Coding, Coverage and Reimbursement

Background: The world of coding, coverage, and reimbursement for molecular pathology is incredibly complex and loaded with jargon and acronyms. In 2020, the AMP EAC published an overview of molecular pathology economics in the hopes that it can serve as an educational resource for residents, molecular pathologists, and clinical molecular geneticists, as well as laboratory directors and hospital/laboratory administrators who seek to understand the complex landscape of molecular pathology economics.

Manuscript can be viewed here.

Presentation by the authors can be viewed here.

Learn More About AMP's Activities:

Coding

AMP participates in current procedural terminology (CPT) coding and the pricing of molecular pathology codes. Throughout the year, it submits new CPT code change proposals based on member need and input.

Coding: The Language of Laboratory Economics

Background on Coding:

There are a number of different coding systems involved with laboratory medicine, including:

Notes about CPT Codes: HIPAA (1996) mandated the use of specific code sets for diagnoses and procedures to be used in all transactions, including CPT. Having a CPT code indicates maturity and vetting of the test. If no CPT code exists, assay is billed using a "not otherwise specified" or NOS code, which may result in difficulty getting paid. However, a CPT code does not guarantee that a test will be paid for...or that the reimbursement will be appropriate!

Subsets of CPT codes related to molecular pathology:

• Molecular Pathology
  • Tier 1: Analyte/gene specific codes
  • Tier 2: Grouped by level of complexity
    • Includes 81479 - Unlisted molecular pathology procedure
• Genomic Sequencing Procedures or GSPs
• Multianalyte Assays with Algorithmic Analyses or MAAAs
• Microbiology
  • Includes molecular microbiology identification codes

How are new codes created?

New CPT codes can be created by the submission of a Code Change Application through the AMA CPT Smart App.

The Code then goes through: 

• Advisory Committee review: 

  The application is then referred to the CPT Advisory Committee for evaluation and commentary.

• Editorial Panel review: 

  Finally, the CPT Editorial Panel takes action on the application. Applicants may need to present their proposal to the Panel. 

How is AMP involved?

The AMP EAC New Codes and Pricing Subcommittee:

• Assists in development of AMA CPT Code Change Applications (CCA) on behalf of AMP EAC;
• Consults with PCC representative and technical representative on CPT CCAs; 
• Advocates for optimal coding structure for molecular diagnostics.

Reimbursement

AMP provides written and oral comments to the Centers for Medicare & Medicaid Services regarding the Clinical Laboratory Fee Schedule. AMP also advocates for Protecting Access to Medicare Act of 2014 (PAMA) reform.

Reimbursement: How Are Tests Priced?

Pricing Process

Each year in July, CMS holds a public meeting for the laboratory payment for new clinical test codes. Stakeholders present in person or submit written comments with rationale for payment recommendations. CMS then determins the basis of payments for codes: crosswalk or gapfill.

A new or revised code is "crosswalked" when the payment rate is determined by comparison to a similar existing code.

A new or revised code is "gapfilled" when no similar code exists and each Medicare Administrative Contractor (MAC) independently establishes a payment amount and submits those values to CMS. MACs are to use the following information in their rate setting process: the charges for the test and routine discounts to charges, the cost of resources to perform the test, payment amounts determined by other payers, and charges, payment amounts, and resources required for other tests that may be comparable or otherwise relevant. During the gapfill process, laboratories need to educate MACs and commercial payers about the cost and value of new procedures. 

The final Clinical Lab Fee Schedule (CLFS), with the payment determinations for each code, is then posted in late fall. 

PAMA

The Problem

The Protecting Access to Medicare Act (PAMA) of 2014 included a provision that tied Medicare reimbursement for clinical laboratory services to private payer rates. The first rate setting period under the PAMA methodology resulted in significant reimbursement cuts for many of these services. After this first pricing exercise, the reimbursement for many services no longer reflects the supplies and work required to perform the procedure. 

AMP conducted a survey[1] of its membership to understand the financial and logistical effects of the implementation of the PAMA rates for clinical laboratory services. We found that the reimbursement cuts from PAMA will continue to have a negative effect on laboratory practices and patient access. Specifically, we solicited responses on innovation in molecular diagnostics, patient access, and burden.

Decreasing Reimbursement Will Stifle Innovation

• Most respondents indicated that the PAMA reimbursement cuts would result in their offering fewer new tests and/or consolidating their testing menu.
• Almost all the survey respondents expressed concern about offering a new test that was crosswalked to a test whose reimbursement rate was declining, disincentivizing laboratories from bringing novel or improved tests into clinical laboratories.

Decreasing Reimbursement May Limit Patient Access to Testing

• Academic and community hospital responses indicated that decreasing reimbursement rates from PAMA would force their labs to send molecular diagnostic tests to outside laboratories rather than performing the testing in-house.
• Hospital laboratories moving from in-house to send-out testing will result in an increase in turn-around time for testing, which will delay results and potentially treatment initiation. In addition, it would remove the molecular pathology professional from the local healthcare team, with concomitant loss of essential expertise.
• Commercial respondents noted they would consider merging or selling their lab as a result of PAMA, which could reduce the benefits of competition and have a significant negative impact on the local economy.
• These changes resulting from PAMA will decrease access to molecular diagnostic testing and professionals.

