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Impact of PAMA: Strategies for Moving Forward

February 11, 2019
Documentation, Billing, & Coding By Maryann Kirschner, Senior Consultant

In the past few years, the healthcare industry—especially laboratories—experienced the impact of the Protecting Access to Medicare Act (PAMA). In 2018 , PAMA estimated that laboratory testing reimbursement would be cut by $390 million. However, The Office of Inspector General and Department of Health and Human Services estimated the 2018 reductions in laboratory testing reimbursement to be $670 million which is 70% higher than PAMAs estimate of $390 million.

laboratory 

 

Why should we be concerned?

The reductions impact healthcare providers not just the laboratories.

Healthcare facilities performing laboratory testing will experience the impact of the cuts , reducing their bottom line significantly. Laboratory testing is essential to the diagnosis and plan of care provided to patients . As published by McKnight's Long-Term Care News, between 70-85% are diagnosed and treated based on laboratory and pathology results.

These Medicare cuts are expected to continue through until 2020 with cuts of 10% to most tests in the fee schedule and up to 15% a year. 

Many healthcare facilities and laboratories are not prepared for the decreased reimbursement and do not have systems in place to retain the detail and data for the audits needed for PAMA. Hospitals using the CMS-1450 claim form to bill Medicare must submit their private payer laboratory test data to Medicare officials during the collection period of January 1 to June 30, 2019. Federal penalties are $10,000 per day for failures to report or for any errors in reporting.

It is important for healthcare facilities to improve their operational processes . Doing so can result in cost savings which may help to offset any cuts through PAMA. These improvement processes include having the right equipment, performing the right tests, having the appropriate staff and correcting billing issues. 

LW Consulting, Inc. will prepare you ! We provide strategies to offset the PAMA related losses, including test utilization and optimization, operational and technology efficiencies and compliance with the revenue cycle. 

 

For more information, contact Maryann Kirschner, Senior Consultant at 609-820-1730 or email at MKirschner@LW-Consult.com.

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