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Labs entering risky payment game in the new year

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Kevin B. O’Reilly

January 2015—This year will bring a host of regulatory, coding, billing, and payment changes that are going to challenge pathologists and laboratory administrators to move quickly or else face declining revenue and the grim specter of Medicare recovery audits. That was the somber consensus of three experts gathered for a December webinar hosted by The Dark Report.

“It will be a high-stakes game in 2015 because both government and private payers are stacking the deck against clinical labs and pathology groups,” Dark Report editor-in-chief Robert L. Michel said in a statement publicizing the webinar. “Across the nation, Medicare carriers and private health insurers are implementing myriad changes in coverage guidelines and reimbursement for both clinical lab tests and anatomic pathology services, in an effort to reduce their costs.”

Wolf

Wolf

Rina Wolf began the session by underlining the uncertain realm in which labs find themselves in 2015. Wolf is vice president of strategic commercialization, consulting, and industry affairs at Xifin, which offers cloud-based billing and revenue-management software.

Perhaps the biggest cause of that unpredictability is the Protecting Access to Medicare Act of 2014, which Wolf said marks “the first substantial change in laboratory reimbursement in 30 years.” Starting Jan. 1, Medicare administrative contractors can now issue a coverage policy on a test only through a local coverage decision, she said. June 30 is the deadline for the Centers for Medicare and Medicaid Services to publish a rule that will establish how labs must report their private payment rates, which will begin sometime in 2016. The CMS will use that information to set new Medicare laboratory pay rates starting in 2017.

Meanwhile, there are 21 new CPT codes for genomic sequencing and multianalyte assays with algorithmic analyses. How these will be paid remains an open question, Wolf noted, with the deadline for determinations being the end of the first quarter of 2015.

“The original intent was that these codes would be specifically for next-generation sequencing, but the actual descriptors apply to any sequencing, even if they are not performed on a next-gen sequencer,” she said. “A number of Medicare contractors have already come out with policies saying that they do not believe that next-gen panels should be covered services.… The question is what are the commercial payers going to do.”
This uncertainty about payment for advanced diagnostics reflects a deeper contradiction that vexes laboratory medicine, Wolf said.

“We continue to be bombarded with kind of a schizophrenic situation where the technology we rely on, and that so many labs have become reliant on to take care of patients, is moving much more quickly than the regulatory and reimbursement environment,” she said. “We see these challenges on coverage and pricing, and the return on investment, against the capability of the science. Nobody wants to move backward from where we are from the patient care perspective.”

Wolf noted other question marks in molecular pathology, such as the FDA’s proposed oversight of laboratory-developed tests, how to standardize review of companion diagnostics, and how or whether to allow for newly actionable alleles in already cleared tests.

Another significant change in the molecular space that took effect Jan. 1 is how Palmetto GBA’s MolDX program will handle panel testing. The Columbia, SC-based Medicare administrative contractor began in November to notify labs about tests that need to be registered as part of a panel. Beginning April 1, MolDX will reject tests for which a separate CPT code is submitted for each biomarker in the panel. Another Medicare administrative contractor, Fargo, ND-based Noridian, plans a similar move, Wolf said.

“This could create a lot of confusion,” she added. “I believe it could encourage the use of panels, which historically have been questioned by [the Department of Health and Human Services’ Office of Inspector General] and CMS.”

On another note, Wolf warned labs to steer clear of murky waters when it comes to certain sales and collections tactics.

“I’m sure all of you have had your sales reps come back and say, ‘We have to do such-and-such’ to compete on things like routinely waiving the patient shares of costs, discounting, capping pricing, or on physician incentives. But we’re also in an environment where that’s becoming incredibly risky,” she said.

For example, payers are increasingly scrutinizing patient collection practices.
“They believe that if you have no intent of actually billing the patient, that makes the payer responsibility zero,” Wolf said. “And it’s important to remember that what you put on your website is not only available to physician clients and patients, but it’s available to the payers who troll these websites.”

She noted that one company’s website indicated that patients were held accountable for a capped $100 fee on a $3,500 test, so the payer said it would only pay the out-of-network benefit of 60 percent based on that $100 quote, rather than the $3,500 price.

“We’re also seeing recoupment requests for money paid over and above what payers deem to be capped prices,” Wolf said. “Whether you’re using a contracted sales force or whatever, as management you’re responsible for whatever brings in payment to your labs.”

Private payers are not the only ones with their antennae held aloft for questionable sales methods.

“Medicare recovery audits are growing exponentially,” Wolf said. “Pay extra attention to all of your compliance practices, because others are.”

This year also will see major adjustments for anatomic pathology coding. The CMS is deleting the G-codes it had used for immunohistochemistry in 2014, opting for new CPT codes.

“The G-codes were very problematic for everybody,” said Tom Scheanwald in his presentation. He is president and chief operating officer of Toledo, Ohio-based APS Medical Billing, which serves pathology practices, independent labs, and hospital pathology labs nationwide.

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