Since its passage in 2014, the Protecting Access to Medicare Act (PAMA) has had a significant impact on the health care landscape—particularly in how clinical laboratory services are reimbursed under Medicare. While PAMA aimed to modernize the payment system by tying lab test reimbursement rates to market data, the implementation has been fraught with challenges. Now, Congress is revisiting PAMA with bipartisan calls for reform—efforts that could shape the future of diagnostic testing and access to timely care.
What PAMA Was Meant to Do
PAMA was designed to create a more accurate, market-based pricing model for clinical laboratory tests. By collecting private payer rates from a sample of laboratories, the Centers for Medicare & Medicaid Services (CMS) would set Medicare reimbursement rates that better reflect the actual market value of lab services.
However, in practice, the data collection process under PAMA has been criticized for being both incomplete and unrepresentative. Large national labs dominated the data submissions, while many smaller and hospital-based labs—where a significant portion of testing occurs—were left out. As a result, CMS reimbursement rates have plummeted for many essential lab tests, putting smaller labs at financial risk and potentially limiting patient access to critical diagnostics.
Delays in Data Reporting and Reimbursement Cuts: A Legislative Lifeline
Recognizing the problematic rollout of the data collection process, Congress has repeatedly stepped in to delay upcoming data reporting requirements and postpone associated reimbursement cuts. These legislative delays have provided temporary relief to the clinical laboratory community and bought time to pursue more permanent reforms.
Originally, PAMA required applicable laboratories to report private payer data every three years, with each reporting period leading to updated—and often lower—payment rates. However, the COVID-19 pandemic and growing bipartisan concerns over the fairness of the system led Congress to pass several delays, including:
- Coronavirus Aid, Relief, and Economic Security (CARES) Act (2020) – Delayed the reporting period and postponed cuts.
- Consolidated Appropriations Act (2022) – Further delayed cuts scheduled for 2023 and pushed back the next reporting cycle to 2024.
Most recently, additional delays passed in late 2023 have suspended further reductions and postponed the next data collection deadline, which was expected to trigger another round of cuts. Without these interventions, laboratories could have seen reimbursement slashed by up to 15% for hundreds of common diagnostic tests—at a time when the healthcare system is still recovering from pandemic-related disruptions.
These legislative pauses have prevented a downward spiral of access and affordability. However, they are stop-gap measures. According to the American Laboratory Association (ACLA), long-term stability in lab reimbursement requires structural changes to the PAMA framework, not just short-term legislative patches.
Congressional Reform Efforts
A top priority for ACLA is comprehensive change to PAMA through enactment of the Saving Access to Laboratory Services Act (SALSA) which aims to:
- Establish a more statistically valid and representative approach to data collection.
- Protect labs from steep year-over-year reimbursement cuts.
- Ensure better oversight and transparency in how rates are determined.
Bipartisan, bicameral support for SALSA highlights a shared understanding that accurate diagnostics are foundational to effective treatment and patient care. However, likely cost to the federal government associated with enactment of comprehensive reform has been a barrier to passage. Whereas, yearly short term legislative delays in data reporting and reimbursement cuts have resulted in budget savings. In fact. Congress has stepped in six times to delay the data reporting period and five times to delay further cuts.
Looking Ahead
As Congress deliberates reforms to PAMA, cost will continue to be a driving factor determining further action. Without action, clinical labs will again face reimbursement cuts of up to 15% on January 1, 2026. While enactment of comprehensive reform to PAMA will continue to be a top priority for ACLA and the clinical lab industry, given legislative history and congressional pressure to limit congressional outlays, Congress is again most likely to pass another short term patch to prevent the impending cuts.