Analysis Suggests Non-Reporting Hospital Outreach Labs at Risk of Huge PAMA Penalties

December 2019 ~

According to an analysis by Laboratory Economics (LE), hospital outreach labs that collected more than $12,500 in Medicare Clinical Lab Fee Schedule (CLFS) payments between January 1 and June 30, 2019, are likely required under PAMA law to report private-payers rates to CMS.

In 2018, CMS finalized a rule that requires nearly every single hospital with a lab outreach business to report its private-payer pricing data under PAMA. The data collection period covered January-June 2019, and labs are to report their pricing data to CMS during the first quarter of 2020.

In the analysis, LE notes that while there have been several CMS bulletins issued and conference calls held in an effort to clarify which labs must report, many hospitals are still confused about their reporting obligation. The report goes on to explain how this is “unfortunate because widespread hospital lab outreach reporting could potentially stabilize the Medicare Clini­cal Lab Fee Schedule (CLFS) in 2021-2023, following three straight years (2018-2020) of 10% PAMA cuts” and provides further insight around reporting requirements specific to hospital outreach labs.

Under the new policy, if a hospital outreach laboratory bills Medicare Part B for testing performed on non-hospital patients under the hospital’s NPI, the determination of required reporting status for the outreach laboratory is based on its Medicare revenues attributed specifically to Form CMS- 1450 14x Type of Bill (TOB). The 14x TOB is used by hospitals to bill for laboratory services provided to non-hospital patients.

Hospital outreach labs are required to collect and report their private-payer payment data if:

  • 1) The majority of their Medicare revenues from 14x TOB billings come from the CLFS and/or Physician Fee Schedule (PFS).

The majority of Medicare revenues threshold equation is: If Medicare CLFS revenues (based on 14x TOB) + Medicare PFS revenues (based on 14x TOB) is >50% of total Medicare revenues (based on 14x TOB), then the laboratory meets the majority of Medicare revenues threshold and must report.

However, this requirement is irrelevant and confusing because Medicare revenues for hospital outreach labs billed on 14x TOB are entirely derived from the CLFS and/or PFS. In other words, the revenues from the CLFS and PFS services included in the nu­merator are the same as the total Medicare revenues included in the denominator. Con­sequently, all hospital outreach labs will meet the “majority of revenue” requirement.

  • 2) The second requirement is for the hospital outreach lab to have collected at least $12,500 in Medicare CLFS revenues billed on 14x TOB during the data collection period (January-June 2019). All but the smallest hospital outreach labs will meet this threshold.

Which private payment data must hospital outreach labs report?

Hospital outreach labs must report the private payer rate for each test provided to non-hospital patients for which final payment has been made during the data collection period. Private payers include all private health insurance plans (Aetna, BCBS, Cigna, et al.) plus all Medicare Advantage and Medicaid managed care plans.

 Which payment data is non-reportable by hospital outreach labs?

Payment information for registered hospital outpatients and admitted hospital inpatients is not report­able. Hospital outreach labs should only report payment information for their non-hospital patients. In addition, says LE, hospital outreach labs should only report private-payer rates made for specific lab test CPT codes; bundled payment data is not reportable. This means that if a laboratory bills individu­al lab test codes and the payer bundles the individual lab test codes into a single payment amount, the payer’s bundled payment amount is not considered reportable information. Estimated private-payer rates and volumes are not allowed.

Source(s): Klipp, Jondavid, “Non-Reporting Hospital Outreach Labs at Risk of Huge PAMA Penalties,” Laboratory Economics, Volume 14, No. 12, December 2019;