prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: Medicare pays for laboratory tests that are performed individually or in a group  For individual tests, laboratories submit claims to Medicare for each test they perform that is on the CLFS; tests are identified using a billing code  Prior to the implementation of PAMA in 2018, the payment rates on the CLFS were based on rates charged for laboratory tests in 1984 through 1985 adjusted for inflation  Additionally, 57 geographic jurisdictions had their own fee schedules for laboratory tests  CMS used the 57 separate fee schedules to calculate a national limitation amount, which served as the maximum payment for individual laboratory tests  Thus, the payment rate for an individual test was the lesser of the amount claimed by the laboratory, the local fee for a geographic area, or the national limitation amount for a particular test  Medicare pays bundled payment rates for certain laboratory tests that are performed as a group, called panel tests  Panel tests can be divided into two categories—those without billing codes and those with billing codes  Panel tests without billing codes are composed of at least 2 of 23 distinct component tests  Additionally, there are 7 specific combinations of these 23 component tests that are commonly used and have their own billing code  Prior to 2018, Medicare paid for both types of panel tests (those without or with a billing code) using a bundled rate based on the number of tests performed, with modest payment increases for each additional test conducted  For example, in 2017, Medicare paid $7 15 for panel tests with two component tests and $9 12 for panel tests with 3 component tests, with a maximum bundled payment rate of $16 64 for all 23 component tests  Prior to 2018, the Medicare Administrative Contractors would count the number of tests performed before determining the appropriate bundled payment rate  For those panel tests with a billing code, the payment rate was the same if laboratories used the associated billing code for the panel test or listed each of the component tests separately  After PAMA’s implementation in 2018, the 57 separate fee schedules for individual laboratory tests were replaced with a single national fee schedule  The payment rates for this single national fee schedule were based on private-payer rates for laboratory tests paid from January 1, 2016 through June 30, 2016  Specifically, the payment rate for an individual test was generally based on the median private-payer rates for a given test, weighted by test volume  Payment for panel tests also changed in 2018  For panel tests without billing codes, Medicare Administrative Contractors no longer counted the number of component tests performed to determine the bundled payment rate; instead, Medicare paid the separate rate for each component test in the panel  For panel tests with a billing code, the payment rate depended on how the laboratory submitted the claim  If a laboratory used the billing code associated with the panel test, Medicare paid the bundled payment rate for that billing code  If a laboratory submitted a claim for the panel test, but listed each of the component tests separately instead of using the panel test’s billing code, Medicare paid the individual payment rate for each component test  Table 1 below summarizes the changes to payment rates before and after 2018  Multiple types of laboratories receive payment under Medicare  The three laboratory types that received the most revenue from the CLFS in 2016 were independent laboratories, hospital-outreach laboratories, and physician-office laboratories  (See table 2 ) Estimates of the size of the total U S  laboratory market vary  For example, the Healthcare Fraud Prevention Partnership estimated that the laboratory industry received $87 billion in revenue in 2017, while another market report estimated the laboratory industry received $75 billion in revenue in 2016  Similar to Medicare, the three laboratory types that generally receive the most revenue overall are independent laboratories, hospital-outreach laboratories, and physician-office laboratories, when laboratory tests performed in hospital inpatient and outpatient settings were excluded  Estimates of revenue received by these laboratories also vary  For example, in recent years, estimates of the share of laboratory industry revenue generated by independent laboratories ranged from 37 percent to 54 percent  Additionally, estimates of revenue generated by hospital- outreach laboratories recently ranged from 21 to 35 percent, and physician-office laboratories ranged from 4 to 11 percent of total laboratory industry revenue  Private-payer rates for laboratory tests conducted by the three largest laboratory types generally vary by type and other characteristics, according to market reports and the laboratory industry officials we interviewed  Independent laboratories  These laboratories generally receive lower private-payer rates than other types of laboratories, according to industry officials we interviewed  Market reports we reviewed noted that about half of the independent laboratory market is dominated by two national laboratories and that these national laboratories provide more competitive pricing by performing a large volume of tests at one time  Medicare accounted for a smaller proportion of the revenue earned by these two national laboratories (12 percent), compared to other laboratories, according to another market report we reviewed  In contrast, a different market report noted that smaller, independent laboratories tend to earn more of their revenue from Medicare (34 percent)  Hospital-outreach laboratories  These hospital-affiliated laboratories typically receive relatively higher private-payer rates, according to industry officials we interviewed  Although hospital- outreach laboratories perform tests similar to other laboratories, they can obtain above-average payment rates by leveraging the market power of their affiliated hospital when negotiating rates with private payers, according to industry officials and market reports  Hospital-outreach laboratories generally receive about 25 to 30 percent of their revenue from the Medicare CLFS  Physician-office laboratories  Physician-office laboratories typically receive higher private-payer rates than independent laboratories, according to a recent analysis by a laboratory industry association  This industry association also noted that the cost structure to operate in a setting such as a physician-office laboratory is different than in large independent laboratories, as the physician-office laboratory is unable to conduct a large number of tests at one time  Officials from another industry association we interviewed said that payment rates for these laboratories are generally dependent on the size of the physician practice group  These same officials told us that larger physician groups (e g , 10 or more physicians) typically negotiate higher rates from private payers than smaller physician groups  Most physician-office laboratories received less than $25,000 in revenue per year from Medicare, according to CMS  Additionally, in 2013, the Department of Health and Human Services Office of Inspector General found that Medicare’s payment rates on the CLFS were higher than rates paid by some private health insurance plans  Specifically, it found that Medicare rates for laboratory tests were 18 percent to 30 percent higher than rates paid by certain insurers under health benefits plans for federal employees  Definition of Applicable Laboratories Required to Report Private-Payer Data to CMS CMS defined applicable laboratories as those meeting four criteria: (1) they met the definition of laboratory under regulations implementing the Clinical Laboratory Improvement Amendments of 1988; (2) they billed Medicare Part B under their own Medicare billing number, also called the national provider identifier; (3) more than 50 percent of their total Medicare revenues came from the Clinical Laboratory Fee Schedule (CLFS) and/or the Physician Fee Schedule; and (4) they received at least $12,500 in Medicare revenue from the CLFS from January 1, 2016, through June 30, 2016  CMS analyzed private-payer data it collected from about 2,000 laboratories to develop new payment rates for individual laboratory tests on the CLFS  PAMA defined laboratories required to report private-payer data, called applicable laboratories, as laboratories that meet certain criteria  (See sidebar ) Applicable laboratories with their own specific billing number, the NPI, submitted these data to CMS  If one organization operated multiple applicable laboratories, each with its own NPI, then the organization could report data to CMS for multiple applicable laboratories  CMS collected data from applicable laboratories on payments they received from private payers during the first half of 2016  Specifically, CMS collected data on (1) the unique billing code associated with a laboratory test; (2) the private-payer rate for each laboratory test for which final payment was made during the data collection period (January 1, 2016, through June 30, 2016); and (3) the volume of tests performed for each