Columnist Steve Gottlieb, M.D., wrote that “This sort of bungling may be without precedent, even for the Medicare agency”

Since the beginning of the year, most Medicare contractors and private health insurers have not paid clinical laboratories and anatomic pathology practices for molecular diagnostic test claims coded to the 114 new molecular test CPT codes.

This unprecedented situation of labs going unpaid for more than three months has created financial turmoil and uncertainty across the medical laboratory profession. In fact, the question must be asked: Did Forbes columnist Scott Gottlieb, M.D., wake up the nation’s Medicare contractors with his column published on March 27?

In his essay, Gottlieb wrote “This is a story of bureaucratic mismanagement at the Centers for Medicare & Medicaid Services [CMS], and the harm it’s visiting on the diagnostic testing industry.” Within days of his reporting on the molecular diagnostic  test payment stoppage at Medicare, individual Medicare contractors began publishing prices for some or all of these 114 molecular test codes.

Scott Gottlieb, M.D.,

Pictured is Scott Gottlieb, M.D., a columnist for Forbes Magazine and an Associate Clinical Professor of Internal Medicine at the New York University School of Medicine. In his March 27 column, Gottlieb wrote about the disruption caused by the Medicare program’s failure to pay clinical laboratories and anatomic pathology groups since the beginning of the year for molecular diagnostic test claims covered under the new molecular CPT codes. Gottlieb was interviewed by The Dark Report in its just-published April 15, 2013, issue. (Photo by NEA.com.)

Clinical Laboratories Hope Molecular Test Payments Commence Soon

Once Medicare contractors issue prices for these molecular CPT codes, clinical laboratory billing and coding experts said checks could be mailed. These checks could go out by the end of this month. But, according to Gottlieb, there is uncertainty about even that scenario.

“Some contractors have not priced anything, such as the Medicare contractor for the market covering Florida,” observed Gottlieb. “That means diagnostic labs located in markets like Florida aren’t getting paid at all… There’s no clear deadline on when this will all get resolved. There’s some speculation that when the Medicare contractors submit their 2013 pricing on April 30, they’ll have to declare their prices for these various molecular tests. Once they do, the labs should get paid retroactively. But the April 30 deadline seems soft. This could linger much longer.”

At this time most clinical laboratories are not being paid for molecular tests. This is probably the most under-reported story in the medical laboratory industry. For that reason, our sister publication, The Dark Report, devoted its latest issue (dated April 15, 2013) entirely to this important topic.

Gottlieb is knowledgeable about the Medicare program. He has served as Senior Adviser to the Administrator of Medicare and Medicaid Services, where, according to Politico, “he supported the agency’s policy work on quality improvement and coverage and payment decision-making, particularly related to new medical technologies.”

Currently he is an Associate Clinical Professor of Internal Medicine at the New York University School of Medicine. He is also a member of the board of directors of two molecular diagnostic laboratory companies.

In its special issue devoted to non-payment of molecular test claims by government and private payers, The Dark Report interviewed Gottlieb and other clinical laboratory industry professionals. These experts explained how and why Medicare contractors are not paying and what lab directors can do about it.

Fixing the Problem of Non-Payment for Molecular Diagnostic Tests

It may never be known if Gottlieb’s column in Forbes was a factor in why a number of Medicare contractors started posting prices. After all, the Medicare Authorized Contractors (MACs) have worked on setting prices for these new molecular test CPT codes since early in 2012. But Gottlieb’s reporting gave the issue the highest public profile it received this year.

According to Gottlieb, “At issue is the way that Medicare reimburses everyone from the big laboratory companies such as the Laboratory Corp of America (LH:NYSE) and Quest Diagnostics Inc. (DGX:NYSE), to the molecular diagnostic labs inside academic hospitals, and especially smaller firms that make proprietary tests used by doctors to more effectively target treatments to patients with conditions like cancer.”

One medical laboratory CEO told The Dark Report  that his lab company had laid off staff members because Medicare contractors had not paid his company’s molecular test claims. He said that his lab company had a revenue shortfall on molecular testing of about $900,000 since January 1 versus expected revenue of about $1.5 million for this period.

Billing experts for McKesson Corporation, told The Dark Report that while pathology practices and labs might see payments for molecular diagnostic tests this month, circumstances could delay payment still further. “Across all our clients, there have been only a few payments since the first of the year,” observed Stephanie Denham, Client Services Director for McKesson.

Quorum Confirms That Few MACs Reimbursing Labs for Molecular Tests

Quorum Consulting, a strategic pricing, reimbursement, and health economics firm in San Francisco, California, offered a similar assessment. “In general, we’re finding that the majority of the MACs are not paying for molecular tests,” said Genevieve Tang, Quorum Consulting’s Associate Director, Strategic Product Planning.

But as of Friday, April 12, seven MACs had posted prices on their websites for at least some of the 114 molecular diagnostic test CPT codes, reported Quorum. They are:

Although seven MACs had posted prices, only three (Cahaba, Noridian, and Palmetto) had released payment rates for all or most of the 114 molecular test codes, Tang added. By April 16, the situation had improved somewhat because, according to Tang, three MACs (CGS, NHIC, and Noridian) had updated their MoPath fee schedules.

XIFIN CEO Comments on Lack of Medicare Payments for Four Months

Gottlieb is not the only clinical laboratory industry expert to take the Medicare program to task for its failure to pay labs on a timely and accurate basis since January 1, 2013. In its special issue, The Dark Report published a letter to the editor by Lâle White, CEO of XIFIN, Inc., of Carlsbad, California.

White specifically criticized the MACs for failing to adopt an efficient process for paying MoPath claims in a timely manner. “What strikes me most about the entire ‘process’ now in use by the Medicare program is the lack of transparency and the feelings of poor faith that blanket the proceedings,” White wrote.

In this issue of The Dark Report, an executive of Palmetto GBA provided statements about the situation. He explained that, by January 31, Palmetto had established prices for the majority of MoPath codes and was processing claims. He characterized the delay in payment as minimal, adding that MACs have a performance requirement to process clean claims in a timely manner. “Any clean claim paid after 30 days includes interest payments,” he said.

Readers and subscribers of Dark Daily who would like to obtain a copy of The Dark Report’s April 15 issue with its detailed coverage of the payment crisis associated with the new molecular CPT codes can visit http://www.darkreport.com/recent-Dark-Report-Molecular-CPT-Codes-Reimbursement-System-Falls-Short.htm .

Gottlieb’s closing comments in his Forbes essay are fitting way to conclude this Dark Daily e-briefing: “[Molecular] diagnostic tests were supposed to usher in an age of personalized medicine. Now they’re being actively priced controlled. And by a bureaucratic regime that can’t even figure out what prices they want to pay for these services.”

—By Joseph Burns

Related Information:

Medicare Has Stopped Paying Bills For Medical Diagnostic Tests. Patients Will Feel The Effects

CGS Takes Palmetto’s Lead on New Prices

Important Trends Point to Cloudy Future for Clinical Laboratories and Pathology Groups in the United States

The Dark Report’s Special Issue on Non-Payment of Molecular Diagnostic Test Claims