MolDx Labs Question Missing Medicare Payment Amounts For Some Test Codes

Clinical laboratories plan to talk to CMS about its decision to list only 65 out of 114 new molecular pathology codes when it released revised gap-fill pricing Sept. 30, as well as their concerns about perceived changes to the gap-fill regulation.

Laboratories that run molecular diagnostic tests were not surprised by the revised reimbursement rates that CMS recently released for new molecular pathology codes, including the 2014 National Limit Amount, but they are concerned that the agency only posted revised reimbursement rates for 65 of the original 114 new codes slated for pricing under the “gap-filling” method.

Along with the revised 2013 payment amounts for molecular pathology codes established by local Medicare administrative contractors, CMS also posted to its website Sept. 30 a statement that “Only those codes that are currently being paid by the MACs are listed. Some codes listed in the May 9, 2013, posting are not currently shown because the service is no longer being paid by the MAC.”

CMS posted to its website interim reimbursement rates for 114 new molecular pathology codes established by MACs on May 9. (See (Also see "Molecular Dx Labs’ Concerns Shift To Coverage Issues With Release Of Interim Medicare Payment Amounts" - Medtech Insight, 3 Jun, 2013.).)

“This leaves 40, 50 codes that are nonpriced and presumably not covered,” said JoAnne Glisson, senior VP of the American Clinical Laboratory Association.

“[CMS] can choose not to cover some of the codes but it doesn’t necessarily mean that there shouldn’t be prices for them” - JoAnne Glisson, ACLA

“These are codes that apparently contractors are not paying for, therefore there’s not going to be a price for them even though … three of the contractors did price all of the codes,” she told “The Gray Sheet” in an interview. “[CMS] can choose not to cover some of the codes but it doesn’t necessarily mean that there shouldn’t be prices for them,” she added.

Industry stakeholders also want CMS to clarify this statement in a Web post accompanying the revised codes: “If CMS revises any [National Limit Amount] as a result of the reconsideration process, the revised NLA will be the upper limit on payment beginning in [Jan. 1, 2014]. If an individual MAC establishes a price that is lower than the NLA, it may continue to pay that price in 2014.”

“This statement is inconsistent with the clear language of the gap-fill regulations, which states that after the first year payment for gap-filled tests is made at the NLA amount,” ACLA said in an Oct. 1 statement on CMS’ revised gap-fill pricing of the molecular diagnostic codes. “ACLA plans to discuss both of these issues with officials at CMS as soon as possible, after the current government shutdown is resolved.”

Charles Root, CEO of CodeMap LLC, a Medicare compliance and reimbursement consultancy, echoed Glisson’s sentiments regarding the issues that ACLA has identified with the revised code reimbursement rates.

He conceded that the revised payment amounts were not “dramatically different” than what was expected, but “the main problem here is that there are only 65 of the 114 codes that are actually listed, which leaves us wondering, ‘Well what’s the status of all the others,’ especially the tier 2 codes.” Tier 1 codes represent gene-specific and genomic procedures, and tier 2 codes are used to report procedures not listed in the tier 1 molecular pathology codes, and represent medically useful procedures that are generally performed in lower volumes than tier 1 procedures.

Root suspects that CMS did not list some of the original 114 codes slated to be paid under the gap-fill methodology because they were not covered under MAC Palmetto GBA’s Molecular Diagnostic Services Program, known as MolDx, which identifies and establishes coverage for molecular diagnostic tests through an evidence-based process. (See (Also see "Personalized Medicine And Palmetto’s MolDx: Raising The Bar On Evidence" - Medtech Insight, 3 Dec, 2012.).)

It is possible that CMS decided not to put tests on the fee schedule if they were not being covered by various contractors, Root suggested. “That’s not the proper way to do it. I mean, if you’re going to develop coverage policy, that’s a separate process from setting fees.”

Commenting on CMS’ statement that if an individual MAC establishes a price that is lower than the NLA, it may continue to pay that price in 2014, Root said, “The way they’re doing this essentially overrides all of the regulations on gap filling in that they are apparently extending the reconsideration period through all of next year.”

This “either means that they’ve essentially extended the reconsideration period and then likewise the whole process for a whole year, or I think they’re just kind of rewriting the rules as they go along,” Root said, adding that “somebody could challenge that certainly from a legal standpoint, but probably nobody will.”

“Each new announcement we get a different surprise and a different interpretation of what you assumed was the regulatory process [CMS] were following,” he added.

“Each new announcement we get a different surprise and a different interpretation of what you assumed was the regulatory process [CMS] were following” - Charles Root, CEO of CodeMap LLC

Representatives of labs have previously claimed that the Medicare contractors’ system for setting the gap-fill rates is not sufficiently transparent, and some industry stakeholders said the interim payment rates set under the gap-filling method were lower compared with the payment amounts that were paid last year under the code “stacking” technique, in which a series of codes that describe methodological steps are used to approximate a complete molecular test.

