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The PAMA and MACRA Relationship: The Tale of Two Policies

Patricia Goede

Patricia Goede

Vice President, Clinical Informatics | XIFIN, Inc.

Aug 29, 2018

We have witnessed the impact of two Medicare (CMS) legislative mandates: Protecting Access to Medicare Act (PAMA) on the laboratory and healthcare systems and will witness the impact of Medicare Access and CHIP Reauthorization Act (MACRA), on January 1, 2019. Both PAMA and MACRA are designed, for the most part, to manage costs through the use of health IT and reporting. Independently, both policies have impacted laboratories and the healthcare system. Together PAMA and MACRA will introduce additional challenges to manage reimbursement changes as laboratories and hospitals move to pay for performance and shared risk.

PAMA legislation, based on reported data from private health plans and designed to save Medicare Part B payments by $400 million in 2018, will continue with cost-cutting alignment through the Clinical Lab Fee Schedule (CLFS) for the highest volume, diagnostic tests – a move that will have a significant impact on margins. Another example of the impact of PAMA include requirements that ordering physicians consult and document ordering advanced clinical imaging through a qualified Clinical Decision Support Mechanism (CDSM) that relies on a set of defined Appropriate Use Criteria (AUC). Where the CLFS impacts hospital labs, the Medicare Physician Fee Schedule (MPFS) will drive reimbursement through requirements for documentation that physicians use clinical decision support when ordering any advanced imaging study that will impact radiology and oncology reimbursement.

MACRA legislation is designed, fee for service and usher in value-based reimbursement through quality reporting by combining three programs: Meaningful Use (MU), Physician Quality Reporting System (PQRS) and the never-ending problem of the Sustainable Growth Rate (SGR) ‘Doc Fix’ into a single quality program. The purpose of MACRA is to reduce Medicare Part B spending by establishing reporting requirements around quality that are directly tied to value and patient safety through two tracks: Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APM). Both tracks have reporting requirements that are designed to encourage quality reporting through processes and clinical improvement measures with payment schedules that include incentives and penalties. Incentives or penalties are derived from a score that is based on how well the health system, laboratory or physician reports their data. While incentives can start anywhere from 4%, penalties also are assessed by the same measure

What complicates matters are the CMS CY 2018 MPFS and the Quality Payment Program (QPP) Final Rules to revise PAMA and MACRA. The CY 2018 Final Rule, passed on November 2, 2017, aligns the CDS consultation requirements of PAMA with the quality reporting initiatives in MACRA. The CY 2018 Final Rule aligns PAMA and MACRA requiring clinical documentation that demonstrates consultation of Appropriate Use Criteria and cost display for determining payment for extraordinarily high-cost cases (cost outliers) on laboratory and radiology orders. Clinical documentation will be required for every Medicare Part B on the claim that utilizes a standardized unique identifier or Decision Support Number (DSN) beginning in January 2020. If a claim does not contain clinical documentation the claim will not be paid.

Need more information on MACRA and PAMA? Check out one of our other PAMA or MACRA related blogs or view our PAMA Headquarters page.


CMS-1676-F. (2017, November 15). Retrieved August 29, 2018, from Centers for Medicare & Medicaid Services website: PhysicianFeeSched/PFS-Federal-Regulation-Notices-Items/CMS-1676-F.html

Published by XIFIN

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