42 U.S.C. § 1395m–1 — Improving policies for clinical diagnostic laboratory tests

(a) Reporting of private sector payment rates for establishment of Medicare payment rates: (1) In general: (A) Subject to (B), beginning January 1, 2016, and every three years afterward—or annually for an “advanced diagnostic laboratory test” defined in (d)(5)—an “applicable laboratory” must report to the Secretary^*, at the time the Secretary sets, “applicable information” for a “data collection period” for each covered clinical diagnostic laboratory test it furnishes. (B) For tests that are not advanced diagnostic laboratory tests, no report is required from January 1, 2020 through April 30, 2026; a report is required for May 1 through July 31, 2026; and reports are required every three years afterward. (2) An “applicable laboratory” is one whose revenues under this subchapter mostly come from this section, section 1395l(h), or section 1395w–4. The Secretary may exclude laboratories below a low-volume or low-expenditure threshold. (3) “Applicable information” means (A) the rate each private payor paid for the test and (B) the test volume for each payor. It excludes tests paid on a capitated or similar basis. (4) A “data collection period” is a period the Secretary specifies, such as a prior 12 months. For the 2026 reporting period in (1)(B), it is January 1 through June 30, 2025. (5) Reported rates must include discounts, rebates, coupons, and other price concessions. (6) Each different rate for the same test and payor, and its volume, must be reported; beginning January 1, 2019, the Secretary may allow aggregation. (7) A laboratory officer must certify accuracy and completeness. (8) “Private payor” means (A) a health insurance issuer^* or group health plan^* as defined in section 300gg–91, (B) a Medicare Advantage plan under Part C, or (C) a Medicaid managed-care organization as defined in section 1396b(m). (9) If a laboratory fails to report or misrepresents or omits information, the Secretary may impose up to $10,000 per day for each failure, misrepresentation, or omission. Except for subsections (a) and (b), section 1320a–7a applies to that penalty as stated. (10) Reported information is confidential and may not identify a payor or laboratory or disclose its prices or payments, except as necessary to carry out this section or to permit review by the Comptroller General, Congressional Budget Office Director^*, or Medicare Payment Advisory Commission. (11) A payor may not be identified, and an applicable laboratory’s name is exempt from disclosure under section 552(b)(3) of title 5. (12) By June 30, 2015, the Secretary had to establish data-collection parameters through notice-and-comment rulemaking.

(b) Payment for clinical diagnostic laboratory tests: (1) (A) Subject to paragraph (3) and subsections (c) and (d), for a test furnished on or after January 1, 2017, payment equals the weighted median for the most recent data period. (B) The amount applies to a hospital laboratory when the test is paid separately rather than bundled under section 1395l(t). (2) The Secretary calculates the weighted median by arranging all reported rates, weighting each by volume for each payor and laboratory, and selecting the middle value. (3) (A) For each year 2017 through 2029, a payment reduction may not exceed the applicable percentage of the prior year’s payment. (B) The percentages are 10 percent for 2017–2020, 0 percent for 2021–2026, and 15 percent for 2027–2029. (C) This limit does not apply to a new test under (c) or a new advanced diagnostic test under (d). (4) (A) A rate continues until the year after the next data period. (B) No geographic, budget-neutrality, annual-update, or other adjustment applies. (5) The nominal sample-collection fee for a sample collected in a skilled nursing facility^* or by a laboratory for a home health agency^* increases by $2.

(c) Payment for new tests that are not advanced diagnostic laboratory tests: (1) Until a rate under (b) is established for a test assigned a new or substantially revised HCPCS code on or after April 1, 2014, payment is set (A) by cross-walking under section 414.508(a) of title 42, or a successor rule, to the most appropriate existing test, or (B) if none is comparable, by gapfilling. (2) Gapfilling considers available charges and ordinary discounts, resources needed, other payors’ payments, comparable tests’ charges, payments, and resources, and other criteria the Secretary finds appropriate. (3) The Secretary must consider the panel’s recommendations under (f)(1). (4) The Secretary must publicly explain the rate and how paragraphs (2) and (3) were applied.

(d) Payment for new advanced diagnostic laboratory tests: (1) (A) During the first three quarters, an advanced diagnostic test not previously paid under the fee schedule before April 1, 2014 is paid using its actual list charge. (B) That charge is the publicly available rate on the first day a private payor can buy the test. (2) The laboratory must first report by the last day of the second quarter. (3) After that period, reported data sets payment using (b)’s method until the year after the next data period. (4) If the initial amount exceeded 130 percent of the later market-rate amount, the Secretary must recover the difference for tests furnished during the initial period. (5) An “advanced diagnostic laboratory test” is a covered test offered and furnished only by one laboratory, not sold for use by another laboratory except the original developer or successor owner^*, and meeting (A) multiple DNA, RNA, or protein biomarkers combined with a unique algorithm producing one patient-specific result, (B) FDA clearance or approval, or (C) similar criteria set by the Secretary.

(e) Coding: (1) (A) The Secretary must adopt temporary HCPCS codes for new advanced diagnostic tests and new FDA-cleared or FDA-approved tests. (B) (i) A temporary code lasts until a permanent code is established, but no more than two years; (ii) the Secretary may extend it or establish a permanent code as appropriate. (2) By January 1, 2016, the Secretary must give each existing advanced diagnostic test and each existing FDA-cleared or FDA-approved test for which payment is made under this part as of April 1, 2014 a unique code if it lacks one, and must publicly report its rate. (3) At a laboratory’s or manufacturer’s request, the Secretary must use a method such as a code or modifier to uniquely track such a test.

(f) Input from clinicians and technical experts: (1) By July 1, 2015, the Secretary had to establish an outside expert panel with appropriate expertise, possibly including molecular pathology, research, laboratory science, and health economics. The panel advises on test development, validation, performance, application, payment rates and cross-walking or gapfilling for new tests, and coverage and payment factors, and makes recommendations. (2) The panel is subject to chapter 10 of title 5. (3) The Secretary must continue the annual meeting described in section 1395l(h)(8)(B)(iii) to receive comments, recommendations, and supporting data on payment amounts.

(g) Coverage: (1) (A) A Medicare administrative contractor^* may issue a coverage policy for a clinical diagnostic laboratory test only through the local-coverage-determination process, including the appeals and review process under part 426 of title 42 or a successor rule. (B) This does not apply to the national coverage-determination process. (C) It applies to policies issued on or after January 1, 2015. (2) The Secretary may designate up to four contractors to establish coverage policies or to establish policies and process claims.

(h) Implementation: (1) No administrative or judicial review is available under section 1395ff, section 1395oo, or otherwise for establishing payment amounts under this section. (2) Chapter 35 of title 44 does not apply to information collected here. (3) For implementation, the Secretary must transfer $4 million from the Federal Supplementary Medical Insurance Trust Fund to the CMS Program Management Account in each fiscal year 2014–2018 and $3 million in each fiscal year 2019–2023; the money remains available until spent.

(i) Transitional rule: From April 1, 2014 through December 31, 2016, the Secretary must use the pricing, coding, and coverage methods in effect on March 31, 2014 for advanced diagnostic tests, including cross-walking or gapfilling methods.