Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News

Clinical labs look to new year for CMS to address unresolved fee and coding issues.

Clinical laboratories will be watching and waiting in the new year for the Centers for Medicare and Medicaid Services (CMS) to resolve several unsettled issues concerning fees for molecular pathology tests, as well as coding for drug-screening tests.

CMS approved 21 new codes for advanced genomic studies such as exome sequencing and whole genome sequencing, as well as a range of hereditary and cancer/somatic mutation genetic panels.

However, CMS directed instead that they be set in 2015 via “gapfilling.” Local Medicare Administrative Contractors (MACs) will set fee schedule amounts during the first quarter of 2015, to be released for public comment. The contractors will submit final prices in or about August 2015, with CMS expected to publish the medians and set 2016 prices at those medians.

CMS also agreed to gapfill the fees for three new “Tier 1” codes and five new “Tier 2” gene-specific molecular pathology codes, based on the American Medical Association’s Current Procedural Terminology (CPT®) codes.

“It will be, again, somewhat of a year of confusion and uncertainty as to what you will exactly get paid for these new panels, or if you will get paid, in case the contractors decide they’re not statutorily covered,” Charles Root, Ph.D., CEO of the healthcare consultancy CodeMap, said during “Laboratory Reimbursement Update 2015,” a December 4 webinar conducted by the American Association for Clinical Chemistry (AACC).

Answering follow-up questions, Dr. Root told GEN: “Gap-filling will result in some disruptions in payment while payment levels are set. Typically some contractors do not come up with pricing when they are supposed to.”

The Tier 1 codes to be gapfilled are:

  • 81246, for reporting analysis of the fms-related tyrosine kinase 3 (FLT3) gene, such as in testing for acute myeloid leukemia. The testing is specifically for tyrosine kinase domain (TKD) variants, such as D835 or I836.
  • 81288, for MLH1 gene analysis, as in testing of colorectal cancer variants specifically for the promoter methylation analysis method.
  • 81313, measuring the PCA3/KLK3 ratio of prostate cancer antigen 3 [non-protein coding] to kallikrein-related peptidase 3

The new Tier 2 listings include procedures covered by codes:

  • 80402, chromosome 1p-/19q- (e.g. glial tumors), deletion analysis
  • 80403, human erythrocyte antigen gene analyses and common variants; Rh blood group, D antigen (RHD) and deletion analysis, such as for Rh maternal/fetal compatibility via testing for hemolytic disease of the fetus and newborn
  • 81404, MpV17 mitochondrial inner membrane protein, duplication/deletion analysis, such as in testing for mitochondrial DNA depletion syndrome

Also unresolved is how Medicare will cover and reimburse labs for oncology tests falling under four new Multianalyte Assays with Algorithmic Analysis (MAAA) codes: Code 8151, covering breast cancer, mRNA, gene expression profiling by real-time RT-PCR of 21 genes; Code 0006M, hepatic cancer, mRNA expression levels of 161 genes; Code 0007M, gastrointestinal neuroendocrine tumors via real-time PCR analysis of 51 genes; and Code 0008M, breast cancer mRNA analysis of 58 genes.

CMS directed MACs to continue considering each individual test classified as an MAAA on an individual consideration basis, so long as they are deemed medically necessary.

Another of CMS’ key unresolved issues expected to be addressed in 2015 is its deferral of decisions on fees for new drug testing codes under the Clinical Laboratory Fee Schedule (CLFS)—for which the agency issued its final determination—and what codes the labs should use in submitting for reimbursement.

In that final version, as with its preliminary determination, CMS stated it would not set prices for drug screening tests covering 63 codes, from 80300 through 80377. The codes describe both presumptive and definitive drug tests commonly used to monitor patient compliance when taking pain medications or being treated for drug abuse.

CMS cited its concern that it may overpay for the tests if labs were allowed to bill for each individual drug test, rather than use a single code that pays the same amount regardless of the number of drugs being tested. The proposed new codes that CMS has held off recognizing represent several tests reported until now by codes to be deleted by the CPT Editorial Panel, which maintains and revises CPT codes.

“We continue to believe that we need additional time and input from the public to determine Medicare payment for drugs of abuse testing that will not lead to overpayment,” CMS concluded in its Final Determination.

CMS added that it will instead replace the 2014 CPT codes for those tests with “G” codes (G followed by four digits) which CMS will use in 2015 instead of the CPT codes. The agency said that decision followed concerns raised in response to its preliminary fee schedule that sufficient codes will not be available to bill for drugs of abuse tests were coding to be finalized.

