2023 Medicare Physician Fee Schedule Clinical Laboratory Updates

Jenni Colagiovanni and Daniel Ayyash, Wachler & Associates, P.C.

On November 1, 2022, the Centers for Medicare & Medicaid Services (CMS) published its Final Rule implementing changes to the Medicare Physician Fee Schedule for CY 2023. Included within this Final Rule are important changes for clinical laboratories that will take effect on January 1, 2023.

There are two notable changes affecting clinical labs included in the Final Rule. First, CMS is implementing congressionally mandated changes to reporting obligations under the Protecting Access to Medicare Act (PAMA), which updates reporting timelines and limits the phase-in of laboratory test payment reductions. Second, CMS is issuing regulations to both codify and modify policies on billing Medicare for specimen collection fees and travel allowances. The changes also increase specimen collection payment rates that had previously remained unchanged for years. Specifically, as it relates to specimen collection, the changes may affect codes 36415, G0471, P9612, and P9615, but do not appear to relate to codes G2023 and G2024. As the regulations relate to travel allowances, the changes may affect codes P9603 and P9604.

Following the implementation of PAMA in 2014, Medicare has established the clinical laboratory fee schedule (CLFS) rates based on data reported by applicable laboratories on the payment rates they receive from commercial payors. Under PAMA, the amounts by which the CLFS rates could be reduced for most tests has been limited to not more than 10% per year for the years 2018 through 2020 and not more than 15% per year for the years 2021 through 2023.

Moreover, the initial reporting period occurred in early 2017 and was based on data from 2016. The second reporting period was initially intended for early 2020. However, the COVID-19 public health emergency and industry influence spurred a series of congressional actions that delayed the second reporting period, as well as extended the phase-in of rate reductions. Most recently, the timeline for reporting and phasing-in reductions was delayed by the Protecting Medicare and American Farmers from Sequester Cuts Act (PMAFSCA). Accordingly, CMS revised the definitions of "data collection period" and "data reporting period" at 42 C.F.R. § 414.502 to specify that for the data reporting period of January 1, 2023 through March 31, 2023, the data collection period is January 1, 2019 through June 30, 2019. As a result of this revision, CLFS payment rates for CY 2024 through CY 2026 will be based on data collected in the first six months of 2019, which will be reported in early 2023. The Final Rule also codifies PMAFSCA's phase-in of payment reductions under the CLFS by updating the percentage by which the CLFS payment rates can be reduced. Accordingly, CLFS payment rates can be reduced by no more than 0.0% for CY 2022, as compared to CY 2021, and by no more than 15% for CY 2023 to 2025, as compared to the preceding year.

As part of the Final Rule, CMS is promulgating a new regulation at 42 C.F.R. § 414.523, which covers new specimen collection fees and travel allowances. Historically, portions of these policies existed primarily in the Medicare Claims Processing Manual, but the guidance was unclear and inconsistent in certain places. In issuing the new regulation, CMS aims to clarify and modify its existing policies to account for current healthcare practices and simplify the rules with respect to claims for travel allowances.

Regarding specimen collection, CMS's new regulation reiterates the eligibility requirements for specimen collection billing for clinical laboratory testing. Specifically, a specimen collection fee will only be paid if the following criteria are met:

• The specimen must be used to perform a Medicare-covered test paid under the CLFS.
• The specimen must be collected by a trained technician from a Medicare beneficiary who is either homebound or a non-hospital inpatient, but may only be collected from a non-hospital patient when no qualified personnel are available at the facility to collect the specimen.
• The specimen must either be a blood specimen collected through venipuncture or a urine sample collected by catheterization.

While the payment rates have remained the same for years – $3 per patient or $5 per patient in a skilled nursing facility (SNF) or on behalf of a home health agency (HHA) – CMS is updating these amounts for inflation as part of the Final Rule. Beginning January 1, 2023, CMS will pay $8.57 for all specimens collected in one qualifying patient encounter, with an increase to $10.57 per patient encounter for specimens collected from a Medicare beneficiary in an SNF or on behalf of an HHA. In addition, beginning January 1, 2024, CMS will update the specimen collection fee rate for each CY by the percent change in the Consumer Price Index for All Urban Consumers (CPI-U) for the 12 months ending June 30 for the year preceding the update year. CMS also seeks to clear up any confusion surrounding the requirement that specimens must be collected by a "trained technician," which is described in the Final Rule as "those staff providing specimen collection services" and includes phlebotomists.

Moreover, CMS is codifying and updating as part of the new regulation the Medicare CLFS travel allowance policies for laboratory specimen collection. A claim for a travel allowance may not be submitted where the technician merely serves as a messenger to pick up specimens. Rather, such claim will only be paid if a specimen collection fee is also payable, which means that the specimen collection must meet the above three criteria. When a travel allowance is permitted, a flat rate or per-mile rate applies depending on the distance traveled and the number of locations. A flat rate travel allowance applies when the trained technician travels 20 eligible miles or less to and from one location for specimen collection from one or more Medicare beneficiaries. For CY 2023, the rate is $10.40 divided by the number of Medicare beneficiaries who received a qualifying specimen collection. A per-mile travel allowance applies when a trained technician either travels more than 20 eligible miles to and from one location for specimen collection from one or more Medicare beneficiaries, or travels to more than one location for specimen collection from more than one Medicare beneficiary. For CY 2023, the per-mile rate is $1.04 per mile and the total travel allowance amounts to the eligible miles multiplied by $1.04, which is then divided by the number of Medicare beneficiaries who received a qualifying specimen collection. The new regulation codifies that "eligible miles" begin at the laboratory or the starting point of the technician's travel for qualifying specimen collection and end at the laboratory or the ending point of the technician's travel for qualifying specimen collection. Eligible miles do not include miles traveled for purposes unrelated to specimen collection, such as collecting specimens from non-Medicare beneficiaries or for personal reasons.

In light of these updates, laboratories should take steps to have their 2019 data accessible and prepare to report before the March 31, 2023 deadline. Laboratories should also ensure that specimen collection activities meet the appropriate criteria outlined in the new regulation, as well as accurately determine the number of eligible miles in order to determine the applicable travel allowance. For additional information or assistance with these recent clinical laboratory changes contact the attorneys of Wachler & Associates at (248) 544-0888.