September 6, 2013 - ASM Comments on CMS Proposed Revisions to the PFS and CLFS

Federal Register - Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to Part B for CY 2014; Proposed Rule

Centers for Medicare and Medicaid Services
Department of Health and Human Services
Attention: CMS-1600-P
P.O. Box 8016
Baltimore, MD 21244-8016

RE: Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, and Other Revisions to Part B for CY 2014 [Proposed Rule CMS-1600-P]

The American Society for Microbiology (ASM) appreciates the opportunity to provide comments to the Centers for Medicare & Medicaid Services (CMS) regarding proposed revisions to payment policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to Part B for CY 2014 [CMS-1600-P] published in the Federal Register on July 19, 2013. In particular, we wish to comment on proposed revisions described in item III. E., Proposals Regarding the Clinical Laboratory Fee Schedule.

The American Society for Microbiology, headquartered in Washington, D.C., is the largest single life science association, with over 38,000 members worldwide. Its members work in educational, research, industrial, and government settings on issues such as the environment, the prevention and treatment of infectious diseases, laboratory and diagnostic medicine, and food and water safety. The ASM’s mission is to advance the microbiological sciences as a vehicle for understanding life processes and to apply and communicate this knowledge for the improvement of health and environmental and economic well-being worldwide.

Many of ASM’s members have primary involvement in clinical laboratory medicine including individuals directing clinical microbiology, immunology and molecular diagnostic laboratories, individuals licensed or accredited to perform such testing, industry representatives marketing products for use, and researchers involved in developing and evaluating new technologies. Technological advances have greatly expanded our ability to diagnose, monitor, and treat infectious diseases, and are especially prominent in strategies for emerging and re-emerging infections. Therefore, the ASM has significant interest in ensuring that payment policies for clinical diagnostic laboratory tests provide reasonable reimbursement for services rendered to Medicare beneficiaries. Of particular interest is the ability to integrate vital, new technologies into infectious disease diagnostics in a financially sound manner.

With regard to key issues underlying this proposal, ASM believes the following points should be considered.

  1. It is well recognized that the CLFS, initially established in 1984, is not reflective of current costs associated with testing. In fact, in the 2000 Institute of Medicine (IOM) report on Medicare Laboratory Payment Policy had as a key recommendation that “Medicare payments for outpatient clinical laboratory services should be based on a single, rational, national fee schedule” and that “the long term goal is to establish payment amounts that accurately reflect the relative costs of services, minimizing the financial incentive to overuse or underuse services”. However, the IOM further stated that “the small amount of laboratory payments as a share of Medicare payments to all providers and suppliers, 1.6 per cent, made the IOM laboratory committee question the wisdom of undergoing an expensive, extended study before moving to a new national schedule” and “Medicare’s rates have some degree of face validity within the community”. Little has changed in 2013 to refute this 2000 conclusion. Therefore, it is our concern that the CMS proposal to adjust all fees, more than 1200 codes, based on “technological changes” over a projected 5 year period will be very disruptive to laboratory providers and could reduce beneficiary access to such services. That the proposal coincides with other significant changes impacting laboratory service providers, e.g. ICD-10 implementation and implementation of other features of health care reform, amplifies the potential for disruption in services.
  2. The assertion that there is a “lack of an established mechanism to adjust payment” for the CLFS fails to acknowledge the significant effects of payment adjustments made as a result of a number of statutory provisions. In fact, CLFS payments have been frequently targeted through multi-year freezes and “productivity adjustments” to reduce costs associated with the Medicare program. In many cases fees today are lower than fees in previous years, and when adjusted for inflation, the reductions are even more pronounced. Further, the “productivity adjustment” made as a result of the Affordable Care Act is already intended to capture perceived cost efficiencies associated with multifactorial service input factors including technology changes. Thus this proposal actually duplicates a negative adjustment already made to the fee schedule.
  3. The overriding theme that costs for laboratory services have largely decreased due to “technological changes” that increase efficiency fails to acknowledge many factors that apply to determining costs in laboratory medicine. In fact, increased regulatory burden resulting from CLIA, HIPAA, and other legislative initiatives, have actually increased ancillary costs associated with laboratory service that may offset any increased efficiencies from technology. While these increased costs are justified to ensure accuracy and guarantee patient safety, they are increased costs none the less. In addition, there are indisputable costs associated with new technologies that often render the overall costs of providing a service greater. In addition to equipment acquisition and upgrade expenditures, materials and reagent costs may be increased and costs of initial verification and ongoing validation are not insignificant, particularly for

With these concerns in mind, the ASM would like to offer the following recommendations regarding this CMS proposal.

  1. Given the broad scope of the proposal as well as the significant impact on laboratory service provision, it is strongly recommended that a limited pilot project be conducted prior to wide scale implementation of a CLFS adjustment process. It is suggested that codes selected for the pilot be representative of services that are most commonly provided to beneficiaries, and based on volume, are most likely to have been affected by technological changes.
  2. It is strongly recommended that CMS follow the recommendation from the 2000 IOM report that a “data-driven consensus approach” be used. As stated in the IOM report, “A consensus approach could lend legitimacy and credibility to the newly developed values if it is designed in a manner acceptable to stakeholders”. The approaches outlined in the IOM report designed to facilitate stakeholder input bear consideration. In particular, a “microcosting approach” has proven to be effective in determining fees for new codes in the public CMS fee-setting meetings that occur annually in July.
  3. CMS should seek input from the laboratory profession, in particular from professional societies representing the various components and disciplines of the laboratory community. Ideally, a negotiated rulemaking approach could be used to ensure broad laboratory professional input. Such an approach was successfully used in establishing 23 National Coverage Determinations for select laboratory services as a provision of the Balanced Budget Act of 1997. Alternatively, CMS could assemble an expert panel composed of laboratory professionals and other stakeholders including the payer community, healthcare policy professionals, and beneficiary representatives. Operating in an advisory role similar to CLIAC, such a panel could review data compiled for justification of fee-adjustments. At the very least, a forum for professional and public input on selected codes announced in advance could be established. This approach has proven to be effective in allowing laboratory community input into determining fees for new codes. Finally, any decisions made on fee adjustments based on “technological changes” should be subject to an appropriate comment period.

Laboratory medicine is an evolving discipline. New technologies and innovation are essential to improving both the efficiency and effectiveness of care. However, as pointed out in the IOM report, “the efficient integration of innovation into medical care may be affected by policies related to coverage, coding, and payment”. There is no doubt that this proposal by CMS to develop a process for a comprehensive adjustment of the CLFS has the potential to significantly affect the laboratory profession and the patients they serve. ASM strongly urges CMS to proceed cautiously and to fully engage all stakeholders in this process. ASM stands ready to assist or contribute to such a process, particularly in areas of concern to our constituency.


Vickie S. Baselski, PhD, DABMM, FAAM
Chair, Committee on Professional Affairs
Public and Scientific Affairs Board