Preparing for Clinical Laboratory Reimbursement Cuts from H.R. 4302

Over the past several months there has been a good deal of industry buzz surrounding the recent policy changes related to the clinical laboratories and Medicare reimbursements. One of the best ways that laboratory managers can prepare for these potential bumps in the road is by staying informed and knowing the financial impact that these changes will have on reimbursements.

What is H.R. 4302?

One law that laboratories should be aware of is H.R. 4302: Protecting Access to Medicare Act of 2014. This law was passed on April 1st, 2014 and was created to extend the Sustainable Growth Rate (SGR) formula. This formula is used to help establish growth targets and acts as a guide for controlling the growth in overall Medicare costs for physicians’ services. This formula is calculated using estimated changes in fees for physicians’ services, number of Medicare fee-for-service beneficiaries, gross domestic product (GDP) per capita and expenditures due to changing in laws or regulations.

What do you need to know?

Extending this formula will cut the amount that reimbursements pay for high volume lab tests under Medicare Part B. The extension will be in effect for 12 months and cuts will have an estimated $2.4 billion impact on clinical lab payments. Some argue that this law unfairly favors large-volume independent labs over hospital-based labs while others argue that this regulation will help limit the cuts overall. Regardless of the position, any lab filing Part B test claims will see an impact in revenue starting in 2017.

How else will H.R. 4302 impact clinical laboratories?

There are several aspects to the law that change the way clinical laboratories will carry out operations. For example, the new law will require certain labs to report private-payer payment rates and volumes for tests. This data will be used to set prices for tests. Prices for new tests will be determined by a panel of outside advisors. The new law will also impact how Medicare handles lab test codes by issuing temporary codes for new lab tests. This will help separate tests before and after the new law goes into effect.

At Colaborate, we are constantly identifying new and innovative ways to address changes like the ones we will see as a result of H.R. 4302. Get prepared for laboratory changes and contact us today.

By Kevin Hunter