unique billing code at that private- payer rate  For the data CMS collected between January 1, 2017, and May 30, 2017, CMS relied on the entities reporting to CMS to attest to the completeness and accuracy of the data they submitted  CMS relied on each laboratory to identify whether or not it was an applicable laboratory and took steps to assist laboratories in meeting reporting requirements  According to CMS officials, they relied on laboratories to self-identify as applicable laboratories because they were unable to accurately identify the number of laboratories required to report  To assist laboratories, CMS issued multiple guidance documents to the industry outlining the criteria for being an applicable laboratory and describing the type of data CMS intended to collect  CMS also conducted educational calls when the proposed and final rules were issued and prior to the data collection period  CMS officials told us they conducted additional outreach activities, including holding conference calls with national laboratory associations and attending professional conferences  Officials said they used these outreach activities in addition to the guidance issued to inform laboratories of the reporting requirements for applicable laboratories, for example  In addition, CMS established a revenue threshold of $12,500 in an effort to reduce the reporting burden for entities that receive a relatively small amount of revenues under the CLFS  In its final rule, CMS noted that it expected that many of the laboratories that would be below this revenue threshold and, thus exempt from reporting data to CMS, would be physician-office laboratories  CMS also chose to use the NPI in its definition of applicable laboratory in the final rule to allow hospital- outreach laboratories that use their own NPI to submit data to the agency  In its proposed rule, CMS suggested using an alternative identification number to the NPI  However, according to the final rule, CMS chose to use the NPI in its definition of applicable laboratory to allow those hospital-outreach laboratories billing using their own NPI to submit private-payer data to the agency  According to CMS, at the end of the 5-month submission period, the agency had received data from approximately 2,000 applicable laboratories, representing a volume of almost 248 million laboratory tests; these data accounted for about $31 billion in revenue from private payers  CMS reported that the data it collected included private-payer rates for 96 percent of the 1,347 eligible billing codes on the CLFS  CMS used these data to calculate a median, private-payer rate, weighted by volume and phased in this change by limiting payment-rate reductions to 10 percent per year  Beginning in 2018, these new payment rates served as the single, national payment rate for individual laboratory tests  These payment rates were also used for the individual, component tests that make up panel tests and were used when laboratories billed Medicare for panel tests by listing the component tests separately  In general, the median payments rates, weighted for volume, that CMS calculated were lower than Medicare’s previous payment rates for most laboratory tests  According to our analysis, these median payment rates were lower than the corresponding 2017 CLFS national limitation amounts (the maximum that CMS would pay for laboratory tests) for approximately 88 percent of tests  Figure 1 below describes the percentage difference between these median payment rates and Medicare’s 2017 national limitation amounts for laboratory tests  The final payment rates that CMS calculated, which included the 10- percent, phased in, payment-rate reductions, will remain in effect until December 31, 2020; PAMA requires CMS to calculate new payment rates for the CLFS every 3 years  Reporting entities will next be required to submit data on private-payer rates to CMS in early 2020, for final payments made from January 1, 2019 through June 30, 2019  PAMA capped any reductions for the second 3-year cycle after implementation to a maximum of 15 percent per year  CMS did not collect private-payer data from all laboratories required to report this information and did not estimate how much data was not reported by these laboratories, according to agency officials  CMS relied on laboratories to determine whether they met data reporting requirements and submit data accordingly  CMS emphasized the importance of receiving data from all laboratories required to report by stating that it is critical that CMS collect complete data on private-payer rates in order to set accurate Medicare rates  However, agency officials told us that CMS did not receive data from all laboratories required to report  They also told us that CMS did not have the information available to estimate how much data was missing because not all laboratories reported or the extent to which the data collected were representative of all of the data that laboratories were required to report  Prior to collecting private-payer data, CMS estimated that laboratories subject to reporting requirements would receive more than 90 percent of CLFS expenditures to physician-office laboratories and independent laboratories  Specifically, based on its analysis of 2013 Medicare expenditures, CMS estimated that reporting requirements would apply to the laboratories that received 92 percent of CLFS payments to physician- office laboratories and 99 percent of CLFS payments to independent laboratories  After laboratories reported private-payer data, we analyzed the share of CLFS expenditures received by the laboratories that reported  Our analysis found that CMS collected data from laboratories that received the majority of CLFS payments to physician-office, independent, and other non-hospital laboratories in 2016  However, the laboratories that reported private-payer data received less than 70 percent of CLFS expenditures to physician-office, independent, and other non-hospital laboratories  Specifically, using Medicare claims data, we calculated that CMS collected data from laboratories that received 68 percent of 2016 CLFS payments to physician-office, independent, and other non-hospital laboratories  Although it did not collect complete data, CMS concluded that it collected sufficient private-payer data to set Medicare payment rates and that collecting more data from additional laboratories that were required to report would not significantly affect Medicare expenditures  This conclusion was based, in part, on a sensitivity analyses that CMS conducted of the effects that collecting certain types and amounts of additional data would have on weighted median private-payer rates and the effects those rates could have on Medicare payment rates and, thus, expenditures  Results from these analyses showed that Medicare expenditures based on the CLFS would have changed by 2 percent or less after collecting more data from the various types of laboratories  For example, CMS estimated that doubling the amount of private-payer data from physician-office laboratories would increase expenditures by 2 percent and collecting ten times as much data from hospital outreach laboratories would increase expenditures by 1 percent  (See fig  2 ) PAMA’s 10-percent limit on annual payment-rate reductions likely reduced the effect that incomplete private-payer data could have on the CLFS because this limit applied to most Medicare payment rates for laboratory tests  As demonstrated in figure 1, while 59 percent of tests had median private-payer rates that were at least 30 percent less than their respective 2017 national limitation amounts, CMS published Medicare rates for these tests for 2018 through 2020 that were reduced by only 10 percent per year as a result of this limit  For example, a hypothetical laboratory test with a 2017 CLFS national limitation amount of $10 00 and a median private-payer rate of $7 00 would result in CLFS rates of $9 00 in 2018, $8 10 in 2019, and $7 29 in 2020  Changes to median private-payer rates due to collecting more complete data or eliminating inaccurate data would have no effect on Medicare payment rates from 2018 through 2020 for this hypothetical test if they resulted in new median rates of $7 29 or less  Our analysis of the potential effects that collecting data from additional laboratories could have had on Medicare payment rates and expenditures found that the effect of CMS not collecting complete data would likely have been greater absent PAMA’s limits on annual reductions to Medicare payment rates  As a result, CMS may face challenges setting accurate Medicare rates if it does not collect complete data from all laboratories required to report in the future when PAMA allows for greater annual payment-rate reductions  To conduct this analysis, we used the private-payer data CMS collected to analyze the range of effects that collecting additional data could have on Medicare expenditures, assuming 2016 utilization rates remain constant  The extent of these effects depends on the amount of additional data CMS would need to collect to obtain complete data and whether the payment rates in these additional data would have been greater or less than the medians of the