Arkansas Lab Owner Indicted in $100 Million Billing Fraud

Arkansas Lab Owner Indicted in $100 Million Billing Fraud

Arkansas Lab Owner Indicted in $100 Million Billing Fraud

 A federal grand jury in the Western District of Arkansas has indicted Billy Joe Taylor, age 42, for an alleged scheme that billed Medicare for over $100 million dollars in fraudulent lab test claims between February 2017 and May 2021.

Taylor is the owner of several lab companies, including Vitas Laboratories (Barling, AR), Beach Tox (Torrance, CA), Nations Laboratory Services (Tecumseh, OK), Corrlabs (Southern Pines, NC) and Imaginus Diagnostic Laboratory (Spiro, OK).

Taylor allegedly used access to beneficiary and medical provider information from prior lab orders to submit fraudulent claims for urine drug tests, Covid-19 tests and respiratory pathogen panels, that were not actually ordered or performed. The complaint also alleges that hundreds of claims were submitted for beneficiaries after they had died or otherwise ceased providing samples.

Taylor used the proceeds of the fraud to live a lavish lifestyle, including purchasing numerous luxury cars, real estate, jewelry and guitars, according to the indictment.

Taylor is charged with 16 counts of health care fraud, and one count of engaging in a monetary transaction in criminally-derived property. Each of the counts is punishable by a maximum penalty of 10 years in prison. He is scheduled for his arraignment on November 23 before the U.S. District Court for the Western District of Arkansas.

PC Rates For Key Pathology Services To Get 12% Cut

PC Rates For Key Pathology Services To Get 12% Cut

PC Rates For Key Pathology Services To Get 12% Cut

Medicare professional component (PC) reimbursement rates for most high-volume pathology services will be cut by 12% next year, according to the newly released Proposed Medicare Physician Fee Schedule (MPFS) for 2021. For example, the 2021 Medicare rate for the PC of CPT 88305 is proposed to be cut by 12% to $34.52, while the TC will remain the same at $32.26. Overall, the proposed global rate for CPT 88305 will decline by 7% to $66.78. The reductions are the result of budget neutrality requirements that offset the cost of major rate hikes given to evaluation and management (E/M) services paid to primary care physicians.

Overall, CMS estimates that the new rates will reduce Medicare reimbursement to pathologists by 9% in 2021, while technical component reimbursement to pathology labs will fall by 5%. Among the other specialties hurt by the redistribution of funds to primary care physicians include anesthesiology (-8%), emergency medicine (-6%), general surgery (-7%), infectious disease (-4%) and radiology (-11%). Specialties benefiting include endocrinology (+17%), family practice (+13%), hematology/oncology (+14%), nurse practitioner (+8%) and rheumatology (+16%).

Immunohistochemistry
The global rate for CPT 88342 (IHC, first stain procedure) is proposed to decrease by 7% to $99.68; professional interpretation down 12% to $32.26; technical component down 4% to $67.42.

The global rate for CPT 88341 (IHC, additional stain) is proposed to decline by 7% to $88.07; professional interpretation down 12% to $26.13; technical component down 4% to $61.94.

Molecular Pathology
One of the few bright spots in the proposed MPFS for 2021 is a recalculation of the rate for Molecular Pathology Interpretation (HCPCS code G0452). The current rate of $19.13 is proposed to more than double to $42.91 in 2021.

The Clinical Laboratory Fee Schedule                                                            An amendment (sec. 3718) to the CARES Act has further delayed the reporting period for labs to submit their private-payer payment data to CMS for the second PAMA survey cycle. Labs are still required to collect their private payer payment data from the period Jan. 1, 2019 through June 30,
2019, but the reporting period has been delayed to the first quarter of 2022. Medicare CLFS rates will be frozen in 2021, and lab test codes will then be subject to 15% max annual cuts from 2022 through 2024. CMS plans to finalize these changes when it issues its Final MPFS Rule this fall.

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Medicare Sets Good Rates For Covid-19 Testing

Medicare Sets Good Rates For Covid-19 Testing

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.

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DermTech’s Pigmented Lesion Assay Gets Medicare Coverage

DermTech’s Pigmented Lesion Assay Gets Medicare Coverage

DermTech’s Pigmented Lesion Assay Gets Medicare Coverage

DermTech (La Jolla, CA) received a Proprietary Laboratory Analyses CPT code (0089U) for its Pigmented Lesion Assay in late October, according to CEO John Dobak, MD. Medicare reimbursement has been set at $760 per test effective January 1.

The Pigmented Lesion Assay (PLA) is a non-invasive gene expression test used for early melanoma detection. The test uses an adhesive patch, about the size of a quarter, that is applied across an entire skin lesion. The tape removes the very upper layer of the skin, called the stratum corneum.
RNA is then extracted from the collected skin cells and RT-PCR is used to assess the expression level of two specific genes, PRAME and LINC00518, associated with melanoma. If one or both of the target genes is detected, the test is positive.

Dobak notes that gene expression changes are detectable before physical changes to a skin lesion occur. In two validation studies comparing the PLA test to traditional histopathology diagnosis (n=398), the PLA demonstrated a sensitivity of 91%, a specificity of 69%, and a negative predictive value of 99%.The PLA reduces the probability of missing melanoma to less than 1% (compared to 16% for early stage melanoma with visual assessment and histopathology), according to Dobak.

DermTech performs the test at its CAP-accredited lab in southern California. DermTech is marketing the test directly to dermatologists through 22 employed sales reps. Dobak plans to double the sales rep staff by year’s end.

Challenges include educating the nation’s 12,000 dermatologists on the benefits of the PLA test. There is also a small economic disincentive because the PLA test eliminates the need for a dermatologist to perform and bill for a biopsy procedure (~$100). However, dermatologists that perform the PLA test can bill for a Level IV office visit versus a Level II visit, notes Dobak.

With financial backing from RTW Investments, HLM Venture Partners, and Irwin Jacobs, a co-founder of Qualcomm, DermTech came public by merging with a dormant publicly traded company (Constellation Alpha Capital) in early September.

DermTech reported billable test volume of 3,596 for the three months ended September 30, 2019, up 18% compared to 3,043 for the same period in 2018. Test revenue increased to $385,000 from $321,000.

PC Rates For Key Pathology Services To Get 12% Cut

Top Hospital-Based Outreach Labs by Medicare CLFS Payments

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.

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