Medicare Sets Good Rates For Covid-19 Testing

by Jondavid Klipp | Jun 15, 2020 | CLFS, COVID-19, Medicare, XIFIN

Medicare Sets Good Rates For Covid-19 Testing

CMS has been very fair when establishing reimbursement rates for Covid-19
tests in an effort to encourage widespread diagnostic and antibody testing.
Furthermore, private health plans are required to cover both diagnostic and antibody testing without member cost-sharing (copays or deductibles) as a result of the Families First Coronavirus Response Act (FFCRA). “Most private insurers have been uncharacteristically reasonable in establishing their rates and working with labs to fix claims processing errors for Covid-19 testing,” notes Lale White, Chairman & CEO at XIFIN Inc. (San Diego).

High-Throughput Covid-19 Diagnostic Testing
Covid-19 diagnostic testing on high-throughput testing systems (200+ specimens per day; e.g., Roche cobas 6800/8800, Abbott m2000 System, Hologic Panther Fusion System, et al.) is billed using HCPCS U0003 or U0004 at a Medicare rate of $100. XIFIN’s White says that her firm has
seen 89% of private insurance claims for U0003 and U0004 paid at or above Medicare’s rate, and only 11% underpaid. She says that underpayment most commonly occurs with BCBS plans, which are frequently paying for high-throughput Covid-19 testing at the low-throughput rate of $51.

Low-Throughput Covid-19 Diagnostic Testing
CMS has established two codes (HCPCS U0002 and CPT 87635) for low-throughput Covid-19 diagnostic testing systems (<200 specimens per day) and set reimbursement at $51.31. Aetna and Cigna are paying equivalent rates, according to Scott Liff, President & CEO at Kellison & Company (Cleveland, OH). Similarly, UnitedHealthcare and many BCBS plans are allowing $51.31, according to Deb Larson, Executive Vice President at TELCOR Inc. (Lincoln, NE). In addition, several big state Medicaid plans, including California, Illinois and New York, have set their fee-for-service rates for U0002/87635 equivalent to Medicare.

Covid-19 Antibody Testing
Medicare reimbursement for Covid-19 antibody testing has been set at $45.23 for CPT 86328 (point-of-care tests) and $42.13 for CPT 86769 (laboratory-based multi-step methods). These are very favorable rates when compared with other antibody test codes for infectious agents that are
reimbursed by Medicare at rates between $8.93 and $19.35, according to Charles Root, PhD, President of CodeMap LLC (Chicago). He notes that labs testing for two antibodies (IgM and IgG) can bill CPT 86769 twice for total Medicare reimbursement of $84.26.

Unfortunately, White says that private insurer reimbursement of Covid-19 antibody testing is more problematic. Most private payer claims for CPT 86769 are being reimbursed below the Medicare rate. For example, some BCBS plans are paying between $12 and $35, with an average of roughly $20, according to White. Similarly, TELCOR’s Larson has seen BCBS rates in the range of $12 to $20, while Kellison’s Liff has seen rates of between $15 and $18 from Cigna.

In addition, some private insurers have taken the position that antibody testing should not be covered if it’s part of an employer-based testing effort for bringing their staff safely back to work, even if the testing is voluntary and performed under a doctor’s order. This flies in the face of the CARES Act, which is intended to promote both Covid-19 diagnostic and antibody testing for anyone that wants it, notes White.

Claims Denial Rates for Covid-19 Testing
Early on in the pandemic (March/April), White says that XIFIN was seeing denials and balance bill errors occurring on about 22% of the Covid-19 test claims it processed. The most common denial and adjudication errors involved medical necessity denials and improper processing of patient
co-pays and deductibles.

However, White says that most payers have readily acknowledged their adjudication errors, made corrections and reprocessed claims with very few requesting a resubmission.

On current claims through the end of May, White says that initial denial rates have fallen to 7% with co-pay/deductible errors at less than 1%. “We expect that 7% medical necessity denial rate to get down to 4% to 5% after we make some calls to correct the remaining denial adjudication errors.”

Similarly, Larson says that TELCOR is currently seeing initial denial rates of 5% to 9% on Covid-19 test claims with the primary source of denials related to member insurance coverage eligibility.

