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Labs Lose Legal Challenge to Medicare Price Data Collection

Analysis  |  By Steven Porter  
   September 24, 2018

By exempting large groups of labs from the data reporting requirement, the federal government has left hospital laboratories underrepresented in the market-based data set used to calculate Medicare payments, the plaintiffs alleged.

A federal judge tossed out a lawsuit Friday from the American Clinical Laboratory Association that had argued Health and Human Services, under the Obama administration, acted arbitrarily in 2016 when it implemented certain requirements for Medicare price data reporting.

The decision dealt a setback to the ACLA, which represents dozens of lab companies unhappy with the way the data collection affects their reimbursements. The lawsuit argues that the HHS final rule included too many exemptions, leaving hospital labs underrepresented in the price data set used in reimbursement calculations.

Despite acknowledging that the arguments in ACLA's suit "raise important questions," U.S. District Court Judge Amy Berman Jackson in D.C. dismissed the proceeding for lack of subject matter jurisdiction, finding that the courts lack the legal authority to review this HHS action.

In a statement, ACLA President Julie Khani said the ruling was incorrectly decided and that ACLA would review its legal options moving forward.

"This is an extremely disappointing outcome for ACLA's members and the millions of seniors they serve—including the most vulnerable Medicare beneficiaries—who rely on clinical laboratory tests for their most basic health needs," Khani said.

In its complaint filed last December, ACLA argued that the HHS final rule's price reporting requirements exempted 99.3% of the labs in the market.

"Moreover, contrary to Congress's intent, the laboratories that did report information are not representative of the market as a whole," the lawsuit added.

"For example, although approximately 7,000 hospital laboratories billed Medicare for laboratory services in 2015—accounting for 24 percent of the Medicare payments made under the Clinical Laboratory Fee Schedule—no more than 21 hospital laboratories (and probably even fewer) reported information to the Secretary, leaving hospital laboratories effectively unrepresented in the data collected by the Secretary."

Due to a variety of factors, hospital laboratories often receive significantly higher private payor rates than do other laboratories, the lawsuit argued.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


Despite nodding to worthwhile questions in the lawsuit, the judge determined she lacked authority to rule on its merits.

The labs contend that HHS arbitrarily excluded too many entities from price reporting requirements, leaving higher-paid hospital labs underrepresented.

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