For clinical labs, CMS’ actions pose two challenges: The temporary G codes may not be accepted by private payers, while the CPT codes are valid and effective whether Medicare recognizes them or not.

That creates a situation where labs need to report under the CPT code for private payers, and under the G codes for Medicare.

“It’s inefficient,” Paul W. Radensky, M.D., J.D., a principal with McDermottPlus Consulting, told GEN. McDermottPlus is a health industry consultancy and wholly owned subsidiary of the law firm McDermott Will & Emery. “For example, with the definitive drug testing codes, under the new codes for 2015, one may have three codes for a certain analyte based upon how many different specific drugs you have within that kind of grouping, whereas the under CPT 2014 now carried forward as G codes for Medicare there may be only one code.”

“Where this occurs, there will be one code to report to Medicare but multiple codes to report to private payers,” Dr. Radensky added.

CMS also decided to set prices for two new therapeutic drugs via “crosswalking,” in which payments for new codes are benchmarked to the same rate for comparable, existing test(s) or code(s). Payment for crosswalked codes will become effective January 1, 2015.

New code 80163, representing “Digoxin, free,” will be crosswalked to Code 80162, which represents not only free Digoxin, but total and bound Digoxin as well. Code 80162 carries a Medicare fee cap or national limitation amount (NLA) of $18.12.

The agency also approved crosswalking Code 80165, representing “Valproic acid (dipropylacetic acid), free,” to Code 80164 which covers Valproid acid whether free, total, or bound, and carries an NLA of $18.49.

Separately, CMS is expected in 2015 to resolve many unanswered questions around the Protecting Access to Medicare Act (PAMA), enacted April 1 by President Obama. PAMA postponed until March 31, 2015, cuts estimated at 24% to the Sustainable Growth Rate (SGR) formula—while also setting new rules for phasing in reimbursement cuts, new procedures to set rates, and requirements for labs and providers to implement new test coding systems that will add potentially thousands of new codes.

If it hasn’t done so before then, CMS is expected early in 2015 to come up with proposed rules for PAMA’s reporting provisions.

CMS is required under PAMA to finalize reporting rules by June 30, 2015.

Effective January 1, 2016, labs that receive most of their Medicare reimbursement through the Clinical Laboratory Fee Schedule (CLFS) or Physician Fee Schedule (PFS)—most clinical labs—must report every payment from private payors, and the volume of payments per price point, per test.

Based on that data, CMS will calculate a “weighted median” payment amount per test, as a market price set to take effect in 2017. The process will be repeated every three years for most tests—but annually for “advanced diagnostic laboratory tests” offered and furnished only by a single lab, not sold for use by that lab, and usually based on DNA, RNA, or protein analysis.

Advanced tests will be paid at “list price” for three quarters, then on market prices—though CMS can recoup payments that are more than 130% of market price.

“Lab reimbursement is going through some pretty major changes, both in terms of the coding, and how tests are being paid,” Peter M. Kazon, senior counsel at the law firm Alston & Bird, said during the AACC webinar.

In general, Dr. Root told GEN, the lab industry expects continued pressure on reimbursement, but is hopeful that nothing major will occur before PAMA takes effect: “If the current update formula stays in effect, which it should, only 1–2% reductions are anticipated. However, dramatic reductions may affect specific ‘overvalued’ procedures that CMS believes are being either over utilized or overpaid.”

Clinical OMICs Reader Poll

Clinical laboratories will be looking for the Centers for Medicare and Medicaid Services (CMS) in 2015 to approve fees for the 21 molecular pathology tests whose new codes were recently approved, as well as coding for drug-screening tests. Fees for the molecular tests—as well as three new “Tier 1” codes and five new “Tier 2” gene-specific molecular pathology codes—will be set by “gapfilling,” with prices to be set for 2016 based on medians of amounts set by local Medicare Administrative Contractors

Q. How do you think fees should be set:

  • Through gapfilling, as decided by CMS.
  • Through crosswalking, as industry also recommended to CMS.
  • Some other means




Alex Philippidis specializes in biopharma business news and industry issues. Alex joined GEN in 2011 after four years at GenomeWeb, where he covered research institutes and biotech economic development topics. Previously, Alex worked more than 20 years for various newspapers covering business, science, and general news topics. He has been interviewed and quoted by news outlets that include The New York Times and the BBC.   ([email protected])

This article was originally published in the January 2015 issue of Clinical OMICs. For more content like this and details on how to get a free subscription to this digital publication, go to

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