Congressional Champions Introduce the Saving Access to Laboratory Services Act (SALSA)

On June 22, 2022, new legislation was introduced that is intended to permanently reform PAMA and set the Medicare CLFS back on a sustainable path. The legislation titled the Saving Access to Laboratory Services Act (SALSA), has been introduced in both the Senate and House by Sens. Sherrod Brown (D-OH) and Richard Burr (R-NC), along with Reps. Bill Pascrell (D-NJ), Scott Peters (D-CA), Richard Hudson (R-NC), Gus Bilirakis (R-FL) and Kurt Schrader (D-OR). 

ACLA, NILA, and other associations have expressed their support of this bipartisan, bicameral effort.

As explained in today’s NILA press release applauding the Act’s introduction:

• PAMA sought to tie reimbursement rates under Medicare’s Clinical Laboratory Fee Schedule (CLFS) to rates paid by private payors, with clinical laboratories periodically submitting private rate information to the Centers for Medicaid and Medicare Services (CMS). However, initial data reporting did not accurately represent the entire laboratory market, resulting in drastic, unanticipated cuts to reimbursement. Without Congressional action, beginning on January 1, 2023, laboratories will face additional cuts of as much as 15 percent to some of the most commonly ordered laboratory tests.
• SALSA requires CMS to use a statistically representative sample of the entire laboratory market to determine Medicare’s Clinical Laboratory Fee Schedule rates for widely available clinical laboratory tests and puts in place protections against drastic rate cuts. SALSA will reduce the administrative burden on laboratories by requiring fewer laboratories to report private payer data and increasing the time between reporting periods from three to four years.
• “Community and regional independent laboratories are an indispensable part of our nation’s health care infrastructure. These laboratories continue to respond to the COVID-19 pandemic and provide critical laboratory services in underserved communities across the country, despite declining and often uncertain reimbursement,” said NILA Executive Director Mark S. Birenbaum, PhD. “NILA is grateful to the bipartisan group of legislators who are committed to putting an end to steep laboratory reimbursement cuts and enacting a long-term fix to PAMA.”

Key provisions of the bill, as summarized by ACLA, follow:

Summary of SALSA Act Reforms

The solution to reforming PAMA and setting Medicare reimbursement back on a sustainable path is straightforward: CMS must collect accurate and representative data from all laboratory market segments that serve Medicare beneficiaries. If enacted, the SALSA Act would achieve this goal and the original Congressional intent of PAMA with the following reforms:

Use Statistical Sampling of a Representative Pool of All Clinical Laboratory Market Segments

In the LAB Act-required report released in June 2021, MedPAC found that sampling of private payer rates from independent laboratories, hospital laboratories and physician office laboratories (POLs) is feasible, would produce accurate, representative data and would correct current, below-market Medicare rates. Further, sampling would reduce the reporting burden by requiring fewer laboratories to report. Therefore, for widely available tests, the SALSA Act would require statistical sampling to obtain representative, private payor data from independent laboratories, hospital laboratories and POLs. A “widely-available test” is a test that is both performed by more than 100 National Provider Identifier (NPI) entities and whose Medicare reimbursement rate is under $1,000. For tests that are not widely available CDLTs, all labs performing that test, above the current minimum revenue threshold, would report their market data to ensure an appropriate data set (the same as current law for these tests).

Annual “guardrails” to increase rate stability and protect against shocks from increases or decreases in CLFS rates

The SALSA Act would set annual limits on year-to-year payment rate reductions and increases effective January 1, 2023. Currently, PAMA limits how much a test’s reimbursement can be reduced each year in the first six years of PAMA’s implementation, but there are no limits on payment reductions in future years, nor limits on rate increases. Creating a limit for both rate reductions and increases would create stability for both laboratories and the Medicare program by protecting against rapid payment reductions and rapid spending increases.

Changes to Applicable Information Reported to CMS

The SALSA Act would implement two changes to the definition of “applicable information” that would help ensure the CLFS rates are more reflective of the market and ease the significant reporting burden. First, Medicaid managed care rates would be excluded from the definition of “applicable information”. Medicaid managed care rates are not true “market rates” because, by law, these rates cannot exceed Medicare rates. Including these rates artificially skews rates downward. Second, to reduce the reporting burden, the SALSA Act creates the option for a laboratory to exclude manual (physically mailed) remittances from reporting, if these remittances do not exceed more than 10 percent of the lab’s claims.

Changing the Frequency of Data Collection Periods

The SALSA Act would increase the length of time between data collection periods to four years (currently three years). This would provide more stability to CLFS rates and reduce the reporting burden across the entire laboratory industry by reducing the frequency of reporting.