The revised gap-fill rate for one test in particular – Myriad Genetics Inc.’s BRACAnalysis test for breast and ovarian cancer – was set to drop by 48 percent for the remainder of 2013 and 2014 by local MAC Noridian Healthcare Solutions LLC, which proposed to lower the main code for this test to $1,449.01, even though CMS proposed to reimburse the test at a national limitation amount of $2,795 in 2014, similar to the interim rates established for this test code.

Myriad, however, explained in a Securities and Exchange Commission 8K form filed Oct. 1 that Noridian and Palmetto “made a clerical error in their pricing for CPT code 81211 (BRCA1 & BRCA2 full sequence). This error was confirmed by Myriad in a telephone call to both Noridian and Palmetto this afternoon. During this call, Noridian informed Myriad that it will contact CMS and immediately correct the pricing for CPT code 81211 to $2,795.09. We believe that it may take a week or two for this correction to be reflected by CMS.” During the time that the partial government shutdown is in effect, MACs will continue to perform all functions related to Medicare fee-for-service claims processing and payment.

Most of Noridian’s final rates were identical to those submitted by Palmetto, Guggenheim Washington Research Group analyst Eric Assaraf said in an Oct. 1 note. “Noridian has relied on Palmetto for pricing and coverage decisions in the past and Noridian was the only outlier on BRCA among the nine contractors,” Assaraf wrote, although he noted in a Sept. 30 note that many other contractors also relied on Palmetto for its final gap-fill submissions.

The public will have until Oct. 30 to request reconsideration of the NLAs listed in the revised payment amounts posted Sept. 30.

ACLA will be collecting information from its members about test codes for which they want to seek specific reconsideration.

“Certainly any lab that has the test either not on the fee schedule that [CMS has] published, or that you don’t agree with the amount, obviously you want to request a reconsideration and get in line, essentially,” Root said, adding that CMS “will have their work cut out for them if everybody does that.”

Algorithm-Based Lab Code Concerns

In addition to posting revised gap-fill prices, CMS posted proposed new and reconsidered clinical laboratory fee schedule test codes that are paid under the code stacking technique, and preliminary payment determinations for 2014 to its website Sept. 25.

Against industry recommendations to pay for 10 multianalyte assays with algorithmic analysis (MAAAs) using either the gap-fill payment method or various combined crosswalk calculations to multiple existing laboratory codes, CMS said it will not recognize these MAAA codes as valid for Medicare purposes under the CLFS for 2014. These assays predict a patient’s risk of developing a disease or responding to a treatment based on an algorithm that measures multiple molecules. (See (Also see "Industry Groups Push CMS To Pay For Algorithms In Multi-Analyte Tests" - Medtech Insight, 22 Oct, 2012.).)

Specifically, CMS said, “At this time, it does not appear that there is a single, consistent definition for a MAAA. It can be a numeric score(s) or a probability (i.e., “p-score”) finding based on an analysis of the results of laboratory tests that already exist on the Clinical Laboratory Fee Schedule (CLFS) and, in some cases, patient information. An algorithm is not a clinical test. The CLFS only pays for clinical diagnostic laboratory tests. Therefore, CMS considers this MAAA code to be not payable under CLFS. As we have previously stated, we will continue to consider each individual test that compares a MAAA code on its own merit.”

Although CMS didn’t recognize nine new MAAAs in its final 2013 Medicare physician fee schedule as part of its 2013 CLFS final payment determinations, it instructed laboratories to continue using existing codes while the agency solicited more information about this category of tests. (See (Also see "CMS In Brief" - Medtech Insight, 12 Nov, 2012.).) However, unlike last year, CMS is not instructing laboratories to continue using existing codes when reporting these assays in its 2014 CLFS test code preliminary payment determinations.

“[CMS] can still choose not to cover [MAAAs] if they don’t want, but they should be on the fee schedule so that there’s some price on them so that commercial [payers] at least have something to refer to,” Root said, adding, “otherwise, you’ve got to negotiate every contract.”

This creates a “Catch-22 situation,” he continued, in which tier 2 codes are not being paid for through the gap-fill method nor will CMS recognize these MAAA codes. “So, we’re right back where we started with no indication of payment for over 500 procedures there. And between those two decisions, it’s very dissatisfying to a lot of obviously specialized genetic labs who depend on those tests.”

Industry voiced its objections to CMS’ payment policies for new clinical lab test codes at the agency’s annual clinical lab fee schedule public meeting in July. (See (Also see "Lab Tests Face Revaluation, Cuts Under New CMS Proposals" - Medtech Insight, 15 Jul, 2013.).) Stakeholders have until Oct. 25 to comment on the preliminary determinations. The basis of payment and the amount of payment will become final around early November.

[Editor’s note: This story was contributed by “The Gray Sheet,” your source for in-depth coverage of the medical device and diagnostics industry. For more information call 1-800-332-2181. To register for a free trial, click here/ – no credit card needed.]