Xifin CEO: Time to tune up negotiations with payers

Sherrie Rice

September 2018—The second round of PAMA data collection is coming in 2019 and it’s critical to get it right, said Lâle White, CEO of Xifin, in a presentation in May at the Executive War College. If it’s not right, she warned, laboratories could see cuts that are more severe than those already seen.

In the first round of cuts, the rates for 75 percent of all codes on the clinical laboratory fee schedule decreased, while 10 percent of rates for codes on the CLFS increased. With a $3.6 billion savings expected over three years, “the level of cuts was essentially almost double what the Office of Management and Budget and the Congressional Budget Office anticipated,” White said, noting that PAMA affected Medicaid as well as Medicare, with some states feeling a greater impact. “One of the things we have to do is work with the Medicaid programs to make sure access is not lost in some of these states,” she said.

Nursing home laboratories will see a 9.44 percent cut in total by 2020. “They are probably the most affected labs,” White said. Least affected are pain and pharmacogenetics testing labs with a 0.15 percent cut by 2020, and molecular testing labs, at 0.31 percent. “These labs have also had severe price cuts on their own in the past several years, but they will have almost no impact with PAMA, and there will be some stability in pricing for these sectors.”

Clinical laboratories will see a 5.33 percent decline by 2020, and pathology labs a 4.07 percent decline.

“Over 90 percent of the PAMA data came from independent clinical labs and only two percent from hospital labs,” which, she said, is the basis of the ACLA lawsuit. “They’re seeking an injunction in order to change the way this exercise was performed.”

Three dozen groups representing patients, health care professionals, laboratories, and diagnostic manufacturers, including the CAP, urged Congress to reform PAMA. In an Aug. 2 letter sent to congressional leaders, they wrote, “In a medical age where technology is pushing closer to patients, the bureaucratic policies implemented through PAMA will drive care and the promise of better health further away from patients.”

They asked Congress to modify PAMA to address data integrity concerns and market exclusion, ensure that the private payer data the Centers for Medicare and Medicaid Services collects accurately represents all segments of the market, and provide a transparent process to allow for validation of the data CMS collects.

Lessons learned on the first go-around need to be applied to the second, White said at the War College, including understanding the accuracy of the data submitted and making sure they are auditable and there is source documentation. Also important: understanding the errors payers make in explanations of benefits that cause labs to submit improper or incorrect pricing that affects some of the reimbursement levels. “Strong financial systems are key to this exercise,” White said.

Laboratories also need to understand “how to talk to payers and how to approach them about the fee structure itself.”

“Many labs that truly understand the value of their tests and that have calculated the incremental and fully loaded cost of each of their tests are able to negotiate different types of rates at different percentages of Medicare for their routine services versus their esoteric and genetic services.” Payers seem to understand, White said, that the market value of the Medicare fee schedule is not realistic and that negotiations on different types of testing become important in the process to establish fees.

“Essentially we’re looking at market value and market value pricing. We need to make sure we understand what the cost of all of our tests are, and we need to establish a standard fee that’s not just a fee that is a percentage over Medicare, or over your highest payer, but that’s proportionally aligned with the costs of the tests being performed. And we need to be able to negotiate off of this type of fee schedule.”