Molecular Code Reimbursement in 2013
Those following the saga of Medicare molecular code reimbursement in 2013 know that each MAC was given the latitude to set its own rates using the so-called gap-filling method (see Background below for the details). As part of this process, CMS set a deadline of April 30 for all MACs to submit their gap-filled fees to CMS.
Issues with pricing these codes were evident early in the year when most MACs had not published rates and even more so when many MACs had not submitted their fee schedules by the deadline. Finally, on May 9, CMS published the interim gap-fill pricing from the MACs for approximately 114 Tier 1, Tier 2 and HLA molecular diagnostic CPT codes. Each MAC will pay their suggested rates to laboratories in their jurisdictions in 2013.
Along with their fees, the MACs were required to submit their rationale for pricing each test but it appears that there was not much logic in the rate setting. There is a large range of fees for each code submitted by the MACs and many of the rates were, on average, 27% below the old code-stack billing rates previously paid to labs. In setting their rates, it appears that several MACs copied the prices published by Palmetto, one of the first MACs to publish rates. Other MACs set fees supposedly based on their own analysis, which according to the Molecular Code Rationale Statement published by CMS showed no analysis or rationale for the rates. Most of the MACs did not set fees at all for several of the molecular codes, evidenced in CMS’ published fee schedule by state. Some examples:
Codes 81280-81282 (Genetic Testing for Congenital Long QT Syndrome) – Only two MACS reported payment amounts for these codes with a huge difference in rates! Whether these rates are errors or not, these reimbursement rates are in the MAC’s payment system to be applied to claims, potentially leaving labs to either appeal for a larger payment or worse, leaving them liable to refund a substantial amount of money once final rates have been established.
|Code||First Coast (FL)||Cahaba (AL, GA, TN)|
Codes 81302-81304 (Genetic Testing for Rett Syndrome) –Only First Coast and Cahaba had fees listed but at least their fees were close in payment amounts.
Codes 81290-81299 (mutation codes) are not priced at all by NHIC (New England) and NGS (CT, NY) but are priced by the remaining MACs.
CMS states the reason for so many blank spaces in their molecular price chart is that either, “1) no claims were received by that particular MAC for that particular test code, or 2) the MAC determined that Medicare could not pay for the test.” 
For codes with fees, the variations in prices submitted by the MACs were of a wide range and in most cases, were well below the stacked-code reimbursement rates. Here are a few examples:
2013 Code-Stack Median
|2013 MAC Range||
2013 MAC Median
Code-Stack to MAC Median Variance
|81210||BRAF Gene Mutation||
|81223||Cystic Fibrosis Full Sequence||
|$135.26 – $310.12||
|$147.50 – $509.76||
|81235||EGRF Mutation Analysis||
|$108.19 – $225||
Sources: Laboratory Economics, Volume 8, No. 5, May 2013 & CMS Clinical Fee Schedule
Disappointed by the results of the MACs’ illogical and incomplete rate settings, the day after the rates were published, nine lab organizations submitted a consensus statement to CMS identifying the areas where errors and omissions were made by the MACs in setting their rates. Their comments included:
- MACs significantly reduced payment rates without public justification for their decisions;
- Some MACs mischaracterized certain tests as investigational and are denying payment;
- Few MACs included the laboratory community to gather data or discuss test pricing;
The statement also indicated that cuts in fees may force some testing facilities to stop offering molecular pathology test services, limiting patient access to care and that lower reimbursement may stifle innovation by removing the incentives for developing new tests.
The suggested reimbursement for high volume tests such as BRAF (81210) and EGFR (81235) are below costs and most of the MACs suggested fees are certainly below the median reimbursement for the stack-code tests of last year (see above chart). This will impact all laboratories, but could particularly spell financial trouble for small labs that have a limited and targeted menu of tests. Many of the smaller molecular labs are still developing their molecular tests and markets, carrying a big expense base for research and development as well as for education of their pathologists about the value of these tests. 
The organizations have asked CMS to:
- Make available their data and methodologies to show how they arrived at their prices in a way that stakeholders receive meaningful information to review their data,
- Convene “Open Door Forum” opportunities through the end of 2013 to allow dialogue with the laboratory community regarding the price-setting process, and
- Extend the “reconsideration” period through the end of 2013 to allow fine-tuning of payment levels for each code.
A 60-day comment period began on May 9 for stakeholders to weigh in on the pricing methods for establishing the molecular code rates. Laboratories are encouraged to submit their comments to CMS detailing their methodologies along with the labor and equipment costs required for each test so that CMS has real data to determine the value of each procedure. Labs and interested stakeholders need to submit their comments by July 8, via email, to CMS at MoPathGapfillInquiries@cms.hhs.gov.
After the comment period ends, CMS will share the comments with the MACs as part of developing final prices under the gap-filled methodology. In September, CMS will post the final pricing decisions on its website and will use a median of the MACs amounts to calculate a national reimbursement rate for each code in 2013 and 2014.
Once final prices are posted, stakeholders will have 30 days to request reconsideration of any prices and final pricing will take place in 2014. Instructions for the 30-day reconsideration process will be posted on the CMS website in September when CMS releases the final fees.
In the meantime, clinical labs and billing companies have recently reported to the publications, Dark Daily and the Dark Report, that payments have begun to flow for some molecular tests but there are still Medicare contractors and private carriers that have yet to issue payment on a regular basis. Companies are also reporting that some Medicare contractors are denying tests as not medically necessary. Also, in most cases, fees have not yet been set for all 114 new molecular test codes.
The Medicare Fee Schedules and the Rationale Statements for pricing the Molecular codes can be found on the CMS website. Scroll down to the “downloads” section.
When CMS chose the Clinical Laboratory Fee Schedule (CLFS) as the payment method for the new molecular codes in 2013, CMS had two pricing options available to calculate the way these codes would be priced. One was cross-walking, where a new code is matched to an existing code or codes to determine the appropriate payment. During the public comment period in 2012, many lab industry stakeholders suggested the cross-walk method since the new molecular codes are combinations of previous specific methodology codes (called stack codes) with established reimbursement rates. MACs could then cross-walk these codes and develop a median price to be used where different versions of the test were grouped into one code.
However, CMS stated that not enough information was available to match the new molecular codes to the existing “stacked” codes. As a result, CMS chose the gap-filling method to establish fees for the new molecular diagnostic CPT Codes. The Gap-filling method allows local MACs (Medicare Administrative Contractors) to set fees based on local pricing patterns, such as current laboratory charges including discounts, private payor reimbursement for the same tests, and MAC payments for similar tests. MACs were given the reins to establish, with a published rationale, their payment rates based on these criteria. After one year, the contractor-specific amounts would be used to calculate a national reimbursement rate for each molecular code. CMS set a deadline of April 30, 2013 for all MACs to submit their gap-filled fees to CMS.