Challenges for Out-of-Network Labs
White notes that one issue that has not been resolved is the continuation of BCBS payer policies that reimburse patients directly for out-of-network (OON) lab test claims. This forces OON labs performing Covid-19 testing to seek payment from patients. “With bad debt rates as high as 50% on direct patient billing and all the added costs involved with identifying a direct patient payment, it is not prudent for the Blues to take a position of penalizing labs that are OON during a time when extensive testing capacity is being demanded at the federal, state and local level for management of the pandemic,” observes White.

Specimen Collection Rates for Covid-19
On March 30, CMS announced the creation of new Covid-19 specimen collection HCPCS codes (G2023 and G2024) at very favorable rates.

HCPCS G2023 is intended for independent labs that collect Covid-19 specimens (by any specimen source) from homebound or non-hospital patients. Medicare reimbursement has been set at $23.46.

HCPCS G2024 is intended for independent labs that collect Covid-19 specimens (by any specimen source) from patients in a nursing home or on behalf of a home health agency. Medicare reimbursement has been set at $25.46.

CMS says that these new specimen collection codes will remain in effect until it has determined that the Covid-19 pandemic is over.

The rates for G2023 and G2024 are far above Medicare’s existing $5 rate for G0471 paid to labs for non-Covid-19 blood collection services provided to nursing home patients or on behalf of a home health agency.

However, the catch is that nearly all Covid-19 diagnostic test samples are nasal swabs that are collected by nurses, not lab-employed phlebotomists (see page 6 for more).

The new Covid-19 specimen collection codes do apply to lab-employed phlebotomists that collect blood samples for Covid-19 antibody testing from nursing home or homebound patients. However, demand for antibody testing has been weak to date.

PAMA Reporting Period Delay Is Welcome News For Labs

by Jondavid Klipp | Jan 15, 2020 | CLFS, CMS, PAMA

PAMA Reporting Period Delay Is Welcome News For Labs

On December 20, President Trump signed into law a spending package that included provisions of The LAB Act. The legislation delays the PAMA
private-payer data reporting schedule by one year, in order to give more time for all labs, especially hospital outreach labs, to gather and report data. The new schedule does not change the data collection period (Jan. 1 to June 30, 2019), but does delay the reporting of that data to CMS until Jan. 1 to March 31, 2021.

The reporting delay comes as a big relief to hospital outreach labs. Even the nation’s more sophisticated hospital outreach labs were planning to devote substantial billing and IT staff to meet the original deadline. The delay should allow more labs to report more complete and accurate payment data.

Furthermore, the delay will give ACLA a fighting chance to get something out of its PAMA lawsuit with CMS, notes lab industry consultant Dennis Weissman. “The original reporting schedule might have rendered the lawsuit moot. Now it has more time to move through the courts,” notes Weissman.

Julie Khani, President of the American Clinical Laboratory Assn., notes that there was broad bipartisan support for The LAB Act in both the House and Senate. In particular, she cites Rep. Scott Peters (D-CA), who introduced the House bill and raised The LAB Act with Energy & Commerce Committee Chair Frank Pallone (D-NJ) at a committee mark-up meeting earlier this year.

In addition to the delayed data reporting, The LAB Act directs the Medicare Payment Advisory Commission (MedPAC) to conduct a study to review how CMS has implemented the privatepayer-based Clinical Lab Fee Schedule (CLFS) under PAMA. As part of this study, MedPAC is to consider the least disruptive ways for CMS to collect data from labs and the most accurate and representative methods to determine payments rates, including the use of statistical methods for estimating rates that are representative of the whole lab market. MedPAC must report its findings to CMS and Congressional committees no later than 18 months from the enactment of The LAB Act (i.e., by late June 2021).

MedPAC is an independent U.S. federal body comprised of 17 members appointed by the Comptroller General of the United States. MedPAC’s Chair is Francis Crosson, MD, a former executive at the integrated managed care plan Kaiser Permanente. Its Vice Chair is Paul Ginsburg, PhD, a professor of health policy at the University of Southern California.

Of course there is no guarantee that MedPAC’s study recommendations will be favorable or that they will be acted upon by CMS or Congress.

Furthermore, using statistical sampling methods to capture a representative share of all sectors of the lab market (independents, hospital outreach and POLs) may be extremely complicated, notes Laboratory Economics. That’s because provider market share can vary widely for each of the 1,000+ CPT test codes on the CLFS.

