Knowledge Base Article

While a majority of the country is in the grips of below freezing weather, here in the South our promised snow did not happen and temperatures by the first of next week are forecast to be in the 70’s. Some flowers, such as jonquils, are beginning to bloom and whether from the changing weather patterns or from early bloomers, I have a sinus headache. This time next year, many hospital laboratories will be in the middle of another large headache – that of reporting private payor data for clinical diagnostic laboratory tests (CDLTs) to Medicare.

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. The official definition for applicable reporting laboratories is:

“Laboratories, including physician offices laboratories and hospital outreach laboratories that bill using a 14X TOB are required to report laboratory test HCPCS codes, associated private payor rates, and volume data if they:

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

As explained in the January 22, 2019 ‘Clinical Diagnostic Laboratories to Collect and Report Private Payor Rates Call’, hospitals will divide the CLFS and PFS revenues attributed to 14x Type of Bill by their total 14x

revenues. Since 14x revenues are “non-patient” services, they consist exclusively (or mostly) of lab services, meaning the percentage will likely always exceed 50%. This 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.

Using Medicare claims data from our sister company, RealTime Medicare Data (RTMD), I looked at the 14x revenue for a number of hospitals and I was surprised that most hospitals easily surpassed the $12,500 per 6-months threshold for reporting. The current data collection period began January 1, 2019 and goes through June 30, 2019. The reporting period for this collection period is January 1, 2020 through March 31, 2020. This gives hospitals time to evaluate their status and prepare for reporting.

I recommend hospitals first verify they are using the 14x type of bill correctly. The 14x type of bill is used to bill non-patient lab services, such as when a specimen is sent to the hospital lab for testing from a physician’s office. Patients that are referred to your laboratory for testing and actually physically come to the hospital lab for specimen collection are outpatients. Outpatient testing is billed to Medicare on a 13x type of bill. Although the data collection period has already begun, if you are not using the 14x bill type correctly, now is the time to correct it.

Hospitals then need to determine the amount of their 14x revenues for a six-month period. The current collection period of January-June 2019 will be the official period for determining 14x lab revenues for reporting purposes, but hospitals can estimate if they will meet the criteria based on prior data. If it appears your hospital laboratory will meet the definition of an applicable reporting lab, someone at your facility needs to learn the requirements for reporting so you are ready next year. Here are some resources to get you started with the process.

• Medicare's Laboratory PAMA webpage – a wealth of information and links to other resources on this page. If you are an applicable reporting lab, you will want to check out the CLFS Data Collection System User Guide.
• Medicare FAQs on the Final Rule (at the time this article was written, these FAQs were not yet updated with the new 2019 applicable lab definition)
• National Provider Call January 22 2019 – this website includes the presentation, audio recording, and transcript of this call. CMS will be having additional calls on this topic so be on the lookout for these.

The January 22, 2019 National Provider Call explained how to determine if you are a reporting laboratory under the new 14x definition. The CMS presenters were unsure exactly what data would be required to be reported to Medicare – was it only 14x data, or was the 14x data only for determining reporting status and all lab non-patient and outpatient data would have to be reported. They promised to clarify this in upcoming sub-regulatory guidance.

In general, reporting labs have to report the private payor rate for each test for which final payment has been made during the data collection period, the associated volume for each test, and the specific HCPCS code associated with the test. 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 entity will report each such payment rate and the volume for the test at each such rate.

There may be some insurances that pay a lump sum amount per claim, instead of individual line item payments, such as an insurance that pays under 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.

Even from this cursory discussion of the required reporting for private payor lab rates, you can tell it will certainly be a huge headache. You cannot change that, but you can start now to know where you stand and what to expect as the reporting period approaches.