The Senate Health Committee will hold a hearing on the impact and continued existence of Medi-Cal Provider Enrollment moratoriums for several provider types including clinical laboratories. A bill last year attempted to reform the current restrictions on clinical labs that have prohibited some new labs doing genetic testing from being able to enroll in the program.

The CSP has been able to convince DHCS to include a number of pathology related exemptions to the moratorium but still has concerns with some aspects. Of particular concern is the prohibition on any lab that enrolls after 2001 from being able to add new types of testing to their provider billing capability. For example, if a lab enrolled in 2003 and did not perform cytology procedures at the time of enrollment they would never be able to add those services and bill the Medi-Cal program.

The CSP will testify at the informational hearing and urge that the moratorium be altered to address the issue described above and other concerns. We expect that legislation will be introduced this year as a result of this hearing.

We have previously informed you of the last minute budget reform in 2012 that called for DHCS to collect payment data from clinical labs and create a new rate methodology. It required a 10% rate reduction in 2012 while DHCS engaged stakeholders, like the CSP, on developing a data collection model that required labs to report their five largest payers payment data for some 380 procedures and the lowest payment amounts. The stakeholder discussions extended intermittently over several years and were productive in narrowing the data submission, i.e. only global payments, lab had to receive at least $100,00 per year in Medi-Cal payments etc.

There had been no response from DHCS on the status of the new rate methodology after labs submitted data in 2013 that represented payments received in 2011. In early December 2014 stakeholders were invited to attend a meeting where the new methodology was unveiled. The CSP and other members of the lab community were dismayed that DHCS announced a number of surprises. First they indicated that after they compute the weighted average of the lowest payments for each procedure they intend to reduce those payment levels by an additional 10% and make that 10% reduction retroactive to 2012. All the stakeholders had assumed that the 10% reduction implemented in 2012 would go away once the new rates were established and certainly not that an additional 10% would be taken. Secondly in the computation of the weighted average lowest payment amount they excluded any lab submitted payments that exceeded 80% of the Medicare payment amount. They claimed those payments were "outliers" since Medi-Cal policy does not allow them to pay more that 80% of Medicare. We argued that those amounts have to be included to determine the average lowest payment amounts.