rates reported  For example, we estimated that if CMS needed to collect 20 percent more data for its collection to be complete, doing so could increase Medicare CLFS expenditures from 2018 through 2020 by as much as 3 percent or reduce them by as much as 3 percent depending on the payment rates in these additional data  However, if annual limits to Medicare payment-rate reductions were not applied, collecting these additional data could increase CLFS expenditures by as much as 9 percent or reduce them by as much as 9 percent  (See fig  3 and app  II for additional information about these estimates ) As demonstrated in figure 2, CMS did analyze how collecting certain types and amounts of data from additional laboratories would affect Medicare expenditures  However, without valid estimates of how much more data these additional laboratories were required to report and how much these data would change median payment rates, it remains unknown whether CMS’s analyses estimate the actual risk of setting Medicare payment rates that do not reflect private-payer rates from all applicable laboratories, as mandated by PAMA  CMS could have compared the data it collected with independent information on the payment rates laboratories were required to report, for example  The independent information could be estimated by auditing a random sample of laboratories or could be estimated using data from third-party vendors, if these vendors could supply relevant and reliable information  We found that CMS mitigated challenges to setting accurate Medicare payment rates by identifying, analyzing, and responding to potentially inaccurate private-payer data  CMS addressed potentially inaccurate private-payer data and other data that CMS determined did not meet reporting requirements  CMS removed or replaced data from four reporting entities that appeared to have or confirmed having reported revenue—which is the payment rate multiplied by the volume of tests paid at that rate—instead of payment rates  We estimated that if CMS had included these data that CLFS expenditures from 2018 through 2020 would have increased by 7 percent  CMS removed data it determined were reported in error including duplicate submissions and submissions with payment rates of $0 00  We estimated that removing these data will change CLFS expenditures from 2018 through 2020 by less than one percent  CMS identified four other types of potentially inaccurate data that it determined would not significantly impact Medicare payment rates or expenditures and did not exclude them from calculations of median private-payer rates  CMS considered the following potentially inaccurate data to have met its reporting requirements: 1  data from 57 entities that reported particularly high rates in at least 60 percent of their data, 2  data from 12 entities that reported particularly low rates in at least 50 percent of their data, 3  data with payment rates that were 10 times greater than the 2017 national limitation amounts or 10 times less than these amounts, and 4  data from laboratories that may not have met the $12,500 low- expenditure threshold or that reported data from a hospital NPI instead of a laboratory NPI
Report 2:  According to officials from the 11 stakeholder organizations we interviewed—which represent authorized collectors and long-term care facilities—several factors may explain why relatively few pharmacies and other eligible entities have chosen to become authorized collectors of unused prescription drugs  These factors include the associated costs of participating, uncertainty over proper implementation, and participation in other, similar efforts for disposing of unused prescription drugs  Costs: Stakeholders said that the costs associated with purchasing, installing, and managing the disposal bins is a factor that explains the relatively low rate of participation  One stakeholder told us that many eligible entities may decide that the benefit of participating does not outweigh the costs associated with doing so  Specifically, stakeholders told us that the major costs associated with participating include the one-time cost of purchasing and installing a disposal bin; the ongoing costs to train personnel to manage the bins; and the cost of contracting with a reverse distributor to periodically dispose of the bin’s inner liner and contents  Stakeholders gave varying examples of the specific costs associated with these investments  For example, one stakeholder estimated the yearly costs of maintaining a disposal bin ranged from $500 to $600 per location; another stakeholder said that the cost is thousands of dollars per location per year, but did not provide a specific estimate  These stakeholders added that costs can increase if the disposal bins fill more quickly and need to be emptied more often than expected  For their part, officials from the reverse distributor stakeholders we interviewed cited incinerating hazardous waste, the availability of incinerators, and the cost of personnel as factors that increase the cost of their services for authorized collectors  One reverse distributor stakeholder told us that there are not many incinerators available, requiring them to travel long distances to incinerate collected waste  The other reverse distributor stakeholder added that DEA’s requirement that a second employee be present during the transportation and disposal increases the cost of their services  While some stakeholders speculated that costs are a reason for low participation, a few stakeholders told us that the benefits are worth the costs  In fact, two stakeholders we spoke with told us that the benefit to the communities was so important that they decided to provide funding to retail pharmacies, alleviating an individual pharmacy’s concern about the cost of installing and maintaining the disposal bins  We found that as of April 2017, over a quarter of the 2,233 authorized collectors using disposal bins received external funding to pay for the costs associated with installing and maintaining the disposal bins  In addition, stakeholders told us that some localities have enacted laws known as extended producer responsibility ordinances, which require that pharmaceutical manufacturers pay for certain costs associated with drug disposal  When asked about the costs associated with operating disposal bins, DEA officials told us that addressing cost issues with eligible participants falls outside of their responsibilities  Uncertainty: Stakeholders also told us that uncertainty regarding how to comply with aspects of DEA’s regulations for prescription drug disposal bins affected their decisions to participate  One stakeholder added that many eligible entities decide not to participate because uncertainties over participation requirements could result in inadvertent non-compliance with DEA’s regulations  As an example of their uncertainty over some of the requirements governing the disposal bins, officials from both of the reverse distributor stakeholders we interviewed cited DEA’s non-retrievable standard for destruction of the inner liners of the bins  DEA requires that the method of destruction be sufficient to render all controlled substances non- retrievable, meaning that the physical and chemical conditions of the controlled substances must be permanently altered and unusable in order to prevent diversion for illicit purposes  Both reverse distributor stakeholders told us that they are uncertain about whether certain disposal methods meet this standard, and they said that the agency has not provided further guidance on how reverse distributors can meet this requirement  DEA officials told us that the agency responds to questions about whether a specific method of destruction meets the non-retrievable standard by telling the registrant to test the remnants after destruction, to see if any components of the controlled substance are still present  In its summary of the regulations implementing the Disposal Act, DEA stated that in order to allow for the development of various methods of destruction, the agency did not require a specific method of destruction as long as the desired result is achieved  However, DEA officials stated that to their knowledge, incineration is the only method known to meet the non-retrievable standard to date, but the officials hoped other methods will be developed in the future  When asked about the guidance they provide to authorized collectors of unused prescription drugs or those eligible to become authorized collectors, DEA officials told us that they post frequently-asked questions on their website, routinely answer questions from participants and others, and give training presentations at conferences that include information on the disposal bins  In our prior work, we found problems with DEA’s communication and guidance to stakeholders  In 2015, we recommended that DEA identify and implement cost-effective means for communicating regularly with pharmacies and other entities authorized to handle controlled substances  DEA agreed with the recommendation, and officials told us that, starting in August 2017, these entities can subscribe to DEA’s website to receive notifications when it is updated with new guidance  Stakeholders also noted that some DEA requirements related to disposal bins may conflict with other state and federal requirements governing the transportation and disposal of hazardous waste, which includes some controlled substances  For example, the two reverse distributor stakeholders told us that some incinerator permits issued by states require that hazardous waste be examined before incineration; however, DEA requirements do not allow the contents of the liners to be examined, even at the time of incineration  To address the incinerator permit requirements, one reverse distributor told us that they use the Environmental Protection Agency’s hazardous waste household exemption, which treats the liners as household waste and thereby allows incinerator facilities to destroy the liners without examining the contents or violating their state permit  In addition, some stakeholders raised concerns that DEA’s regulations may conflict with other federal regulations  For instance, one stakeholder noted that they recently learned that transporting the disposal bin’s inner liners could violate Department of Transportation regulations  DEA officials told us that they were aware of this, explaining that the conflict was between DEA’s requirement that controlled substances be transported in liners and the Department of Transportation’s requirement that this type of waste be transported in sturdy containers  According to DEA officials, this conflict has been resolved by the Department of Transportation allowing reverse distributors to place the liners inside sturdy containers kept on trucks  Participation in or Availability of Similar Efforts: Stakeholders said that some pharmacies and other eligible entities were already participating in other, similar efforts that allow for the safe disposal of controlled substances, and therefore they did not want to invest additional resources into participating as authorized collectors using disposal bins  For example, the Centers for Medicare & Medicaid Services has an established process that long-term care facilities use to dispose of their unused controlled substances  As a result, all of the long-term care stakeholders told us that long-term care facilities may choose not to partner with pharmacies interested in placing disposal bins within their facilities because it adds significant cost and effort without any additional benefit  Furthermore, pharmacy stakeholders noted that because of the availability of other prescription drug collection efforts in their communities, they did not think that maintaining a disposal bin at their locations was needed  For example, two of the stakeholders explained that local law enforcement precincts already had a similar type of disposal bin in place to collect unused prescription drugs  DEA officials told us that they were aware of other options for the public and entities such as long-term care facilities that are not registered as authorized collectors to dispose of controlled substances  The officials also indicated that the availability of disposal options at law enforcement agencies contributes to the low participation rates among pharmacies as authorized collectors of unused prescription drugs  We provided a draft of this report to the Department of Justice for comment  DEA, part of the Department of Justice, provided technical comments, which we incorporated as appropriate  As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies to the Attorney General of the United States and the Administrator of DEA  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-7114 or draperd@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix II  In addition to the contact name above, Elizabeth H  Curda (Director), Will Simerl (Assistant Director), Kathryn Richter (Analyst-In-Charge), Nick Bartine, Giselle Hicks, Jessica Lin, and Emily Wilson made key contributions to this report  Also contributing were Muriel Brown and Krister Friday 

ground_truth: The Land and Water Conservation Fund (LWCF) Act of 1965 (P.L. 88-578) created the LWCF in the Treasury as a funding source to implement the outdoor recreation goals set out by the act. The LWCF Act authorizes the fund to receive $900 million annually, with the monies available only if appropriated by Congress (i.e., discretionary appropriations). The fund also receives mandatory appropriations under the Gulf of Mexico Energy Security Act of 2006 (GOMESA). The level of annual appropriations for the LWCF has varied since the origin of the fund in FY1965. The LWCF Act outlines uses of the fund for federal and state purposes. Of the total made available through appropriations or deposits under GOMESA, not less than 40% is to be used for "federal purposes" and not less than 40% is to be used to provide "financial assistance to states." The act lists the federal purposes for which the President is to allot LWCF funds "unless otherwise allotted in the appropriation Act making them available." These purposes primarily relate to acquisition of lands and waters (and interests therein) by the federal government. With regard to state purposes, the act authorizes a matching grant program to states for outdoor recreation purposes. Throughout the LWCF's history, appropriations acts typically have provided funds for land acquisition and outdoor recreational grants to states. Beginning in FY1998, appropriations also have been provided each year (except FY1999) to fund other purposes related to natural resources. The extent to which the LWCF should be used for purposes other than federal land acquisition and outdoor recreation grants to states, and which other purposes should be funded from the LWCF, continue to be the subject of legislation and debate in Congress. In the past few decades, Presidents have sought LWCF funds for a variety of other purposes. Congress chooses which if any of these requests to fund, and has chosen programs not sought by the President for a particular year. Among other programs, appropriations have been provided for facility maintenance of the land management agencies, ecosystem restoration, the Historic Preservation Fund, the Payments in Lieu of Taxes program, the Forest Legacy Program, State and Tribal Wildlife Grants (under the Fish and Wildlife Service), the Cooperative Endangered Species Conservation Fund, U.S. Geological Survey science and cooperative programs, and Bureau of Indian Affairs Indian Land and Water Claim Settlements. Since FY1998, a total of $2.7 billion has been appropriated for other purposes, of a total LWCF appropriation of $18.9 billion over the history of the fund. The Fish and Wildlife Service and the Forest Service have received the largest shares of the total appropriations for other purposes, about $1.4 billion (53%) and $1.0.billion (38%), respectively, from FY1998 to FY2019. Several agencies shared the remaining $0.2 billion (9%) of the appropriations. Both the dollar amounts and the percentages of annual LWCF appropriations for other purposes have varied widely since FY1998. The dollar amounts have ranged from $0 in FY1999 to $456.0 million in FY2001. The percentage of annual funds provided for other purposes ranged from 0% in FY1999 to a high of 59% in both FY2006 and FY2007. In some years, the appropriation for other purposes was significantly less than the Administration requested. For instance, for FY2008, the George W. Bush Administration sought $313.1 million; the appropriation was $101.3 million. The appropriation for other purposes last exceeded $100.0 million in FY2010, and most recently was $93.3 million, in FY2019. Prior to FY2008, several other purposes typically were funded each year from LWCF. Since FY2008, funds have been appropriated annually only for grants under two programs: Forest Legacy and Cooperative Endangered Species Conservation Fund. These two programs and a third grant program—State and Tribal Wildlife Grants—have received more than three-quarters ($2.1 billion, 79%) of the total appropriation for other purposes since FY1998.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: The Land and Water Conservation Fund (LWCF) Act of 1965 was enacted to "assist in preserving, developing, and assuring accessibility to     outdoor recreation resources " Two main goals of the law were to facilitate participation in recreation and "to strengthen the health and vitality" of U S  citizens  To accomplish these goals, purposes of the law included "providing funds" for federal land acquisition and for federal assistance to states generally related to outdoor recreation  The fund is authorized to receive $900 million in revenues annually under the LWCF Act  Each year the fund accrues revenues at this level  The fund accumulates the majority of its revenues from oil and gas leases on the Outer Continental Shelf (OCS)  It also accumulates revenues from the federal motorboat fuel tax and surplus property sales  However, revenues that accrue under the LWCF Act are available only if appropriated by Congress through the discretionary appropriations process  The LWCF receives additional revenue (beyond the $900 million) from OCS leasing under the Gulf of Mexico Energy Security Act of 2006 (GOMESA)  Unlike revenues under the LWCF Act, GOMESA revenues are mandatory appropriations (and thus are not subject to annual appropriation by Congress)  They can be used only for grants to states for outdoor recreation purposes  The overall level of annual appropriations (discretionary and mandatory combined) has varied widely since the fund's origin in FY1965  Of the total revenues that have accrued throughout the program's history ($40 9 billion), less than half have been appropriated ($18 9 billion) through FY2019  Thus, the unappropriated balance in the fund is estimated at $22 0 billion through FY2019  The LWCF Act outlines uses of the fund for federal and state purposes  It states that of the total made available to the fund, not less than 40% is to be used for "federal purposes" and not less than 40% is to be used to provide "financial assistance to states " The act lists the federal purposes for which the President is to allot LWCF funds "unless otherwise allotted in the appropriation Act making them available " These purposes primarily relate to the acquisition of lands and waters (and interests therein) by the federal government  With regard to state purposes, the act authorizes a matching grant program to states for outdoor recreation purposes  In practice, over the history of the LWCF, appropriations acts have provided funding for three general purposes  First, for each year since FY1965, appropriations for land acquisition have been provided to some or all of the major federal land management agencies—the Bureau of Land Management (BLM), Fish and Wildlife Service (FWS), National Park Service (NPS), and Forest Service (FS)  Second, for nearly every year since FY1965, appropriations have funded the outdoor recreation matching grant program, to assist states in recreational planning, acquiring recreational lands and waters, and developing outdoor recreational facilities  Third, beginning in FY1998, appropriations from the LWCF have been provided each year, except FY1999, to fund other federal programs with related natural resource purposes  Hereinafter, the third type of appropriations is referred to as funding other purposes   The $18 9 billion appropriated from the fund through FY2019 has been allocated in different proportions among federal land acquisition, the state grant program, and other purposes  The largest portion of the total—$11 4 billion—has been appropriated for federal land acquisition  The state grant program has received the second-largest portion, $4 8 billion  Other purposes have received the remaining $2 7 billion  Appendix A shows the total LWCF appropriation for other purposes  Congress continues to consider the extent to which the LWCF should fund purposes other than federal land acquisition and outdoor recreation grants to states  Some traditional LWCF advocates and beneficiaries have expressed concern about expanding the use of the funds, particularly if such expansion results in lower appropriations for land acquisition and outdoor recreation grants to states  Some Members of Congress, Presidents, and stakeholders have supported funding other purposes in order to draw on the balance in the fund for policy priorities, to shift the focus of the fund from land acquisition, or to achieve other goals  A number of measures introduced in recent Congresses sought to authorize funding from the LWCF for various other purposes  These measures were not enacted  They included proposals to specify an amount or percentage of funding for two programs that are currently funded by the LWCF—the Forest Legacy Program and Cooperative Endangered Species Conservation grants—although the LWCF Act does not specifically authorize this funding  Other proposals sought to authorize programs or activities that have not been funded by LWCF in the past, or that have been rarely funded by LWCF in the past  For instance, one 115 th Congress bill would have authorized LWCF funding for certain programs and activities of the major land management agencies, including deferred maintenance, critical infrastructure, visitor services, and clean-up efforts; the Payments in Lieu of Taxes Program; and certain offshore energy exploration, innovation, and education activities  As another example, one 115 th Congress bill proposed to authorize LWCF funding for financial assistance from the Secretary of Housing and Urban Development for park and recreation infrastructure projects  The balance of this report discusses the other purposes for which LWCF appropriations have been provided throughout the fund's history  It identifies the amount of funding contained in annual appropriations laws for other purposes and the types of purposes for which funds have been appropriated  A total of $72 0 million was appropriated from the LWCF for other purposes in FY1998, the first year in which LWCF was used to fund other purposes  The total included $60 0 million for maintenance needs of the four land management agencies and $12 0 million for rehabilitation and maintenance of the Beartooth Highway (in Wyoming and Montana)  In FY1998, total LWCF appropriations had spiked to approximately $969 million from the FY1997 level of about $159 million  Both the dollar amounts and the percentages of annual LWCF appropriations for other purposes have varied widely since FY1998  (See Appendix B  ) Over the most recent 10 years, LWCF appropriations for other purposes fluctuated, declining overall from $132 5 million in FY2010 to $93 3 million in FY2019 (in current dollars)  However, the FY2019 level was the highest appropriation since FY2010  Beginning in FY2011, appropriations for other purposes in each year have been less than $100 million, as was the case for FY1998-FY2000  Appropriations for other purposes were at their lowest dollar amount in FY1999, when no funds for other purposes were appropriated  The next-lowest dollar value was provided for FY2000, when a total of $20 0 million was appropriated for three purposes: Elwha River Ecosystem restoration (in Washington), deferred maintenance of the NPS, and the FS Forest Legacy program  By contrast, from FY2001 to FY2010, appropriations for other purposes exceeded $100 million in each year  In fact, during four of these years (FY2004-FY2007), the annual appropriation was between $200 million and $225 million  The appropriation surpassed $400 million in another year during the period  Specifically, the $456 0 million appropriation in FY2001 was more than double the amount provided for other purposes in any other year  These appropriations were used to fund more than a dozen programs in the Clinton Administration's Lands Legacy Initiative  In that year, total LWCF appropriations exceeded the annual authorization level, totaling nearly $1 billion  This record level of funding was provided partly in response to President Clinton's Lands Legacy Initiative, which sought $1 4 billion for about two dozen resource-protection programs, including the LWCF  It also was provided partly in response to some congressional interest in securing increased and more certain funding for the LWCF  The highest percentage of annual funds provided for other purposes occurred in FY2006 and FY2007 (59% in both years), in response to President George W  Bush's request for funding for an array of programs  For instance, in FY2007 the Bush Administration sought funding from the LWCF for 15 programs in addition to land acquisition and state grants  For that year, the appropriation for five other purposes was $216 1 million, out of a total LWCF appropriation of $366 1 million  In some years, the appropriation for other purposes was significantly less than the Administration requested  For example, for FY2008 the Bush Administration sought $313 1 million for other purposes, or 83% of the total request of $378 7 million  The FY2008 appropriation for other purposes was $101 3 million, or 40% of the LWCF total of $255 1 million  The $2 7 billion appropriated from the LWCF from FY1998 to FY2019 for other purposes represents 27% of the $10 0 billion total appropriations from LWCF during the period  FWS and FS have received the largest shares of the appropriations for other purposes, about $1 4 billion (53%) and $1 0 billion (38%), respectively  BLM, NPS, the U S  Geological Survey, and the Bureau of Indian Affairs have shared the remaining $0 2 billion (9%) of the appropriations for other purposes  (See Figure 1  ) Because there is no set of other purposes specified in the LWCF Act to be funded from the LWCF, presidents have sought funds for a variety of purposes  Congress has chosen which of these requests to fund from the LWCF, and whether to fund any additional programs from the LWCF not suggested by the President  Appropriations for other purposes have been provided for more than a dozen diverse natural resource-related programs, including facility maintenance of the land management agencies, ecosystem restoration, the Historic Preservation Fund, the Payments in Lieu of Taxes program, the FS Forest Legacy program, FWS State and Tribal Wildlife Grants, the FWS Cooperative Endangered Species Conservation Fund, U S  Geological Survey science and cooperative programs, and Bureau of Indian Affairs Indian Land and Water Claim Settlements  (See Appendix A  ) Although in earlier years several other purposes typically were funded from LWCF, since FY2008, funds have been appropriated annually only for grants under two programs: Forest Legacy and Cooperative Endangered Species Conservation Fund  (See Appendix B and Figure 2   ) The total appropriation from LWCF for these two programs (since FY1998) is $1 7 billion, or 63% of all appropriations for other purposes ($2 7 billion)  These two programs and a third grant program funded prior to FY2008 from LWCF—FWS State and Tribal Wildlife Grants—have received more than three-quarters ($2 1 billion, 79%) of the total appropriations for other purposes  The appropriations through FY2019 are $944 4 million for Forest Legacy (35% of the other purposes total), $753 3 million for Cooperative Endangered Species Conservation Fund (28% of total), and $448 5 million for State and Tribal Wildlife Grants (17% of total)  Grants under the Forest Legacy program are used to acquire lands or conservation easements to preserve private forests threatened by conversion to non-forest uses, such as agriculture or residences  FS provides matching grants to states through a competitive process that requires state approval and then national approval and ranking  The ranking is based on the importance of the project (potential public benefits from protection), the likelihood of the forest's conversion to non-forest uses, and the strategic relevance of the project, among other factors  The program is implemented primarily through state partners, usually state forestry agencies  State partners generally acquire, hold, and administer the easements or land purchases, although the federal government also may do so  The Cooperative Endangered Species Conservation Fund provides grants "for species and habitat conservation actions on non-Federal lands, including habitat acquisition, conservation planning, habitat restoration, status surveys, captive propagation and reintroduction, research, and education " In addition to appropriations from LWCF, the Cooperative Endangered Species Conservation Fund typically receives additional appropriations  In recent years, the appropriations from LWCF generally have been used for two types of land acquisition grants provided to state and territories on a matching basis  Recovery land acquisition grants have been made for acquisition of habitats in support of species recovery goals and objectives  Habitat conservation plan land acquisition grants have been made for acquisition of lands that are associated with habitat conservation plans  State and Tribal Wildlife Grants are provided to states, territories, and tribes to develop and implement programs for the benefit of fish and wildlife and their habitats, including nongame species  State and Tribal Wildlife Grants received funding from the LWCF for FY2001-FY2007; subsequently, funding has been provided from the General Fund of the U S  Treasury  Currently, the largest portion of the program is for formula grants to states and territories on a matching basis  Funds from the formula grants may be used to develop state conservation plans and to implement specific conservation projects  Smaller amounts of funding have been appropriated for competitive grants to states and territories, and to tribal governments  The competitive grant programs do not have matching requirements  Appendix A shows the total LWCF appropriations for other purposes summed from FY1998 to FY2019  Appendix B shows the other purposes that received LWCF appropriations each year, the amount of LWCF appropriations for each purpose, and the total annual appropriations for other purposes  Appendix A  Total LWCF Appropriations for Other Purposes Appendix B  Annual LWCF Appropriations for Other Purposes 


Report 2:  We found that each of these four types of potentially inaccurate data would have changed estimated Medicare CLFS expenditures from 2018 through 2020 by 1 percent or less if CMS had instead excluded the data  To conduct this analysis, we recalculated Medicare rates after excluding each type of data and estimated Medicare expenditures assuming 2016 rates of utilization  Although weighted median private-payer rates were lower than Medicare’s 2017 national limitation amounts for 88 percent of tests, we estimated the total Medicare expenditures based on the 2018 CLFS would likely increase by 3 percent ($225 million overall) compared to 2016 expenditures, assuming test utilization remained at 2016 levels  This increase in estimated expenditures is due, in part, to CMS’s use of above-average payment rates as a baseline to calculate payment rates for those laboratory tests affected by PAMA’s annual payment-rate reduction limit of 10 percent  (See fig  4 ) When applying the 10-percent payment-rate reduction limit, CMS used as its starting point the 2017 national limitation amounts in order to set a single, national payment rate for each laboratory test  Thus, the Medicare payment rate for a test in 2018 could not be less than 90 percent of the test’s 2017 national limitation amount  However, prior to 2018, some payment rates were commonly lower than the national limitation amounts because they were based on the lesser of (1) the amount billed on claims, (2) the local fee for a geographic area, or (3) a national limitation amount, and because panel tests had different bundled payment rates  As a result, by reducing payment rates from national limitation amounts, CMS did not always reduce rates from what Medicare actually paid  Panel tests, in particular, frequently received bundled payment rates that differed substantially from national limitation amounts associated with their billing codes prior to 2018  We compared national limitation amounts, which represent maximum Medicare payment rates for tests, with the average amounts Medicare allowed for payment in 2016, which reflect actual Medicare payment rates  For example, figure 5 below shows that the 2017 national limitation amount for comprehensive metabolic panel tests ($14 49) was substantially higher than both the average amount Medicare allowed for payment in 2016 ($11 45) and the median payment rate laboratories reported receiving from private payers ($9 08)  As a result, using the 2017 national limitation amount as a basis for payment reductions caused Medicare’s payment rate to increase from an average allowed amount of $11 45 in 2016, to a payment rate of $13 04 in 2018, instead of decreasing towards a lower median private- payer rate of $9 08  By increasing average payment rates rather than phasing in reductions to rates, CMS’s implementation may lead to paying more than necessary for some tests  Federal standards for internal control for information and communications require agency management to use quality information to achieve its objectives  Basing reductions on national limitation amounts rather than more relevant information on how much Medicare actually paid—such as the average allowable amounts in 2016, for example—could result in Medicare paying more than necessary by $733 million from 2018 through 2020, according to our estimates  In implementing PAMA, CMS eliminated bundled rates for panel tests that lack billing codes and started paying separately for each component test instead  CMS also implemented the 2018 CLFS in a manner that could lead to unbundling payment rates for panel tests with billing codes  If payment rates for all panel tests were unbundled, we estimated that Medicare expenditures could increase by $218 million for panel tests that lack billing codes and by as much as $10 1 billion for panel tests with billing codes from 2018 through 2020  CMS also estimated that there could be significant risks of paying more than necessary associated with unbundling and has taken initial steps to monitor these risks and explore possible responses, but had not yet responded to these risks as of July 2018  CMS Unbundled Payment Rates for Panel Tests without Billing Codes Beginning in 2018, CMS no longer uses bundled payment rates for panel tests without billing codes and instead pays laboratories individual payments for each component test that comprises these panel tests  However, CMS staff and members of its advisory panel discussed concerns with this approach  At an advisory panel meeting in 2016, CMS staff relayed concerns from stakeholders that CMS would not be able to collect valid data on private-payer rates for these panel tests  According to agency staff, stakeholders had informed CMS that private payers commonly use bundled payment rates for these panel tests, but laboratories would only be able to report unbundled payment rates for individual component tests  We estimated that unbundling these payment rates would increase Medicare expenditures from 2018 through 2020 by $218 million in comparison to the estimated Medicare expenditures over the same time period based on Medicare’s 2016 utilization and allowable amounts  For example, under the 2016 CLFS, Medicare paid approximately 435,000 claims for panel tests that included the laboratory tests assay of creatinine (HCPCS code 82565) and assay of urea nitrogen (HCPCS code 84520) at an average bundled payment rate of $6 82  In contrast, under the 2018 CLFS, these two component tests are reimbursed individually at $6 33 and $4 88, respectively, or $11 21 combined—a 63 percent increase  Despite concerns about the validity of available private-payer data on component tests for panel tests without billing codes, CMS used these data to set payment rates for component tests  CMS officials told us that they stopped using bundled payment rates for these panel tests because it is not clear that CMS has the authority to combine the individual component tests into groups for bundled payment as it did before 2018 due to PAMA’s reference to payments for each test  However, in July 2018, CMS officials told us the agency was reviewing its authority regarding this issue  CMS officials told us they are exploring alternative approaches that could limit increases to Medicare expenditures but had not yet determined what additional legal authority would be needed, if any, and did not know when CMS would make this determination  Agency officials told us that CMS has taken initial steps to monitor unbundling and explore possible responses, including the following: Monitoring unbundling: CMS has begun monitoring changes in panel test utilization, payment rates, and expenditures associated with its implementation of PAMA, according to officials  For example, CMS officials told us that preliminary data indicated that Medicare payments for individual component tests of panel tests has increased substantially in 2018, but, as of July 2018, it was too early to draw conclusions from these data because laboratories have up to one year to submit claims for tests  Collecting input on alternatives: In 2016, a subcommittee of an advisory panel that CMS established reviewed Medicare’s use of bundled payment rates for panel tests and published different approaches for CMS to consider implementing in combination with other changes to implement PAMA  CMS’s Implementation of PAMA May Have Allowed Unbundling of Payment Rates for Panel Tests with Billing Codes Beginning in 2018, laboratories that submit claims for any of the seven panel tests with billing codes by using the billing codes for the individual component tests now receive the payment rate for each component test, rather than the bundled rate  Prior to 2018, laboratories could submit claims for these panel tests either by using the specific codes for panel tests or by billing separately for each of the component tests, and, regardless of how laboratories submitted claims, Medicare Administrative Contractors would pay bundled payment rates based on how many of the 23 component tests were conducted  However, CMS instructed Medicare Administrative Contractors to stop bundling payment rates for tests that are billed individually on claims rather than billed on claims using codes for panel tests, beginning in 2018  CMS did so because it was not clear that CMS had the authority to combine the individual component tests into groups for bundled payment as it did before 2018 due to PAMA’s reference to payments for individual tests, according to agency officials  This change could potentially have a large effect on Medicare spending  For example, if a laboratory submitted a claim individually for the 14 component tests that comprise a comprehensive metabolic panel it would receive a payment of $81 91, a 528 percent increase from the 2018 Medicare bundled payment rate of $13 04 for this panel test  (See fig  6 ) Improving how reductions to payment rates for panel tests are phased in could mitigate, but not completely counteract, the effect of unbundling these payment rates  For example, for the comprehensive metabolic panel test described in figure 6, basing maximum reductions on 2016 average allowable amounts would result in a 2018 Medicare bundled payment rate of $10 31 instead of $13 04 and individual payment rates for the 14 component tests that total $56 06—a 32 percent decrease from $81 91 that Medicare would otherwise pay  If the payment rate for each panel test with a billing code were unbundled, we estimated that Medicare expenditures for these tests from 2018 through 2020 could reach $13 5 billion, a $10 1 billion increase from the $3 3 billion we estimated Medicare would spend using the bundled payment rates in the CLFS  Similarly, prior to implementing PAMA, CMS estimated that Medicare expenditures to physician-office, independent, and other non-hospital laboratories could potentially increase as much as $2 5 billion in 2018, alone if it paid for the same number of panel tests with billing codes as it did in 2016 but paid for each component test individually  These estimates represent an upper limit on the increased expenditures that could occur if every laboratory stopped using panel test billing codes and instead used the billing codes for individual component tests  We do not know the extent to which laboratories will stop filing claims using panel test billing codes  CMS officials also told us that they were aware of the risks associated with paying for the individual component tests instead of the bundled payment rate for a panel test with a billing code  However, CMS guidance, which was effective in 2018, continued to allow laboratories to use the billing codes for individual component tests rather than the billing code for the panel  CMS officials explained that this was due to PAMA’s reference to payments for individual tests, similar to CMS’s decision to stop paying bundled rates for panel tests without billing codes  At the time we did our work, CMS had not implemented a response to these risks but had taken some initial steps to monitor unbundling and consider alternative approaches to Medicare payment rates for these tests  HHS provided additional information on planned activities to address these risks in its written comments on a draft of this report  (See app  III ) CMS collected data on private-payer rates from laboratories that were required to report these data, but not all laboratories complied with the reporting requirement, and the extent of noncompliance remains unclear  PAMA’s provision directing CMS to phase in payment-rate reductions to Medicare payment rates likely moderates the potential adverse effects of incomplete private-payer data  However, in the future, failing to collect complete data could substantially affect Medicare payment rates because private-payer rates alone will determine Medicare payment rates  In addition, we estimated that Medicare expenditures on laboratory tests will be $733 million higher from 2018 through 2020, because CMS started phasing in payment-rate reductions from national limitation amounts instead of more relevant data on actual payment rates, such as average allowable amounts  Finally, changes to payment rates, billing practices, and testing practices could increase Medicare expenditures by as much as $10 3 billion from 2018 through 2020, if CMS does not address the risks associated with unbundling payment rates for panel tests  Agency officials indicated that it was unclear if PAMA limited CMS’s ability to combine individual component tests into groups for bundled payment, and, as of July 2018, CMS was reviewing this matter but did not know when it would make a determination  We are making the following three recommendations to CMS: The Administrator of CMS should take steps to collect all of the data from all laboratories that are required to report  If only partial data can be collected, CMS should estimate how incomplete data would affect Medicare payment rates and address any significant challenges to setting accurate Medicare rates  (Recommendation 1) The Administrator of CMS should phase in payment-rate reductions that start from the actual payment rates Medicare paid prior to 2018 rather than the national limitation amounts  CMS should revise these rates as soon as practicable to prevent paying more than necessary  (Recommendation 2) The Administrator of CMS should use bundled rates for panel tests, consistent with its practice prior to 2018, rather than paying for them individually; if necessary, the Administrator of CMS should seek legislative authority to do so  (Recommendation 3) We provided a draft of this report to HHS for review and comment  HHs provided written comments, which are reproduced in appendix III  HHS also provided technical comments, which we incorporated as appropriate  HHS concurred with our first recommendation to take steps to collect all data from laboratories required to report and commented that it is evaluating ways to increase reporting  In particular, in a November 2018 final rule, HHS changed the definition of an applicable laboratory, which it expects will increase the number of laboratories required to report data on private-payer rates to the agency  HHS neither agreed nor disagreed with our second recommendation to phase in payment-rate reductions that start from the actual payment rates Medicare paid prior to 2018  HHS noted that any changes to the phasing in of payment-rate reductions would need to be implemented through rulemaking  We estimated that by using the national limitation amounts as a starting point for these reductions, Medicare expenditures would increase by $733 million from 2018 through 2020  For this reason, we