Congress has once again delayed significant Medicare reimbursement cuts for clinical laboratory tests. Signed by President Biden on September 26, 2024, the short-term government funding bill delays the implementation of up to 15% payment reductions for approximately 800 lab services by one year. This marks the fifth time Congress has postponed the phase-in of new payment rates for clinical laboratories under Section 216 of the Protecting Access to Medicare Act (PAMA) of 2014.

The American Clinical Laboratory Association (ACLA), a trade group whose members include Labcorp and Quest Diagnostics, called the delay “critically needed” to preserve patient access to many of the most commonly ordered lab tests. Despite the fact that legislation to reform reimbursement provisions under PAMA (e.g., Saving Access to Laboratory Services Act (SALSA)) failed to gain traction, the lab industry continues to push for sustainable Medicare lab test pricing solutions.

PAMA Background

PAMA, signed into law in 2014, originated because the Office of Inspector General determined that Medicare payments for laboratory tests were often higher than payments for commercial payers. The law’s intent was to update the Medicare Clinical Laboratory Fee Schedule (CLFS) and create competitive, market-based laboratory testing prices.

PAMA changed the way that Medicare calculates the CLFS, requiring that Medicare pay the weighted median rate of private payor payments for lab tests.

Under PAMA, the first set of Medicare CLFS payment rates resulted in reimbursement cuts for many lab tests—up to 10% each year for 2018, 2019, and 2020. Many commonly performed tests were reduced by 30% during this time.