The US’s Protecting Access to Medicare Act of 2014 became law this month and shifts the determination of Medicare payments for clinical lab tests to a market-based system. Starting in January 2017, the Centers for Medicare & Medicaid Services (CMS) will set the Medicare payment rates for clinical lab tests by using the weighted median rates of private payors, which will begin reporting their rates in 2016. If applicable, existing tests will be subject to a phase-in of payment reductions. In addition, the Act established a new class of Advanced Diagnostic Laboratory Tests, defined as a test developed and sold by a single lab that is either for multiple biomarkers and uses a unique algorithm, or is FDA approved, or other similar CMS criteria. These tests will be paid at the list charge for the first three quarters after introduction and then at market-based rates. Changes to payment amounts determined by technology changes will not be made (see IBO 12/31/13). The CMS will assign codes to Advanced Diagnostic Lab Tests and FDA-approved tests by January 2016.

Source: Foley Hoag