Delayed Reporting Guarantees a Fourth Year of Cuts in 2021

The one-year delay in reporting means that CMS will continue to use pricing data from the initial PAMA survey to formulate CLFS rates for 2021. This guarantees rate cuts averaging 10-15% for most high-volume tests next year when the max reduction cap becomes 15%.

As highlighted in the last issue of Laboratory Economics, three straight years of 10% annual rate cuts (2018-2020) have not fully lowered many high-volume lab tests down to the median CLFS rates set by the initial PAMA survey. For example, after three years of the max 10% annual rate reduction, the comprehensive metabolic panel (CPT 80053) will still need another 14% cut next year to reach the median rate determined by the initial PAMA survey.

Any potential benefit from delayed PAMA reporting and the inclusion of more hospital outreach labs won’t occur until 2022.

Top Hospital-Based Outreach Labs by Medicare CLFS Payments

by Jondavid Klipp | Dec 15, 2019 | CLFS, Hospital Outreach Laboratory, Laboratory Economics, Medicare, PAMA

Top Hospital-Based Outreach Labs by Medicare CLFS Payments

The vast majority of hospital laboratory outreach programs uses its hospital’s NPI and finance department for billing and is now required to report their private-payer data to CMS under PAMA. The table below lists the top 25 hospital-based labs based on their Medicare CLFS payments for outreach lab testing in calendar-year 2018. Medicare CLFS payments typically represent roughly 20% to 30% of total revenue generated by hospital-based outreach labs.

Latest Medi-Cal Private-Payer Payment Survey Underway

by Jondavid Klipp | May 15, 2019 | CLFS, Medi-Cal

Latest Medi-Cal Private-Payer Payment Survey Underway

California’s Medi-Cal lab fee schedule has been pegged to private-payer rates since 2015. California’s Department of Health Care Services (DHCS) is currently in the midst of its fourth private-payer rate survey, which will be used to set Medi-Cal reimbursement rates for clinical lab and pathology services next year.

Approximately 300 independent labs, hospitals and pathology groups in California are required to submit their 10 lowest private-payer rates received in calendar year 2018 for approximately 270 high-volume lab and pathology CPT codes. The deadline for reporting the data to DHCS is June 30, 2019. The newly calculated Medi-Cal rates will be announced in June 2020 and will become effective July 1, 2020.

Labs are required to report if they have Medi-Cal paid claims volume of 5,000 or more per year, or Medi-Cal payments of $100,000 or more. Over the past three surveys, an average of about 100 labs per survey actually reported, representing less than 30% of the required labs. DHCS has the authority to suspend providers that are required to report, but fail to do so. However, no lab suspensions have occurred to date.

Medi-Cal’s transition to using private-payer lab rates has helped it slash its expenditures on lab testing for its 2.3 million fee-for-service (FFS) members from $265 million in fiscal year 2014 (ended June 30) to $205 million in fiscal year 2018. Medi-Cal lab expenditures have also been tempered by a steady movement toward Medi-Cal managed care plans. Managed care plans are
paid on a capitated basis, and they manage member care and negotiate and establish their own rates with their contracted providers. There are currently 10.7 million Medi-Cal members covered by managed care plans.

Medi-Cal currently reimburses clinical lab tests for FFS members at an average of approximately 79% of the Medicare CLFS for 2019. Medi-Cal rates for anatomic pathology services (i.e., CPT 88305) are set at approximately 60% of current Medicare Physician Fee Schedule rates.

The current Medi-Cal private-payer survey is especially interesting because it may provide an early glimpse into future Medicare CLFS rates. It will provide an early indication of the extent to which private health insurance plans in California were influenced by the first PAMAdirected 10% rate cut to the Medicare CLFS that took effect January 1, 2018.

It should also be noted that most
Medi-Cal providers, including labs,
remain subject to the Assembly Bill 97 (AB 97) 10% payment reduction that was enacted during the California’s budget crisis of 2011. Because AB 97 is a payment reduction, not a change to the actual rates, the 10% cut comes
off the listed Medi-Cal fee schedule rates. The 10% payment reduction authorized by AB 97 has no sunset date.

