Is Your Hospital Ready to Meet PAMA Outreach Lab Reporting Requirements?

December 11, 2019

Monica Lelevich
Director, Audit Services
PARA HealthCare Analytics, an HFRI Company

IMPORTANT UPDATE:

On January 2, 2020, the Centers for Medicare and Medicaid Services (CMS) announced that it has extended by one full year the reporting deadline for private payor rate data. The announcement was posted on the CMS PAMA Regulations website. For more information on the reporting requirement, which applies to many hospitals and physician clinics which operate a CLIA-certified lab, read our article below. To review the revised dates, click here.

With the clock ticking, hospitals nationwide are scrambling to comply with a new reporting mandate announced by Medicare in early 2019 within a densely written and widely misunderstood transmittal.

The reporting, which is mandated by the Protecting Access to Medicare Act of 2014 (PAMA), requires physician clinics and hospital outreach laboratories that perform specimen-only lab testing on the 14x Type of Bill (TOP) to report their commercial payor payment rates for lab services by the end of March 2020 or potentially face fines of more than $10,000 per day.

Many hospitals view the requirement as onerous, since most don’t retain detailed payment rate data at the line-item level. Instead, hospitals generally post total payment, total adjustments, and total patient liability only, without specific rates for each line on a claim. As a result, the information is not available within the hospital accounting system and other methods must be found to meet the reporting requirement.

The new mandate marks the second time Medicare has collected private payor lab rate payment data, but it’s the first time the requirement has been extended to include hospitals that bill Medicare and other payors on the 14x TOB. The Centers for Medicare and Medicaid Services (CMS) must collect private payor data every three years for use in setting rates under the Clinical Lab Fee Schedule (CLFS). Their initial effort in 2016 required that only large national and regional lab testing firms, such as LabCorp and Quest, report.

The 2019 Outpatient Prospective Payment System (OPPS) Final Rule expanded the reporting obligation to include hospital outreach laboratories that submit Medicare claims for non-patient services if the hospital meets the threshold of $12,500 in revenues paid by Medicare for services on the 014x TOB during the first six months of 2019. The rate reporting is due to CMS by the end of the first quarter of 2020.

Applicable laboratories

According to CMS, “applicable laboratories” that are required to collect and report their private-payor, non-patient service lab rates paid for dates of service from January 1 through June 30, 2019, are organizations that can answer affirmatively to the following questions:[1]

  1. Is the laboratory certified under CLIA?
  2. Does the CLIA-certified laboratory bill Medicare Part B for specimen-only/non-patient laboratory services on the 14x Type of Bill?
  3. Were the majority of payments received from Medicare on TOB 14x claims paid under the Clinical Lab Fee Schedule or the Medicare Physician Fee Schedule? (Majority of Medicare Revenues test)
  4. Did Medicare reimburse the laboratory more than $12,500 for lab services billed on the 014x type of bill between January 1 and June 30, 2019? (Minimum revenue threshold test.)

Since tests 1 through 3 are typically met by hospitals that perform non-patient lab testing, the main determinant of the obligation to report is the $12,500 threshold.

It’s important to note that Medicare Advantage plan payments made under Medicare Part C are not to be included in the total Medicare revenues component of the majority of Medicare revenue threshold calculation.

Medicare acknowledges that most hospital labs will meet this Majority of Medicare revenues test on page 8 of Medicare Learning Network Matters Number: SE19006:

“Hospital outreach laboratories that bill Medicare Part B under the hospital’s NPI, and therefore determine applicable laboratory status based on its Medicare revenues from the 14x TOB, will most likely meet the majority of Medicare revenues threshold. They will most likely meet the majority of Medicare revenues threshold because their Medicare revenues are primarily, if not entirely, derived from the CLFS and or PFS. In other words, the revenues from the CLFS and or PFS services included in the numerator are essentially the same as the total Medicare revenues included in the denominator.”

Note that while the UB manual specifies that 14x TOB is for non-patient lab tests, California Medicaid requires emergency department charges (ED) to be reported on the 14x type of bill. Hospitals in California, therefore, will need to report specimen-only testing claims and exclude claims for in-person medical services, such as ED charges, to ensure they’re only reporting non-patient lab charges.

Some physician offices that provide laboratory services will need to report if they have $12,500 or more in Medicare revenue for all clinical services, even though they bill on a CMS1500/837i claim form. Reporting for physician offices should nonetheless be relatively straightforward, since, unlike hospitals, they post by line item in the patient accounting system.

Reporting requirements and timetable

Applicable laboratories are responsible for collecting three primary types of information, according to CMS:[2]

  1. The specific HCPCS code associated with the test
  2. The private payor rate for each test for which final payment has been made during the data collection period
  3. The associated volume for each test

For additional details on reporting requirements, visit CMS Medicare Learning Network Matters SE19006.

The period for which data is to be collected includes dates of service from January 1 through June 30, 2019, as well as claims from earlier dates of service that were not paid until the 1/1/19-6/30/19 timeframe.

The six-month period from July 1 through the end of calendar 2019 was designated by CMS as a review and validation period. The rate information can be reported to CMS starting Jan. 1, 2020, with a deadline of March 31, 2020. This collection, validation and reporting cycle will repeat every three years to form the basis for an updated CLFS.

The reporting is designed to ensure that the rates paid under Medicare’s Clinical Lab Fee Schedule fairly represent hospital rates, as well to those paid to commercial, low-charge/high-volume labs. It is therefore important for all outreach labs to provide data which can help support more equitable and appropriate Medicare reimbursement rates in the future.

Penalties

Applicable organizations may face civil penalties of up to $10,017 per violation per day if reporting is not complete, accurate and timely, according to CMS. There is no exception for Critical Access Hospitals. In its final rule, CMS noted that in situations where its review revealed that the data submitted was incomplete or incorrect, the agency would work with the Office of Inspector General (OIG) to assess whether a civil monetary penalty should be applied, and if so, what the appropriate amount should be based on the specific circumstances.[3] CMS also stated that it does not intend to assess monetary penalties for minor errors.[4]

Achieving compliance

Even if your organization hasn’t started test rate collection and validation, it’s not too late to achieve compliance with the March 31 reporting deadline. Hospitals can immediately task clerks with the task of pulling both paper and electronic 835s claims to begin assessing the total dollar amount and volume of the tests in question.

Alternatively, Healthcare Financial Resources (HFRI) provides compliance assistance through our comprehensive Lab Payment Reporting Analytical Services. Using Medicare outpatient claims data, we’ll help new and existing clients determine the type and volume of payments made through the Medicare 14x TOB. This will help determine whether the hospital has exceeded either the $12,500 Medicare threshold for the January-June 2019 reporting period, and therefore needs to report.

The PARA Data Editor additionally offers the ability to analyze electronic remittance files to quickly generate a spreadsheet of the allowable rates paid by CPT® codes on the 14x TOB. PARA can configure this electronic data into the required format for Medicare reporting. However, some clients will likely have received payments that will require manual research if they were not paid on a submitted 835 file, since HFRI is unable to research payments submitted on paper remittances.

It’s critical that hospital outreach labs push to meet the PAMA reporting requirements, not only to eliminate the risk of onerous monetary penalties, but to help ensure the highest possible lab reimbursements in the future. Contact HFRI to learn more about how our Lab Payment Reporting Analytical Services can help you.

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