Cuts From PAMA Threaten Health Equity

• Hospital and clinics in rural and underserved areas provide essential care to patients, especially those who cannot travel great distances to receive care.
• Laboratories are facing the same or a greater staffing crisis as the rest of the healthcare sector.
• Declining reimbursement as a result of PAMA may cause rural and underserved facilities to close, thereby exacerbating health disparities.

How is AMP involved?

The AMP EAC New Codes and Pricing Subcommittee:

• Develops strategy and recommendations for yearly pricing of new codes on the CLFS;
• Develops strategy for gapfill pricing of codes;
• Advocates for and effects proper pricing of molecular diagnostics, including GSPs.

Coverage

AMP monitors emerging policies and works with various groups on the coverage of molecular testing. It weighs in on both local and national coverage determinations

Coverage: Will Insurance Cover A Test?

Background

Coverage is the determination whether and in what cases to pay for a service.

In the US, there are a number of different payers for molecular pathology services. The governmental (public) payer is CMS, which includes Medicare (Part A, B, C, and D) and the State Medicaid programs. The commercial (private) payers include numerous private health insurers that offer plans with various coverage options (including employer group plans) and large corporations/business that self-insure.

Coverage and payment policies may differ between public and private payers, depending on type of molecular testing, for example:

• Germ-line testing occurs more often in non-Medicare population (pediatric/pregnant patients)
• Somatic testing is more common in the Medicare population, although not limited to this group

Private payers can choose to follow Medicare coverage rulings, although many perform independent determinations for each medical procedure (CPT). Medicare coverage is limited to items and services that are reasonable and necessary for the diagnosis or treatment of an illness or injury. 

Medicare coverage is determined through two processes:

• National Coverage Determinations (NCD), which establish a national coverage policy for a service and
• Local Coverage Determinations (LCD), where in the absence of an NCD, a service may be covered locally, at the discretion of Medicare Administrative Contractors (MACs).

A MAC is a private health care insurer that has been awarded a geographic jurisdiction by CMS to process Medicare Part A and Part B (A/B) medical claims or Durable Medical Equipment (DME) claims for Medicare Fee-For-Service (FFS) beneficiaries. MACs cover 12 geographic jurisdictions, as seen in the map below. MACs serve as the primary operational contact between the Medicare FFS program and the healthcare providers enrolled in the program. MACs are informed by Carrier Advisory Committees (CAC) – one per state.

A/B Medicare administrative contractor (MAC) jurisdictions as of October 2017. From “Map of A/B MAC Jurisdictions as of June 2019,” by the Centers for Medicare & Medicaid Services, last accessed June 1, 2019. In the public domain. CGS, CGS Administrators, LLC; J5, Jurisdiction 5; J6, Jurisdiction 6; J8, Jurisdiction 8; J15, Jurisdiction 15; JE, Jurisdiction E; JF, Jurisdiction F; JH, Jurisdiction H; JJ, Jurisdiction J; JK, Jurisdiction K; JL, Jurisdiction L; JM, Jurisdiction M; JN-FCSO, Jurisdiction N–First Coast Service Options, Inc; NGS, National Government Services, Inc.; WPS, Wisconsin Physicians Service Government Health Administrators.

In 2011, one of the MACs, Palmetto, developed a very pro-active approach to Molecular Testing in the MolDx program:

• Uses test registry and evaluation processes outside the standard CMS processes;
• Administered in 28 states;
• Default non-coverage of all Molecular Diagnostic Procedures by “Statutory Exclusion”;
• Requires application for unique identifier;
• Requires a Technical Assessment (TA) to determine coverage status for most new tests.

AMP Activity on Local Coverage Determinations (LCDs)

The AMP EAC Coverage Subcommittee monitors and responds to draft LCDs for molecular pathology with help from AMP member subject matter experts. AMP's LCD comments are frequently done in collaboration with the College of American Pathologists (CAP).

 You can also view all of AMP's comments on LCDs here.

AMP Activity on Private Payer and Laboratory Benefit Manager Policies

Commercial, third party payers vary in their level of sophistication dealing with Molecular Pathology tests. Commercial payers still use CPT codes and can be more lenient with their coverage and reimbursement policies.

Private payers are also dealing with the monumental task of determining appropriate coverage and reimbursement for molecular tests. AMP has provided expert feedback to Blue Cross Blue Shield Evidence Street and other private payer policies. 

Concerns regarding molecular diagnostic tests helped to spur the rise of Laboratory Benefit Managers, or LBMs. LBMs are used by commercial, third party payers as an outsourced option for medical and coverage policy development, technical assessments, claims editing, and network services. Use of LBMs has resulted in a rapidly growing trend toward the requirement for prior authorization for payment of molecular lab services. In general, LBMs have presented substantial challenges to the lab community who do not have direct access to the patient at the time of test ordering. 

AMP encourages our members to submit concerning private coverage policies to policy@amp.org for the EAC Coverage Subcommittee to review for potential comment.