Many Hospital Labs Still Don’t Know They Must Report PAMA Data

by Jondavid Klipp | Feb 18, 2019 | CLFS, PAMA Data

Many Hospital Labs Still Don’t Know They Must Report PAMA Data

On January 22, the Centers for Medicare & Medicaid Services (CMS) hosted a teleconference that focused on a new rule that requires nearly all hospital outreach labs to collect their private-payer payment data from January 1 to June 30, 2019, and report it to CMS in early 2020. This data, along with private-payer data from independent labs and physician office labs, will be used to set new rates for the Medicare CLFS in 2021.

Although the new rule was published in early November 2018 and the data collection period is already underway, the teleconference Q&A showed that many hospital outreach labs are unaware that they are required to report. Broad participation from hospital outreach labs in the current data collection cycle is critical to stabilizing Medicare CLFS rates in 2021.

The Final Medicare Physician Fee Schedule for 2019 states that hospital outreach labs that bill for their non-patient lab services using the hospital’s national provider identifier (NPI) must now use Medicare revenues from the Form CMS-1450 14x Type of Bill to determine whether they meet the majority of Medicare revenues threshold and low expenditure threshold.

During the teleconference, CMS confirmed that this will require most hospital outreach labs to collect and report their private-payer data.

Laboratory Economics notes that in simplest terms, the rule requires any hospital outreach lab that collects $12,500 or more in Medicare CLFS revenue during the first six months of 2019 to report their private-payer payment data to CMS. Of course, all independent labs and physician-office labs meeting the $12,500 threshold must also report.

Based on an analysis of Hospital Cost Report data from 2018, Laboratory Economics has identified more than 1,000 hospital outreach labs that will meet the $12,500 threshold and are therefore required to report.

The PAMA law authorizes CMS to impose civil monetary penalties of up to $10,000 per day on labs that are required to report, but fail to do so. However, CMS did not enforce this law during the first reporting cycle (2016-2017) and it has not threatened to do so in the current cycle.

The cost and complexity involved with collecting private-payer payment data combined with CMS’s unwillingness to impose penalties on non-reporting labs lead Laboratory Economics to the unfortunate conclusion that most hospital outreach labs, as well as smaller independent labs and POLs, will dodge their reporting responsibility.

This likely scenario will have devastating long-term consequences for all laboratories. It means that lab test codes paid through the Medicare CLFS—already scheduled for three straight years (2018-2020) of 10% rate reductions—may suffer reductions of as much as 15% in 2021.

Note: This is an excerpt from an article in the February 2019 issue of Laboratory Economics.

GAO Warns Of Increased Costs From Unbundling Panel Tests

by Jondavid Klipp | Dec 4, 2018 | CLFS, GAO, Laboratory Regulations

GAO Warns Of Increased Costs From Unbundling Panel Tests

A new report from the U.S. Government Accountability Office (GAO) has zeroed in on the unbundling of common panel tests as a practice that could cause Medicare to overpay billions under PAMA’s new market-based CLFS.

The potential for overpayment stems from a loophole that enables labs to charge significantly more for common panel tests by billing for each component test individually (see LE, December 2017). Previously, Medicare had paid a lower bundled rate for routine panel tests such as Comprehensive Metabolic Panel (CPT 80053) and Lipid Panel (CPT 80061).

But starting January 1, 2018, PAMA limited CMS’s ability to automatically combine individual component tests into groups for bundled payment. Labs now have the ability to game the system for higher reimbursement by billing individually for tests in a panel. The GAO report has estimated that this practice could potentially increase Medicare expenditures by as much as $10.3 billion from 2018 through 2020.

The Department of Health and Human Services (HHS) commented that it is taking steps to address this issue. More specifically, HHS is developing an automated process to identify claims for panel tests that should receive bundled payments and anticipates implementing this change by the summer of 2019. In addition, HHS posted guidance on November 14, 2018, stating that for panel tests with billing codes, laboratories should submit claims using the corresponding code rather than the codes for the separate component tests beginning in 2019.

In addition, CMS says that it has been monitoring changes in panel test utilization, payment rates, and expenditures. CMS says that preliminary data indicates that Medicare payments for individual component tests of panel tests have, in fact, increased substantially in 2018.