favor of a motion in a lawsuit by the American Clinical Laboratory Association (ACLA) against the Department of Health and Human Services (HHS) over PAMA implementation. The CAP has strongly supported ACLA’s lawsuit against the HHS and efforts to correct the administration’s execution of PAMA’s clinical laboratory payment reforms. ACLA filed the lawsuit in 2017.

The court agreed that the 2016 PAMA regulations were arbitrary and capricious, which is an argument that the CAP made in an amicus brief in support of ACLA’s lawsuit in 2018.

On December 3, 2020, the CAP submitted comments to the Medicare Payment Advisory Commission (MedPAC) in response to issues raised at a MedPAC public meeting around PAMA implementation. The CAP also sent comments to CMS in response to the 2019 Physician Fee Schedule proposed rule urging CMS to make the PAMA methodology changes necessary to include all segments of the industry, thereby ensuring more accurate PAMA rates and continued access to laboratory tests for Medicare patients. The CAP sent the CMS additional comments that outlined concerns from its members on October 23, 2017.

The CAP has also been urging Congress to pass legislation to reduce the administrative burden on laboratories and ensure accurate collection of private market data through statistically valid sampling from all laboratory segments while avoiding drastic cuts to clinical laboratory payment rates. We need to improve how data is collected and validated under PAMA to ensure an accurate, market-based payment system for laboratories paid through CLFS. This would allow laboratories to focus on providing timely, high-quality clinical laboratory services for patients, continuing to innovate, and building the infrastructure necessary to protect public health.

The Saving Access to Laboratory Services Act, or SALSA (S.1000/H.R. 2377), is a permanent solution that would set Medicare reimbursement for clinical laboratory services on a sustainable path forward. SALSA will give the Centers for Medicare and Medicaid Services (CMS) new authority to collect private market data through statistically valid sampling from all laboratory segments for the widely available test services where previous data collection was inadequate. The bill ensures true private market rates are included and provides a much-needed reduction in the reporting burden. By providing a gradual phase-in approach, the bill protects clinical laboratories, the Medicare program, and patients from the impact of dramatic rate increases or decreases.

The CAP is advocating for Congress to pass SALSA and included this as one of our three "asks" during the 2023 Pathologist Leadership Summit Hill Day. Additionally, the CAP joined other industry stakeholders, including the American Medical Association and the American Clinical Laboratory Association, in sending a letter of support to congressional leadership urging the passage of SALSA.

Here is the timeline for payment cuts under SALSA.

For widely available tests:

• 2024: 0 percent
• 2025: No more than 2.5 percent rate change
• 2026 and thereafter: No more than 5 percent rate change

Here is the timeline for payment increases under SALSA.

For widely available tests:

• 2024–2025: No more than 2.5 percent
• 2026–2027: No more than 3.75 percent
• 2028 and thereafter: No more than 5 percent

Pathologists can encourage their Representatives and Senators to support SALSA by signing into our Action Center.