Knowledge Base Article

If your hospital has a hospital outreach laboratory that furnishes laboratory testing to non-patients, you may be required to collect and report private payor lab rates and volumes to Medicare. A non-patient is a patient that is neither an inpatient nor an outpatient of a hospital.

Non-patients are those patients that:

• Have a specimen submitted for analysis to a hospital and the patient is not physically present at the hospital;
• The patient did not receive other outpatient services at the hospital on the same day the specimen was collected; or
• The specimen was not collected by an employee of the hospital or of a facility provider-based to the hospital.

Hospital laboratories may bill Medicare under their own NPI separate from the hospital NPI. Hospital laboratories that bill under the hospital NPI, bill for non-patient specimens on Form CMS-1450 (UB-04) 14x Type of Bill (TOB).

The Protecting Access to Medicare Act of 2014 (PAMA) made significant changes to the way in which Medicare payments for laboratory tests paid under the Clinical Laboratory Fee Schedule (CLFS) are determined. Under the CLFS final rule “Medicare Clinical Diagnostic Laboratory Tests Payment System Final Rule” (CMS-1621-F), which was published in June 2016 and implemented the PAMA requirements, private payor rates became the basis for the revised CLFS rates beginning January 1, 2018. Medicare obtains the data for the private payor rates from applicable laboratories that are required to report their private payor payments and volumes to CMS. When this rule first came out the definition of applicable reporting labs had to do with the percentage of Medicare services for a particular NPI that were paid under the CLFS or the physician fee schedule. Since hospital Medicare revenues are mainly from inpatient and outpatient prospective payment systems (IPPS and OPPS), most hospital labs did not qualify as an applicable reporting laboratory with the exception of hospital laboratories that had their own NPI number. In the 2019 Medicare Physician Fee Schedule (MPFS) Final Rule, CMS changed the definition of an applicable reporting laboratory to use the Medicare revenue from a hospital 14x type of bill for the data collection period beginning January 1, 2019.

On February 27, 2019, Medicare published MLN Matters Article SE19006 that includes a lengthy discussion of the reporting requirements including “clarifications for determining whether a hospital outreach laboratory meets the requirements to be an “applicable laboratory,” the applicable information (that is, private payor rate data) that must be collected and reported to the Centers for Medicare & Medicaid Services (CMS), the entity responsible for reporting applicable information to CMS, the data collection and reporting periods, the schedule for implementing the next private payor-rate based CLFS update” and information about a condensed data reporting option for reporting entities.

For many hospitals that perform outreach testing, this will be a big deal. The reporting entity is based on the Tax Identification Number (TIN) but data is reported for each individual NPI that meets the definition of an applicable laboratory.  This means the first step is determining if your laboratory meets the definition of an applicable reporting laboratory. If your hospital lab bills under its own NPI, you likely dealt with determining if you were a reporting laboratory for the first reporting period.

Labs are required to report data if they:

• Have more than $12,500 in Medicare revenues from laboratory services on the Clinical Laboratory Fee Schedule (CLFS) during a 6-month data collection period, and
• Receive more than 50 percent of their Medicare revenues from CLFS and physician fee schedule services during a data collection period”

Hospital labs billing under the hospital’s NPI now use the 14x TOB for these calculations. Since 14x revenues are “non-patient” services, they consist exclusively (or mostly) of lab services, meaning the percentage will likely always exceed 50%. The means if your hospital outreach lab’s 14x revenues equal or exceed $12,500 in the 6-month reporting period, then you are required to report the lab private payor data to Medicare.

If you are an applicable laboratory, you must report each private payor rate and volume for each lab test subject to the data collection and reporting requirements. You can find a list of the lab tests subject to reporting in the Downloads section of the Medicare CLFS PAMA webpage – the document is titled CLFS Applicable Information HCPCS Codes. Private payors are defined as a health insurer issuer, a group health plan, a Medicare Advantage plan or a Medicaid Managed Care Organization.  

Labs report the final amount paid by a private payor including patient cost sharing amounts and secondary insurer payments. If an applicable laboratory has more than one payment rate for the same private payor for the same test, or more than one payment rate for different payors for the same test, the reporting lab will report each such payment rate and the volume for the test at each such rate.  There may be some insurances that do not pay individual amounts per HCPCS code, such as an insurance that pays under capitation or under a claim-level payment (such as, EAPGs for example). In this case, if the final private payor rate amount paid by HCPCS code and the associated volume paid at that final rate cannot be determined, the payment amount is not a private payor rate for purposes of applicable information and therefore is not reported to CMS.

Hospital laboratories that meet the applicable reporting status based on billing on the 14X TOB report only applicable information attributed to the lab’s non-hospital patients. This means the hospital must distinguish private payor payments made for lab tests furnished to non-patients from private payor payments made for lab tests furnished to hospital inpatients and outpatients. Only the private payor rates and volumes of laboratory tests furnished to non-patients are to be reported to CMS.

The next data collection period for this reporting began January 1, 2019 and goes through June 30, 2019. Then there is a six-month review and validation period from July 1, 2019-December 31, 2019. Applicable laboratories will report their data between January 1, 2020 and March 31, 2020. This data will be used to set the Clinical Lab Fee Schedule (CLFS) rates beginning in year 2021. The data collection, reporting and setting of new rates occurs every 3 years.

There is a new option available for condensed reporting at the TIN level. The TIN level reporting entity may combine the volume paid at the same private payor rate for the same HCPCS code for its component applicable laboratories. The condensed data reporting is only permitted when a specific lab test HCPCS code is paid at the same private payor rate to more than one applicable lab under the same TIN. The reporting entity must select one NPI as the reporting NPI when using this condensed data reporting. The MLN Matters article gives examples of how the condensed reporting would work. This is only an option if a reporting entity has multiple applicable laboratories for which it is reporting.

This reporting is not voluntary, optional, or discretionary. If your laboratory qualifies as an applicable reporting laboratory, you must ensure accurate collection and reporting of applicable information. There is a lot to consider and a lot of preparation prior to reporting. This article is only a cursory explanation of the process. I encourage hospitals to first determine if the reporting requirements apply to you and if they do, begin by reading all the Medicare information on the data collection and reporting process. I am sure after further study, you will agree, this is a big deal.

Resources:

MLN Matters Article SE19006

Medicare Laboratory PAMA Webpage

FAQs CY 2019 CLFS