​Clinical Laboratory Services Rate Methodology

May 2021 Update:

In accordance with section 105(a) of the Further Consolidated Appropriations Act 2020 (FCAA) and section 3718 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Centers for Medicare & Medicaid Services (CMS) did not change their clinical laboratory fee schedule for 2021. As a result of the Medi-Cal rate review, no fee for service (FFS) Medi-Cal clinical laboratory rates require a rate adjustment at this time, and, thus DHCS did not submit proposed State Plan Amendment (SPA) 21-0008 as noticed on December 31, 2020.

December 2020 Update:

The Department of Health Care Services (DHCS) has calculated the Clinical Laboratory rates, effective July 1, 2020 in compliance with California Welfare and Institutions Code section 14105.22.

 

On December 16, 2020, the CMS approved SPA 20-0010. The procedure codes with rates adjusted in accordance with SPA 20-0010 are listed below. The new rates are effective retroactively to July 1, 2020.


 

Procedure CodesCode Description

July 1, 2020 Rate

80305DRUG TEST PRSMV DIR OPT OBS              $9.98
82120AMINES VAGINAL FLUID QUAL $3.22
82172ASSAY OF APOLIPOPROTEIN $12.96
82270OCCULT BLOOD FECES $2.48
82962GLUCOSE BLOOD TEST $1.57
83020HEMOGLOBIN ELECTROPHORESIS $9.57
83050BLOOD METHEMOGLOBIN ASSAY $6.17
83789MASS SPECTROMETRY QUANT $16.28
84311SPECTROPHOTOMETRY$6.45
85046RETICYTE/HGB CONCENTRATE $3.81
86677HELICOBACTER PYLORI ANTIBODY $12.42
87653STREP B DNA AMP PROBE $24.68
87806HIV ANTIGEN W/HIV ANTIBODIES             $21.85
88108CYTOPATH CONCENTRATE TECH $22.07
88112CYTOPATH CELL ENHANCE TECH $60.14
88189FLOWCYTOMETRY/READ 16 & > $69.16
88350IMMUNOFLUOR ANTB ADDL STAIN              $61.30
G0482DRUG TEST DEF 15-21 CLASSES              $126.22
G0483DRUG TEST DEF 22+ CLASSES                $160.47

 

Background

In accordance with Assembly Bill (AB) 1494 (Committee on Budget), the DHCS is required to:

  • Develop a new rate setting methodology for clinical laboratory or laboratory services based on the average of the lowest prices other third-party payers are paying for similar services.

    • Effective July 1, 2015, the new rate methodology is implemented under approved SPA 15-015

  • Implement a 10 percent payment reduction, excluding services under the Family Planning, Access, Care and Treatment (FPACT) program and outpatient hospital services, effective July 1, 2012 through June 30, 2015, for clinical laboratory and laboratory services until a new rate setting methodology is approved by the Centers for Medicaid & Medicare Services (CMS).

    • The 10 percent payment reduction is implemented under approved SPA 12-028

As required by statute, the AB 97 payment reduction is also applied to the new payment methodology.

Data Collection Process

​DHCS underwent a significant stakeholder process to develop the data collection tool to be used for the development of the new methodology and to determine the new rates under that methodology.   

Beginning in 2012, DHCS conducted meetings with clinical laboratory stakeholders to develop a data collection methodology that was operationally feasible and consistent with the intent of the legislation.
 
DHCS requested third-party payer rate and utilization data from providers and limited the use of data to codes that met either of the following two thresholds based on the prior year's Medi-Cal paid claims data:
  • Medi-Cal paid claims volume equal to or greater than 1,000
  • Total Medi-Cal paid amount equal to or greater than $500,000  
 
The thresholds for choosing providers required to submit utilization data are:
  • Medi-Cal paid claims volume equal to or greater than 5,000
  • Total Medi-Cal paid amount equal to or greater than $100,000 

Rate Methodology

Reimbursement for clinical laboratory or laboratory services shall not exceed the lowest of the following:

(1) the amount billed,

(2) the charge to the general public,

(3) 80% of the lowest maximum allowance established by the federal Medicare Clinical Laboratory fee schedule and Medicare Physician fee schedule for the same or similar services,

(4) and every three years, beginning on July 1, 2020, an amount calculated based on a weighted average of the lowest amount that third-party payers are paying for the same or similar services, excluding all rates paid over 150 percent of the Medicare maximum allowance for California.


 

Triennially, DHCS utilizes the data collected to develop the clinical laboratory reimbursement rates. The following represents the steps taken in the determination of the average of the lowest rate.  

DHCS uses the range of rates that fall between zero and one-hundred fifty percent of the calculated California specific Medicare rate.

  1. These rates are then weighted based on the units billed to create an average.

  2. The methodology is individually applied to each code meeting threshold requirements, excluding codes for which no third-party rate and/or utilization data was submitted, or if the services under that code were terminated or no longer a Medi-Cal benefit.

To ensure that requirements of the provisions of statute continue to be met, DHCS will collect third-party payer rate and utilization data every three years, beginning in 2019, from clinical laboratory or laboratory services providers. Beginning on July 1, 2020, and every years thereafter, rates are required to be calculated based on the prior year’s data and application of the methodology will be limited to those codes meeting either of the two thresholds. DHCS will continue to monitor the thresholds and methodology and make changes as necessary to comply with the law, access requirements, and account for other operational or programmatic issues.

Contact DHCS

Questions or comments can be submitted to the DHCS Clinical Laboratory email box: labcomments@dhcs.ca.gov.  

Legislation

Last modified date: 5/17/2021 4:33 PM