Dive Brief:

• A trade group representing LabCorp and Quest Diagnostics has appealed the dismissal of its lawsuit challenging the implementation of the Protecting Access to Medicare Act, which sets laboratory payment rates according to market data reported by industry.

• Federal district courts have previously dismissed the lawsuit, most recently in March, but the American Clinical Laboratory Association continues to argue that PAMA is a case of "harmful regulatory overreach" that forces an "unsustainable reimbursement model" on its members.

• ACLA is targeting PAMA through the courts while continuing to push for Congress to change the law. The trade group said that, regardless of the outcome of the appeal, a legislative solution is needed to a law it argues has led to artificially low Medicare rates.

Dive Insight:+

ACLA began its legal case against the implementation of PAMA late in 2017, weeks after the release of the final private payer rate-based clinical laboratory fee schedule. As ACLA sees it, HHS diverged from PAMA directives by exempting "significant categories and large numbers of laboratories" from reporting market data, meaning "Medicare rates will not be consistent with market-based rates."

The U.S. District Court for the District of Columbia dismissed the case on the grounds that ruling on the establishment of PAMA payment amounts was barred by the statute. ACLA successfully appealed that ruling in 2019. However, the lower court again dismissed the case in late March.

The trade group said the court relied "on the same conclusions that the D.C. Circuit [appeals court] rejected." The court ruling said the case was dismissed "for lack of subject matter jurisdiction."

ACLA’s filing of a notice of appeal restarts a process that could take months to play out. The last time the trade group appealed, there was a nine-month wait between the submission of a notice and the delivery of the opinion of the court.

While preparing its opening brief and then waiting on the decision of the appeals court, ACLA will try to tackle PAMA from another angle.

"ACLA will continue to work with policymakers to establish a Medicare Clinical Laboratory Fee Schedule that is truly representative of the market and supports continued innovation and access to vital laboratory services, as Congress originally intended," Julie Khani, president of ACLA, said in a statement.

Congress has already delayed the next set of fee cuts until 2022. ACLA said the cuts will reduce rates for certain tests used to diagnose chronic diseases by 15%, potentially threatening access to testing. Rates were previously cut in 2018, 2019 and 2020.

Talking to investors in April, LabCorp CEO Adam Schechter said he expects the 2022 impact to "be about the same as it was in 2019, around the $100 million mark."