The recent Centers for Medicare and Medicaid Services (CMS) decision regarding the final payment determinations for the new molecular and related test codes, added to the Current Procedural Terminology (CPT) manual in 2012, was a mixed bag, but it was largely positive for the lab sector. If nothing else, it provided a welcome degree of certainty concerning the future of payments for an important and highly advanced group of diagnostics that represent the future of diagnostic medicine.
As you may recall, these 101 new codes for genetic and molecular tests were created to replace the prior “stacking codes” which laboratories had used to bill for the individual steps involved in a molecular test (i.e., DNA extraction, amplification, interpretation). The CPT manual replaced the old codes with a set of new molecular diagnostic (MDx) codes that were specific to the individual analyte(s) involved in the test. In addition, it also created a new class of Multivariate Analyses with Algorithmic Assays (MAAAs), which includes tests that utilize an algorithm to analyze a set of individual analytes to come up with an index score that predicts a clinical outcome. These tests represent the advancing frontline of diagnostic medicine, and hold tremendous promise for the future of personalized medicine; as such, uncertainty regarding the future of payment regarding these tests has been particularly concerning for the industry.
The Final Payment Determination can be broken down into three main areas.
First, CMS decided that all 101 new molecular diagnostic codes would remain on the Clinical Laboratory Fee Schedule (CLFS). In the past, the molecular diagnostic tests were all paid for on the CLFS; however, CMS had explored the placement of these new codes on the Physician’s Fee Schedule (PFS) in the Proposed Physician Fee Schedule Rule, and solicited comment to that end. The placement of these new codes on the PFS, as advocated by the College of American Pathologists (CAP) and the American Medical Association (AMA), would have created a host of new problems by preventing PhD-level geneticists who perform much of the work from billing for these new codes, and by requiring that a pathologist perform the interpretation for all of these tests.
Second, in terms of the pricing of the individual codes, CMS decided to refer these 101 new molecular diagnostic codes to the Medicare contractors and allow them to “gapfill” the codes. CMS had previously proposed this approach in its August Notice of Proposed Pricing Decisions, stating that this would give it the opportunity to “gather current information about the manner in which the tests are performed and the resources necessary to provide them.” Under gapfilling, contractors price the new codes and report their decisions to CMS by April 30. In the second year, the tests are all paid at the new National Limitation Amount, which is set at 100% of the median of the contractor prices set for each code.
However, this decision to gapfill the codes, rather than “crosswalk” them to the codes that were previously used to bill for these tests or the median of the past payment amounts, creates yet more questions: How will the gapfill process work? Will each contractor gapfill all 101 codes, considering that many may be unfamiliar with some or all of these tests? Upon what information will contractors base their gapfill determinations? How could the contractors have been expected to gapfill all 101 new tests by January 1, 2013, their date of implementation?
Gapfilling has only been used rarely in the past, and previous experiences with the pricing method have been fraught with problems. As this issue of Medical Laboratory Observer goes to press, contractors are still awaiting instructions from CMS on how to proceed with the gapfilling process, creating the potential for confusion, and arbitrary and reduced laboratory payment going forward.
Last, CMS decided to walk back its troubling and puzzling position from the August Notice of Proposed Pricing Decisions that it did not consider the algorithm to be a laboratory test and would only pay for the underlying tests on which the MAAA test is done, but not the algorithm itself. Such a position would have had a drastic impact on the continued viability of these tests, and jeopardized the future of personalized medicine.
Under the Final Rule, CMS stated that it will not be utilizing the new MAAA codes for 2013, and will instead take the year to gather more information on this important class of tests. In somewhat unclear language, CMS indicated that MAAA tests should continue to be billed using the existing Healthcare Common Procedure Coding System (HCPCS) codes as they have been in the past. More importantly, CMS did not make any broad, categorical determination about the reimbursement of algorithms in laboratory tests, much to the relief of the entire laboratory sector.
