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Delay in Final Rule Implementing PAMA: Sunshine Act Revisited?

As reported in our 2015 Laboratory Industry Year in Review post, the laboratory industry began 2016 amid confusion regarding how to comply with the Protecting Access to Medicare Act of 2014 (PAMA), which made the most significant changes to the Medicare Part B payment structure for laboratories since implementation of the Medicare Clinical Laboratory Fee Schedule (MCLFS) in 1984.  Despite PAMA’s requirement that the Centers for Medicare & Medicaid Services (CMS) publish final regulations no later than June 30, 2015, CMS did not issue a proposed rule until October 1st and has yet to follow up with the final rule.  Given stakeholders’ substantial concerns regarding the proposed rule – and the track record of CMS – the delay is not surprising.

By way of background, PAMA would require certain laboratories to report payment data so that the MCLFS can be updated based on private payor rates. More details regarding PAMA’s requirements may be found in a previous post.  According to the proposed rule, certain laboratories would need to submit payment data to CMS between January 1, 2016 and March 31, 2016, but this deadline has obviously come and gone and CMS remains silent regarding its next move.

Industry stakeholders such as the American Clinical Laboratory Association and the American Hospital Association have been highly critical of the proposed rule’s timeline, and Senate and House members joined the fray in late December when they submitted separate letters to CMS, questioning the proposed timeline and other aspects of the proposed rule.  Earlier this week a bipartisan group of 27 members of the House Ways and Means Committee piled on in a letter urging CMS to delay its implementation of PAMA so that the process is not “improperly rushed.”  The Committee further noted that revising the MCLFS is a “highly complex task with significant implications for all stakeholders, with a reach far beyond the Medicare program” and expressed concern about the delay in issuing the final rule, which makes a January 1, 2017 effective date “not feasible.”

The position in which the laboratory industry currently finds itself is eerily reminiscent of that faced by pharmaceutical and medical device manufacturers back in 2012 when CMS delayed implementation of the Sunshine Act after failing to publish regulations in a timely way.  CMS issued a proposed rule that did not adequately consider the operational realities that manufacturers would face when they collected and submitted, for the first time, data regarding payments and other transfers of value to physicians and teaching hospitals.  When CMS announced the delay in data collection, it stated that the delay was meant to “provide time for organizations to prepare for data submission and to sufficiently address the important input we received during the rulemaking process” and that the additional time would allow CMS “to address operational and implementation issues in a thoughtful manner, and the ability to ensure the accuracy of the data that is collected.”   One can only hope that CMS takes a page out of its own playbook and delays PAMA implementation as well.

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Bridgette advises health care providers, ACOs, health plans, PBMs, and laboratories on regulatory, fraud and abuse, and business planning matters, applying her experience in health system administration and ethics in health care to her health law practice.

Karen S. Lovitch

Chair, Health Law Practice & Co-Chair, Health Care Enforcement Defense Practice

Karen advises industry clients on regulatory, transactional, operational, and enforcement matters. She has deep experience handling FCA investigations and qui tam litigation for laboratories and diagnostics companies.