Just a year ago, a ray of hope dawned in the legislative landscape for clinical laboratories. Bipartisan leaders from both the House and Senate introduced the Saving Access to Laboratory Services Act (SALSA). If ratified, this pivotal bill would shield laboratories from the drastic reimbursement cuts scheduled for 2023 and beyond. Despite considerable backing, the curtain closed on 2022 with Congress failing to pass the bill. Instead, Congress approved another freeze on Medicare’s Clinical Laboratory Fee Schedule (CLFS) rate cut for 2023, along with a delay in the reporting requirements.
Unpacking PAMA
Understanding the importance of SALSA requires a journey back to 2014 with the enactment of the Protecting Access to Medicare Act (PAMA). Among a host of changes to the Medicare program, PAMA also fundamentally altered the way the Centers for Medicare and Medicaid services (CMS) calculate the Clinical Laboratory Fee Schedule (CLFS), including requiring laboratories to report their private-payer rates and test volumes for each test.
Regrettably, the initial execution of PAMA fell short of its lofty aims to introduce market-based pricing to the Medicare CLFS. Rather than gathering data from a board spectrum of the laboratory industry, including independent, hospital, and physician office laboratories, concerned laboratory groups argued that the method oversampled private payer rates from the largest national independent laboratories. The bias in the data led to deep cuts in essential tests used every day to treat patients with diabetes, heart disease, kidney disease, various types of cancer and other common conditions.
Although COVID-19 crisis prompted a hiatus in these reductions in 2021 and 2022, the future looks bleak without Congressional action. Laboratories could face CLFS reimbursement cuts of up to 15% annually from 2023 to 2025, affecting hundreds of commonly used tests.
If SALSA does not pass and the existing cuts resume, those laboratories serving the most vulnerable and homebound citizens may be forced to shut down operations, reduce services, eliminate tests or lay off employees. PAMA cuts further exacerbate the laboratory workforce shortage.
Additionally, laboratories nationwide may have to reevaluate which tests they can reasonably offer and at what price, in a bid to compensate for the financial loss. Consequently, these changes would have far-reaching implications, affecting not only Medicare beneficiaries but all individuals who rely on these laboratories and the diagnostic services they provide.
SALSA: A Beacon of Hope
Enter SALSA – a proposed remedy to these devastating trends. The key provisions of SALSA include:
- Directing CMS to use a statistically representative sample of private payer rates from the entire laboratory market when determining Medicare’s CLFS rates.
- Limiting mandatory reporting to widely available laboratory tests, i.e., those costing under $1,000 and offered by more than 100 labs.
- Extending the intervals between data collection from three to four years.
- Lowering the cap on annual CLFS rate cuts for each lab test from 15% to 2.5% for the first year and 5% for subsequent years.
- Excluding Medicaid managed care rates from reportable data.
- Permitting laboratories to exclude manual remittances from their reporting, as long as they constitute 10% or less of the laboratory data required to report.
If SALSA is enacted, reporting of private payer rates would occur every 4 years (currently reporting is every three years) and CMS would use targeted sampling to reduce the burden of reporting and to ensure the private payer rates are representative of all laboratories. The next data collection period would begin once CMS finalizes implementing regulations. Further limits on rate reductions and rate increases would also be used to provide greater stability for both laboratories and the Medicare program.
SALSA’s Journey Forward
While the laboratory community celebrated a win with another one-year delay in laboratory reimbursement cuts and some changes in data reporting at the end of 2022, addressing the unintended consequences of PAMA remains a top priority. In March 2023, SALSA was reintroduced with bipartisan sponsorship from both the House and Senate.
COLA, alongside a variety of stakeholders, including clinical and pathology laboratories, healthcare providers, laboratory professionals and diagnostic manufacturers, have asked Congress to enact SALSA within this year. In a joint letter to Congressional leaders, dispatched on May 22nd 2023, COLA and 33 other leading healthcare organizations implore the leadership of both the House and Senate to pass SALSA, thereby ensuring that seniors and patients maintain uninterrupted access to essential diagnostic tests.
The passage of SALSA would safeguard routine patient care, foster innovation in clinical laboratory tests and fortify the national clinical laboratory infrastructure, thereby preparing us for future public health needs.
To read more about the joint letter to the U.S. Congress, click here.
Resources:
https://www.congress.gov/bill/117th-congress/senate-bill/4449
https://www.congress.gov/bill/113th-congress/house-bill/4302