PAMA laboratory data reporting requirements for hospitals are set to impact Medicare lab payments

Hospitals offering clinical diagnostic laboratory services should take note of imminent reporting obligations that will affect Medicare payment rates.

Reporting of commercial final-paid claim rates as the basis for Medicare rate setting was included in the Protecting Access to Medicare Act of 2014 (PAMA) and initially took place in 2017. Subsequent phases of data reporting were supposed to happen at three-year intervals but were delayed by Congress a half-dozen times, starting with the COVID-19 pandemic.

Now, however, a reporting period is set for May 1 through July 31 to convey payment data for January-June 2025 for almost all lab tests. The resulting Medicare rates will take effect for 2027-2029.

The reporting period has high stakes for lab reimbursement, and it could impose an administrative burden on providers. According to a recently published estimate in the trade journal Laboratory Economics, the reporting requirements apply to roughly 2,600 hospitals.^a

“If you qualify as an applicable laboratory, you have to report your commercial market data and associated volumes for every test on your menu — final paid claims and volumes by every payer for all codes required by CMS,” said Susan Van Meter, president of the American Clinical Lab Association (ACLA).

Volume-weighted median rates from private payers, including Medicare Advantage and Medicaid managed care payments, will determine the Medicare CLFS rates. Before Congress canceled a reporting period that would have affected 2026 rates, roughly 800 of the 2,000 reportable codes were projected to incur a reduction of up to 15%, Van Meter said. (For the next reporting period, set to take place in 2029, PAMA currently includes no cap on the amount by which CLFS payments can be reduced.)

Better representation of hospital-based lab data could mitigate the decrease, she added.

Which hospital laboratories must report under PAMA

Hospital outreach labs billing “non-patients” via Type of Bill (TOB) 14x are expected to report their commercial payment rates if at least 50% of their Medicare revenues come from the Medicare Clinical Laboratory Fee Schedule (CLFS) or the Medicare Physician Fee Schedule (i.e., the “majority of Medicare revenue test”). A hospital outreach lab is a lab that serves patients referred by other providers (i.e., non-patients).

Criteria also include meeting the designated Medicare CLFS revenue threshold of $12,500 for the six-month reporting period.

The technical reason why many hospitals are subject to the reporting requirement is that CMS applies the majority of Medicare revenue test only to revenues billed on TOB 14x. That means virtually all applicable revenue is CLFS-based.

“If you bill Part B under the hospital’s NPI [and] determine applicable laboratory status based on its Medicare revenues from the 14x TOB, you’ll most likely meet the majority of Medicare revenues threshold,” CMS wrote in guidance, referring to the hospital’s National Provider Identifier.

Reporting takes place at the Taxpayer Identification Number (TIN) level, typically meaning the parent hospital or health system would report for all of its labs that meet the criteria.

CMS clarified the criteria following successful litigation brought by the ALCA amid the initial data-reporting period, with the association arguing that regulations implementing PAMA did not live up to the statute because CMS’s guidelines essentially excluded hospital outreach labs. Although the plaintiff prevailed on the merits, statutory constraints precluded retroactive remedies from being applied to the 2018-2020 payment rates.

The 2026 reporting requirement also pertains to independent labs and physician office labs if they bill under a unique NPI and otherwise meet the same criteria that apply to hospital outreach labs.

Financial and industry implications of PAMA reporting noncompliance

For labs that are subject to the reporting mandate, noncompliance can result in penalties of up to $10,000 per day, as noted in an FAQ.

There also could be industrywide consequences if eligible hospital-based labs fail to report, Van Meter said. Widespread absence of data from such labs would depress the rate that gets applied to the CLFS over the next three years.

That dynamic was seen during the 2017 reporting period. Entities that reported were, disproportionately, large commercial laboratories that tend to feature lower payment rates.

The resulting Medicare rates “skewed low,” Van Meter said. CLFS payments dropped by $3.8 billion between 2018 and 2020, according to the ACLA’s estimates.

“Generally speaking, hospital outreach [lab] rates in the commercial market are higher than independent rates,” Van Meter said. “So when there’s a dearth of hospital outreach data reported, you really can see some of those rates come down even more significantly.”

In turn, Van Meter noted, lower Medicare rates can affect a hospital’s commercial rates for lab tests in accordance with common contractual terminology.

The importance of getting started soon

Although the reporting period extends through July, Van Meter advises registering and reporting early to avoid potential technical obstacles or glitches. Hospitals could face a heavy operational lift.

“We’ve been working really closely with CMS, and they’ve gotten the word out to labs to some extent, but we think much more education needs to be done,” Van Meter said. “We’re doing what we can to make sure everyone who is required under the law to report does [so].”

Bipartisan, bicameral legislation would promote easier and more comprehensive and representative lab-data reporting in 2029 and beyond via steps such as use of a nonprofit independent claims database. Rates also would be bolstered by excluding Medicaid managed care rates from reporting requirements, and payment reductions resulting from the reporting could not exceed 5%. Reporting intervals would increase from three years to four.

Footnote

a. “Will Hospital Outreach Labs Report PAMA data?” Laboratory Economics, March 2026.