CMS re-release of clinical laboratory fee schedule payment rates a reminder to keep eye on updates

Medicaid Payment Perspectives helps Medicaid programs and other payers improve the methods used to purchase care and services for their beneficiaries. It’s published by the Payment Method Development team at Conduent.

For those who price Medicaid professional services, each year can prove to be a guessing game for when the Centers for Medicare & Medicaid Services (CMS) will release the fee schedules. Typically, four schedules are needed for pricing: physician, drugs, durable medical equipment (DME) and clinical lab.

The timing of these schedules’ release can affect year-end activities to make sure the MMIS is ready to process and pay claims accurately for the next year without interruption to providers.

Last year, the physician fee schedule was released November 20 and updated December 20. These fee schedules are often amended, creating the need to check for updates or changes almost daily – even through January 31 into the next year. The drug fee schedule was released December 4 and updated eight days later on December 12. The DME fee schedule was not released until December 20, which is really late in the year (although not untypical) given the activities that must occur as a result of the fee schedule release.

Lab seemed different this year. CMS changed how the payment rates were calculated, so there was some confusion around the release of the actual fee schedule. On November 21, CMS issued final Medicare payment rates for clinical diagnostic laboratory tests and advanced diagnostic laboratory tests for calendar year 2018. This was done because rates are now based on the weighted median of private insurer payment rates, as required by a 2016 final rule implementing changes to the Medicare clinical laboratory fee schedule under the Protecting Access to Medicare Act. Several organizations urged CMS to suspend implementation of new payment rates, citing significant concerns with the data collection process used to establish the rates. However, CMS moved forward with rates effective January 1.

With the November 21 release of these payment rates for clinical lab services, several outlets indicated the “lab fee schedule” was available. The interchanging of terms – rates and fee schedule – caused confusion. In looking at the payment rates information (which looked different than the typical lab fee schedule), it seemed possible that these were the fees for established codes; but there were no fees for the new codes for 2018, only the formulas for establishing them using existing codes to be cross-walked. Also, the fee schedule usually listed geographically specific rates, usually by state. However, the new methodology for calculating payment rates no longer included a geographic designation, so it made sense this was absent.

The other head-scratching part was that the clock was ticking close to year’s end and rates needed to be effective for CY 2018. Were the new rates published on November 21 the actual fee schedule for established codes? Did payers have to use the cross-walks and formulas provided to calculate rates for new codes?
Those who had worked with fee schedules for many years felt certain CMS had to release an actual fee schedule. But those responsible for importing rates per a deadline were nervous that perhaps the new methodology for calculating rates meant the entire process had changed.

Fortunately, CMS finally released the old faithful fee schedule (granted without geographic distinctions) for both new and established codes on December 15 – 24 days after the release of the new payment rates.

The key takeaways here are to understand what fee schedules are needed and to always check (and double-check) for when the fee schedules are amended. The good news going forward is that a clinical lab fee schedule should continue to be published and hopefully will become available earlier than it did in 2017.

The Payment Method Development team at Conduent has compiled an annual schedule of CMS effective dates and files for systems maintenance that provides a timeline for when CMS typically updates fee schedules and other file updates. If you have any questions about how Conduent can help with fee schedule updates, please contact Andrew Townsend.

You can read more Conduent insights about Medicaid payment in previous editions of Medicaid Payment Perspectives.