2017 Clinical Laboratory Fee Schedule: The 3 Changes Affecting Your Reimbursement

The Centers for Medicare and Medicaid Services (CMS) issued the final 2017 Clinical Laboratory Fee Schedule (CLFS) on Nov. 21. The winners: The small group of labs that provide new specialty molecular tests that dodged the deep cuts proposed in the preliminary schedule; The losers: Just about everybody else. Here is a look at the three key changes you need to know about going into 2017:

1. Seven Molecular Assays Stave Off Big Cuts
At the center of the hullaballoo are the 16 CPT codes for molecular tests that CMS added to the CLFS this year. The question: How much should Medicare pay for these esoteric and pricey assays? In June, CMS proposed interim gapfill prices at a discount from their regionalized prices. Led by providers of the assays, the industry asked CMS to reconsider the interim rates. "The proposed gapfill rates are inconsistent with rates established by commercial payers and the Protecting Access to Medicare Act of 2014," contended The Coalition for 21st Century Medicine.

CMS apparently took heed, dropping the rate cuts and either restoring or increasing the regional prices for seven of the 16 tests listed. Companies benefiting from the change of course included:

• CareDx, which instead of a 77 percent cut got a 47 percent increase on its AlloMap test to identify heart transplant recipients at low risk of rejection (CPT 81595);

• Biodesix, which got a 57 percent hike on its Veristrat lung cancer aggressiveness test (81538);

• Genomic Health, which got a 51 percent hike on its Oncotype DX colon cancer recurrence test (81525);

• BioTheranostics, which got a 23 percent hike on its metastatic tumor origins diagnostic test (81540);

• Invitae, which avoided a 33 percent cut on its hereditary breast cancer panel (81432);

• CardioDx, which instead of a 28 percent cut got a modest 1.4 percent increase on its coronary artery disease risk test Corus CAD (81493); and

• Veracyte, which instead of a 22 percent cut got a 12 percent increase on its thyroid nodule assessment assay Affirma (81545).

2017 Medicare Rate for New Molecular Diagnostic Tests
(Tests for which discounts were proposed but not adopted are shown in boldface)

CMS also increased pricing for fetal aneuploidy trisomy risk testing (CPT 0009M) from $132.86 to $598.

2. New Pricing Formula for Differential Drug Testing G Codes
The other significant development in the final CLFS affects pricing of the four definitive drug tests capable of identifying individual drugs and distinguishing between structural isomers, for which CMS issued HCPCS G codes in 2016—G0480, G0481, G0482 and G0483. To pay for these tests, CMS used a crosswalking formula under which: i. the first two tests performed were paid at the full price of the crosswalk CPT code 82542; and ii. remaining tests within that code were paid at 25% of the crosswalk price.

Industry asked CMS to modify the formula for 2017 claiming that it understates the true costs of performing accurate tests. They expressed concerns that physician office labs without quality control and multiple calibrations were generating high volume of G0483 claims in the first part of 2016. CMS made two proposals to address their concerns:

• Proposal 1: Change the crosswalk formula to allow four tests to be priced at the full crosswalk price; and

• Proposal 2: Create a new G code to recognize labs that perform a less sophisticated version of differential drug tests.

In the end, CMS opted for Proposal 1. Allowing the four tests to be priced at the full crosswalk price should adequately recognize the resources required to perform these procedures, CMS explains.

New Formula for Crosswalking Price of G Code Differential Drug Tests

3. CMS Crosswalks 14 Codes
The final significant change in the 2017 CLFS is the crosswalking of 14 existing CPT codes. (See the Table on the G2 website for a summary of all the codes that were crosswalked.)

Takeaway: Here are the three key things to know about the newly finalized CLFS:

1. Proposed deep cuts in molecular diagnostic tests were not implemented—in several cases, CMS actually granted significant price increases
2. The pricing formula for the four differential drug test G codes has been changed to allow for billing at the full crosswalk price of CPT 82542
3. CMS crosswalked 14 G and CPT codes into existing CPT codes to eliminate duplication.