S-2761-119
Read twice and referred to the Committee on Finance.
Sponsored by Thomas Tillis (R-NC)
What it does
This bill would amend Title XVIII of the Social Security Act to modify how Medicare calculates payment rates for clinical diagnostic laboratory tests. It would change the data collection process used to set those rates, which are currently based on what private insurers pay for the same tests. The bill aims to improve the accuracy of that private-payor data and make it more feasible for laboratories to report it.
Who benefits
Medicare beneficiaries who rely on diagnostic lab tests (approximately 60 million enrollees) and could see improved access if payment rates better reflect market rates. Clinical laboratories — including independent labs, hospital outpatient labs, and physician office labs — that may receive more accurate and stable reimbursement. Smaller and rural laboratories that may struggle with current data reporting burdens. Patients in underserved areas where labs have reduced Medicare participation due to low reimbursement rates.
Who is hurt
Medicare program and federal taxpayers, if more accurate private-payor data results in higher payment rates and increased program spending. Private insurers and employers who fund private health plans, if the data reporting process creates new administrative obligations. Competing healthcare providers who may see Medicare resources shift toward laboratory services. Patients who benefit from cost containment in Medicare if the changes increase overall program costs.
Supporters argue
Supporters argue that the current private-payor data collection system — established under the Protecting Access to Medicare Act of 2014 — has produced payment rates that do not accurately reflect what commercial insurers actually pay, leading some laboratories to reduce Medicare services or exit the market entirely. They contend that fixing data accuracy and reducing reporting burdens would stabilize lab access for the roughly 60 million Medicare beneficiaries who depend on diagnostic tests for routine and preventive care.
Opponents argue
Opponents argue that the existing private-payor benchmark system was specifically designed to bring Medicare lab payments in line with market rates and reduce overpayment, and that loosening data collection requirements could allow inflated rates to re-enter the fee schedule. They contend that higher reimbursement rates would increase Medicare spending at a time of significant fiscal pressure on the program, ultimately shifting costs to taxpayers and Medicare beneficiaries through higher premiums or reduced benefits elsewhere.
Constitutional context
Congress has broad authority to structure Medicare payment systems under the Taxing and Spending Clause (Art. I, §8, cl. 1). No active constitutional dispute is apparent in this bill, which modifies an existing administrative payment methodology rather than creating new mandates or conditions on states. Post-Loper Bright (2024), any HHS regulations implementing new data collection rules would face independent judicial review rather than automatic deference.
Checks and balances
Congress sets the payment methodology through statute; HHS and CMS gain administrative authority to implement revised data collection rules; courts would independently review any implementing regulations under the post-Loper Bright standard.
Historical precedent
The Protecting Access to Medicare Act of 2014 (PAMA) established the current private-payor-based fee schedule for Medicare clinical diagnostic laboratory tests, and subsequent reports from MedPAC and the HHS Office of Inspector General found that the data collection methodology produced rates that may not accurately represent the broader commercial market.