6 Factors Affecting Future Reimbursement for the CLFS

The Obama Administration recently released its proposed federal budget for FY 2014, which includes $371 billion in savings from Medicare.  Of that amount, $9.46 billion comes from proposed 1.75% reductions to the Clinical Lab Fee Schedule (CLFS) to be made each year from 2016 through 2023.  The budget would also extend the current 1.75% cuts to the CLFS, which was enacted under the Affordable Care Act of 2010 (ACA).  With this news, there are now 6 outstanding factors that can have a direct effect on reimbursement rates for the CLFS in 2014.  These include:

1. Medicare’s CLFS is due to receive an annual inflation update each year based off the Consumer Price Index for all Urban Consumers.
2. According to the ACA, CMS must reduce the inflation update to the Part B lab fee schedule by a “productivity adjustment” close to 1.3% per year from 2011-2020.
3. The ACA requires an additional 1.75% decrease in the CPI update each year from 2011-2015.
4. January 1, 2013 marked a one-time 2% cut to the CLFS to help pay for a 10 month freeze in Medicare payment rates to physicians.
5. The Budget Control Act of 2011 triggered an automatic sequester of 2% to the CLFS, effective April 1, 2013.
6. President Obama’s proposed federal budget (FY2014) calls for extending the 1.75% annual cut to the CLFS through 2016-2023, with cancellation of the 2% sequestration cut.

Independent laboratories and hospital based practices alike are all feeling the pinch in 2013 due to cuts in the Medicare Professional Fee Schedule (MPFS), budget cuts to the CLFS and sequestration.  A bright side to President Obama’s proposed budget is the suggested retirement of the SGR formula and removal of the 2% sequestration.  APS will continue to monitor the policies affecting reimbursement and keep you updated on developments.  If you have any questions, please contact your Practice Manager.