The 2018 Lab fee schedule is a lab schedule issued by the Center for Medicare and Medicaid Care (CMS) that illustrates the implementation of the proposed budget cuts for medical laboratories starting 2018. The proposed cuts were based on the Proposed Access to Medicare Act of 2014 which aims at providing cheaper Medicare expenses. Here are four key things to know for your laboratory about the 2018 lab fee schedule, what to prepare for and helpful info/links to register your lab for specific tests to CMS:

1. How was the 2018 Lab Fee Schedule adjusted?

The laboratory billing rates were arrived at by calculating the weighted median of private payer rates for particular tests based on rates submitted by laboratories with their own National Provider Identifier. The data was collected using Laboratory Information Systems then submitted for analysis to CMS’ data reporting system. Information from laboratories that use other NPIs such as hospital-based labs was not factored in. These rates will also be adjusted every three years. The CMS will implement the cuts in a phased-in approach by implementing just a slight percentage per year until the entire fee cut is implemented. The roll-out period in the schedule is three years, running from 2018 to 2020, with the steepest cuts being implemented during the first year, 2018.

2. Exceptions in the 2018 Lab Fee Schedule

The only exception in the lab fee cuts are laboratory tests classified as Advanced Diagnostic Laboratory Tests (ADLT). For a test to be qualified as an ADLT test, it must either be analysis of DNA, RNA or protein bio-markers, or approved by the Food and Drug Administration such as a toxicology test. The reimbursement for ADLT tests will remain the same until the end of the three quarter evaluation period after which a payout amount will be determined by calculating the median weighted private payer rates for tests in the laboratory.

3. Effects of the Proposed Lab Fee Cuts

The proposed fee cuts are poised to be the biggest economic event in the laboratory community in almost twenty years with community lab testing and office practices being the most affected. Community labs and most office practices offer clinical testing services at a limited margin and may be unable to shoulder the proposed rates by the CMS. If true, this will have a negative effect on patients especially in rural areas once the practices succumb to the rate cuts and potentially feel the effects. Patients will be faced with new clinical testing challenges and even more limited access to laboratory testing services.
Though small practices with huge overheads will be affected by the cuts, larger lab services corporations are more likely to withstand the new rates. These could result to cheaper clinical testing costs for patients with access to labs owned by such corporations.

4. Opposition to the Proposed Rates

The Laboratory community has not taken kindly to the proposed Medical Clinic Lab Fee Schedule with the American Medical Association (AMA) and the American Hospital Association combining forces to oppose these changes. The associations among other health care providers have petitioned the CMS to delay the implementation of the new rates citing several problems. Chief of the problems cited is the inaccuracy of the collected data used to determine the new rates. The associations are asking the CMS to prove the accuracy of the data used amid claims that the data submitted was erroneous and a very small fraction of the clinical testing facilities. There are also claims that the time-frame offered to the laboratories to collect the information was arduous to work with. Partial payments that were mistook for full payments by the CMS also contributed to the inaccurate rates that are proposed for implementation. The AMA and AHA also oppose the negative impact this could have on the patients and their access to services.

Quick Links for your Laboratory on the new changes:

1. Application and Guidance for laboratories on ADLTs:
2. Notification to CMS of an FDA Cleared or Approved Clinical Diagnostic Laboratory Test (CDLT) under the Medicare Clinical Laboratory Fee Schedule (CLFS):
3. Application for laboratories on Level II HCPCS:
Additional Resources: