This delay does not alter the reporting requirements or thresholds for being an “applicable laboratory.” Hospitals should use this additional time to verify their qualifications and gather complete, accurate data to prevent financial and compliance issues.
Are You an “Applicable Laboratory”?
According to CMS, the criteria for reporting as an applicable laboratory under the Medicare private payor (PAMA) rules include the following:
- CLIA Certification
- The laboratory must be certified under CLIA (Clinical Laboratory Improvement Amendments)
- Billing Structure
- The laboratory must bill Medicare Part B for clinical diagnostic laboratory services either:
- Under its own NPI, or
- As a hospital outreach laboratory on institutional claims (CMS‑1450) using Type of Bill (TOB) 14x.
- The laboratory must bill Medicare Part B for clinical diagnostic laboratory services either:
- Majority-of-Medicare Revenues Test
- During the data collection period, January 1, 2025, through June 30, 2025, more than 50% of the laboratory’s total Medicare revenues must be derived from the Clinical Laboratory Fee Schedule (CLFS) and/or the Physician Fee Schedule (PFS).
- For hospital outreach labs billing on TOB 14x, Medicare CLFS and PFS payments generally make up nearly all Medicare revenues on 14x claims, so this test is commonly met.
- Exceeds the Low Expenditure Threshold
- The laboratory must receive at least $12,500 of its Medicare revenues from the CLFS during the same data collection period (January 1, 2025–June 30, 2025).
- To validate this threshold, CLFS payments may be totaled at the NPI level or, for hospital outreach laboratories, by TOB 14x using internal billing data or the PS&R.
- Medicare Advantage (Part C) revenues are excluded from both the majority‑of‑Medicare‑revenues and low‑expenditure‑threshold calculations.
If all criteria are satisfied, the laboratory meets the CMS definition of an applicable laboratory and must report its private payor rates and associated test volumes for clinical diagnostic laboratory tests (CDLTs) during the 2026 reporting window (May 1–July 31, 2026), using data collected from January 1–June 30, 2025.
Penalties and Risk
- Civil monetary penalties: If the Secretary determines that an applicable laboratory failed to report, or made a misrepresentation or omission, CMS may impose civil monetary penalties of up to $10,000 per day for each failure, misrepresentation, or omission.
- Payment impact: Incomplete or inaccurate data can distort the weighted median of private‑payer rates used to set CLFS payment amounts, potentially leading to deeper CLFS cuts when new rates take effect and reducing hospital laboratory revenue for multiple years.
We can help
Our experts are available to address questions, test your hospital’s eligibility to report, or help your Hospital determine private payer rates for Medicare reporting. Contact us today.
