Failure to Pay for New Molecular CPT Codes Creates Money Crisis for Clinical Laboratories and Pathology Groups

Medicare contractors are setting prices that are 40% to 60% lower than they paid medical laboratories last year for these same molecular diagnostic tests

Non-payment for most new molecular diagnostic test CPT codes continues to be a problem for the majority of medical laboratories across the country.

A lack of payment for these claims, have forced some clinical laboratories and pathology groups to stop doing molecular testing and lay off staff. At least one lab  company shut its doors, blaming non-payment by its Medicare contractor as the primary reason.

Clinical Labs Waiting Since January 1 for Molecular Test Payment

These are the latest reports coming into Dark Daily. The problem is that government and private payers were not prepared to reimburse claims for molecular tests covered by the 114 new molecular test CPT codes. Nearly all clinical labs and pathology group practices have been waiting since January 1 to receive payment from Medicare Administrative Contractors (MACs) and many private health insurers.

In the first weeks of June, individual clinical lab organizations and medical lab billing companies began telling Dark Daily and our sister publication, The Dark Report, that they are seeing payments for molecular claims begin to flow. At the same time, there remain some Medicare contractors, Medicaid programs, and private health insurers that have yet to issue payments for the molecular test claims in a regular flow to the submitting labs.

“Pathologists and laboratory professionals have still been providing services since January without reimbursement [for claims submitted with the new molecular test CPT codes] . However, if these services are poorly reimbursed, people will say: ‘Why do I want to provide the services?’ Then, patients and other clinicians will not trust innovation in laboratory medicine. It’s a travesty to be held in this situation,” stated pathologist Mark Synovec, M.D., FASCP, on the website of the American Society of Clinical Pathology. Synovec will be speaking on this topic at the fall conference conducted by ASCP. (Photo by KaMMCo.com.)

But non-payment is not the only issue. Labs face two other problems related to this issue. First, billing experts say, Medicare contractors have decided that some of the 114 new molecular test codes introduced this year are not medically necessary. That determination means those contractors will not pay for these tests. Second, the contractors are setting rates that are at least 40% and as much as 60% lower than they paid last year under the previous code-stacking arrangement.

Both issues are seen as financially devastating to clinical lab organizations performing these tests. As of the end of May, most Medicare contractors had posted prices for more than 70 of the new molecular CPT codes, but none had priced all 114 tests. One contractor has priced only 22 tests.

Medical Necessity Determinations for New Molecular Test CPT Codes

Deciding that some molecular diagnostic assays and genetic tests are not medically necessary is particularly disconcerting to the clinical laboratory industry because such decisions could set back the movement toward personalized medicine. It could result in patients not getting tests that physicians believe are in their patients’ best interests.

The latest issue of The Dark Report (dated June 17, 2013), has a full executive briefing on this topic. One notable development covered in this issue is the nation’s first assessment of the different ways these developments are reducing patient access to many critical molecular assays and genetic tests.

The executive briefing also provides information about how a growing number of labs are in dire financial straits—both from non-payment of claims submitted during the first half of the year, along with the new development that many Medicare contractors are ruling that a significant number of molecular tests are medically unnecessary.

The federal Centers for Medicare & Medicaid Services (CMS) has given clinical labs and pathology groups 60 days to comment on the prices and the decisions related to medical necessity and new rate-setting procedures for these tests.

That comment period ends on July 8. Experts advise lab directors and pathologists to write to CMS about the effect these low prices and medical necessity decisions are having on operations and patient care.

Cash-Flow Problems for Medical Labs Awaiting Molecular Test Payment

Since the beginning of the year, clinical laboratories that do molecular testing have had cash-flow problems, stated Kyle Fetter, Associate Vice President of Molecular Diagnostic Services at XIFIN, Inc., a revenue management company in San Diego, California. “As a result of not being paid for many of their molecular tests done since January 1, clinical labs are discontinuing molecular testing, laying off staff, and some lab companies may be forced to close,” he explained.

“When labs don’t get reimbursed for certain tests, they will either decide not to run those tests or they will seek to charge patients directly,” Fetter said. “Also, if labs remove those tests from their test menus, that’s bad for patients—but also it means that development of those tests has stopped.

“When payers make the decision that some of these tests are medically unnecessary, that will have a chilling—but as yet unmeasurable—effect on the innovation needed to develop new molecular tests,” he explained. “A meaningful number of AMA members have expressed frustration that tests that had been important to the doctors and their patients and covered previously, are now being denied by many payers, including Medicaid.”

The medical necessity issue is complicated by the fact that each Medicare contractor is addressing these issues individually. That means patients in one jurisdiction may not have access to molecular tests available to patients in other jurisdictions, Fetter added.

One Medicare Contractor Posted Prices for Only 22 Molecular CPT Codes

For example, NGS, one of the largest Medicare contractors, as of the end of May, had not yet begun paying for molecular tests. As of May 31, it had priced only 22 of the 114 new molecular CPT codes. NGS serves providers in New York and Connecticut.

Fetter was unaware of any Medicare contractor that had posted prices for all of the 114 new molecular CPT codes through May 31. Not pricing molecular tests is “a surprisingly negative stance and could have some important consequences,” Fetter commented. “For example, when one Medicare contractor decides not to cover these tests, it means those tests are not available to Medicare patients and their physicians in that jurisdiction. This creates a huge discrepancy in medical care from one Medicare jurisdiction to the next.”

—Joseph Burns

Related Information:

VISIT THIS URL TO SEE THE DARK REPORT’S INTELLIGENCE BRIEFINGS ON THE ISSUE OF NON-PAYMENT OF MOLECULAR TEST CLAIMS

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