continue to believe CMS should revise these rates as soon as practicable and through whatever mechanism CMS determines appropriate  HHS neither agreed nor disagreed with our third recommendation to use bundled rates for panel tests  However, HHS commented that it is taking steps to address this issue  More specifically, for panel tests with billing codes, HHS is working to implement an automated process to identify claims for panel tests that should receive bundled payments, similar to the process used to bundle payment rates for these panel tests prior to PAMA’s implementation and anticipates implementing this change by the summer of 2019  In addition, HHS posted guidance on November 14, 2018, stating that the panel tests with billing codes, laboratories should submit claims using the corresponding code rather than the codes for the separate component tests beginning in 2019  To reduce the potential of paying more than necessary, we believe it is important that CMS implement its proposed automated process to allow for these payments as soon as possible  In contrast, for panel tests without billing codes, HHS commented that it is continuing to review its authority and considering other approaches to payment for these panel tests, such as adding codes to the CLFS  We estimate that unbundling the payment for these panel tests could increase Medicare expenditures by $218 million from 2018 through 2020 compared to expenditures based on Medicare’s 2016 utilization, and the actual amount could be higher if utilization increases  For this reason, we believe CMS should implement bundled payment rates for these panel tests to avoid excess payments  We are sending copies of this report to the appropriate congressional committees and the Administrator of CMS  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-7114 or cosgrovej@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix IV  Appendix I: Table of Key Dates Related to Developing the New Payment Rates for the 2018 Clinical Laboratory Fee Schedule Event Centers for Medicare and Medicaid Services (CMS) issued the CLFS proposed rule  CMS issued responses to frequently asked questions regarding the CLFS proposed rule  CMS issued the CLFS final rule  CMS issued responses to frequently asked questions regarding the CLFS final rule  CMS held the joint Annual Laboratory Public Meeting and Medicare Advisory Panel on Clinical Diagnostic Laboratory Tests meeting  CMS issued laboratory billing codes subject to data collection and reporting  CMS issued guidance to laboratories for collecting and reporting data  CMS held a Medicare Advisory Panel on Clinical Diagnostic Laboratory Tests meeting  CMS issued the CLFS data reporting template  CMS collected data on (1) the billing code associated with a laboratory test; (2) the private-payer rate for each laboratory test for which final payment was made during the data collection period (i e , January 1, 2016, through June 30, 2016); and (3) the volume of tests performed for each billing code at that private-payer rate  CMS issued additional guidance for laboratories as the data collection period began  CMS issued the CLFS fee-for-service data collection user’s manual  CMS issued revised guidance to laboratories for collecting and reporting data  CMS held a Medicare Advisory Panel on Clinical Diagnostic Laboratory Tests meeting  CMS released the proposed CLFS rates  CMS held a Medicare Advisory Panel on Clinical Diagnostic Laboratory Tests meeting  Deadline for stakeholders to submit comments on the proposed CLFS rates to CMS  CMS issued the final CLFS rates  New CLFS rates became effective  Table 4 below demonstrates the challenges the Centers for Medicare & Medicaid Services (CMS) faces in setting accurate Medicare payment rates to the extent it does not collect complete data from laboratories on private-payer rates  Specifically, the table shows the potential effect that collecting additional data for each laboratory test could have on Medicare expenditures and how this effect could vary depending on (1) the amount of additional data collected, (2) payment rates in the additional data, and (3) limits to annual reductions in Medicare payment rates  These limits are in place from 2018 through 2023 to phase in changes to payment rates  In addition to the contact named above, Martin T  Gahart, Assistant Director; Gay Hee Lee, Analyst-in-Charge; Kaitlin Farquharson, Sandra George, Dan Lee, Elizabeth T  Morrison, Laurie Pachter, Vikki Porter, and Russell Voth made key contributions to this report 

ground_truth: Medicare paid $7.1 billion for 433 million laboratory tests in 2017. These tests help health care providers prevent, diagnose, and treat diseases. PAMA included a provision for GAO to review CMS's implementation of new payment rates for these tests. This report addresses, among other objectives, (1) how CMS developed the new payment rates; (2) challenges CMS faced in setting accurate payment rates and what factors may have mitigated these challenges; and (3) the potential effect of the new payment rates on Medicare expenditures. GAO analyzed 2016 Medicare claims data (the most recent data available when GAO started its work and the year on which new payment rates were based) and private-payer data CMS collected. GAO also interviewed CMS and industry officials. The Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS) revised the Clinical Laboratory Fee Schedule (CLFS) for 2018, establishing new Medicare payment rates for laboratory services. Prior to 2018, these rates were based on historical laboratory fees and were typically higher than the rates paid by private payers. The Protecting Access to Medicare Act of 2014 (PAMA) required CMS to develop a national fee schedule for laboratory tests based on private-payer data. To revise the rates, CMS collected data on private-payer rates from approximately 2,000 laboratories and calculated median payment rates, weighted by volume. GAO found that the median private-payer rates were lower than Medicare's maximum payment rates in 2017 for 88 percent of tests. CMS is gradually phasing in reductions to Medicare payment rates, limited annually at 10 percent over a 3-year period (2018 through 2020), as outlined in PAMA. CMS relied on laboratories to determine whether they met data reporting requirements, but agency officials told GAO that CMS did not receive data from all laboratories required to report. CMS did not estimate the amount of data it should have received from laboratories that were required to report but did not. CMS took steps to exclude inaccurate private-payer data and estimated how collecting certain types and amounts of additional private-payer data could affect Medicare expenditures. However, it is not known whether CMS's estimates reflect the actual risk of incomplete data resulting in inaccurate Medicare payment rates. GAO found that PAMA's phased in reductions to new Medicare payment rates likely mitigated this risk of inaccurate Medicare payment rates from 2018 through 2020. However, GAO found that collecting incomplete data could have a larger effect on the accuracy of Medicare payment rates in future years when PAMA allows for greater payment-rate reductions. CMS's implementation of the new payment rates could lead Medicare to pay billions of dollars more than is necessary and result in CLFS expenditures increasing from what Medicare paid prior to 2018 for two reasons. First, CMS used the maximum Medicare payment rates in 2017 as a baseline to start the phase in of payment-rate reductions instead of using actual Medicare payment rates. This resulted in excess payments for some laboratory tests and, in some cases, higher payment rates than those Medicare previously paid, on average. GAO estimated that Medicare expenditures from 2018 through 2020 may be $733 million more than if CMS had phased in payment-rate reductions based on the average payment rates in 2016. Second, CMS stopped paying a bundled payment rate for certain panel tests (groups of laboratory tests generally performed together), as was its practice prior to 2018, because CMS had not yet clarified its authority to do so under PAMA, according to officials. CMS is currently reviewing whether it has the authority to bundle payment rates for panel tests to reflect the efficiency of conducting a group of tests. GAO estimated that if the payment rate for each panel test were unbundled, Medicare expenditures could increase by as much as $10.3 billion from 2018 through 2020 compared to estimated Medicare expenditures using lower bundled payment rates for panel tests. GAO recommends that the Administrator of CMS (1) collect complete private-payer data from all laboratories required to report or address the estimated effects of incomplete data, (2) phase in payment-rate reductions that start from the actual payment rates rather than the maximum payment rates Medicare paid prior to 2018, and (3) use bundled rates for panel tests. HHS concurred with GAO's first recommendation, neither agreed nor disagreed with the other two, and has since issued guidance to help address the third. GAO believes CMS should fully address these recommendations to prevent Medicare from paying more than is necessary.