Initial Gapfill Prices Released for Molecular Pathology Codes

Two Medicare Administrative Contractors (MACs) were first out of the starting gate in late January when they released their gapfill payment rates for molecular pathology codes new to the 2013 Part B lab fee schedule. Cahaba, which covers Alabama, Georgia, and Tennessee, announced its pricing for the Tier 1 molecular pathology codes on Jan. 25. Palmetto GBA announced its pricing and coverage determinations for 78 of the Tier 1 codes on Jan. 28. Palmetto covers California, Nevada, and Hawaii, as well as the U.S. territories of American Samoa, Guam, and the Northern Mariana Islands. To industry analysts who track the large lab companies, the gapfill prices were disappointing to say the least but not unexpected. To the California Clinical Laboratory Association (CCLA), the Palmetto rates were alarming, prompting it to schedule an emergency board meeting to craft a crisis response plan. In many instances, these rates are below the costs of doing the tests. “They have no relationship to reality,” said CCLA Executive Director Michael Arnold. “They will result in lab closures, lost jobs, and a reversal of recent advances in personalized medicine. Patient access to many lifesaving genetic and molecular tests may no longer be available.” In assigning the codes to the Part B lab fee schedule, CMS opted to use the gapfill method, which lets MACs determine the payment rates based on local pricing patterns, versus the crosswalk method, where a new code is matched to an existing code or set of codes and paid at the rate. CMS said it did not have sufficient information to establish national payment rates for the molecular pathology codes in 2013 but would use the rates that MACs set this year in determining national fees for these codes in 2014. Gapfill Rates Lower In its preliminary analysis of the Palmetto payment schedule, Deutsche Bank said it believes Medicare reimbursement for the 78 codes could represent a reduction of 25 percent to 30 percent for Quest Diagnostics and LabCorp in this testing segment. For example, Palmetto will pay $57.51 for BRAF testing (CPT 81210) while Cahaba will pay $123. According to reports, labs typically were paid between $119 and $301 under the old code-stacking method. For KRAS mutation analysis (CPT 81275), Palmetto will pay $225.88 while Cahaba will pay $235. Payment under code-stacking ranged from $256 to $637. An initial analysis by Piper Jaffray on a subset of the codes found on average reimbursement levels are 18 percent lower than the average price using code stacks from Quest and Medicare’s national limitation amounts. Based on an assessment of 55 of the codes, the median decline is 25 percent, with the largest price difference coming from BRAF Mutation (CPT 81210) and KRAS (81275), while pricing for Warfarin (81227 + 81355) is down 13 percent.

HOW INITIAL GAPFILL PRICES STACK UP
CODE	LAB TEST	CODE STACK PRICE	PALMETTO	%CHG	CAHABA	%CHG
81200	Canavan Disease Mutation	$213	$94*	-56%	$123	-42%
81206	BCR/ABL1 Quantitative	$61	$108	78%	$123	102%
81210	BRAF Mutation	$259	$58	-78%	$123	-55%
81225	CYP2C19 Genotype	$290	$135	-53%	$305	5%
81226	CYP2D6 Genotype	$159	$148	-8%	$50	-69%
81227	CYP2C9 Genotype	$219	$97	-56%	$50	-77%
81235	EGFR mutation analysis	$302	$116	-61%	$123	-59%
81241	Factor V Mutation Analysis	$136	$69	-49%	$50	-63%
81243	Fragile X DNA Test	$130	$61*	-53%	$123	-5%
81255	Tay-Sachs DNA Analysis	$379	$94*	-75%	$123	-68%
81270	JAK2 Mutation Analysis	$88	$73	-18%	$90	2%
81275	KRAS Mutation Analysis	$911	$226	-75%	$235	-75%
81291	MTHFR DNA Analysis	$130	$93	-29%	$235	81%
81342	T-Cell Gene Rearrangement	$83	$148	70%	$205	148%
81350	UGT1A1 Genotyping	$83	$59*	-29%	$123	49%
*Priced, but not yet covered by Palmetto Source: Piper Jaffray Industry Note, Jan. 31, 2013. Prices from Palmetto and Cahaba are compared with stacked code prices from Quest Diagnostics.

  Coverage Denials an Issue Reimbursement rates are not the issue if the test is not covered in the first place under Palmetto’s MolDx program. Darren Lehrich, an analyst with Deutsche Bank, notes that only 53 of the 78 codes priced by Palmetto thus far appear to be covered under Medicare based on Palmetto’s review of available literature. Among the tests denied coverage are Fragile X DNA testing, Apolipoprotein (Apo) E genotype testing to assess risk of cardiovascular disease, PTEN tumor suppressor gene testing, and UGT1A1 gene analysis testing used to guide therapy selection for colorectal cancer. According to Palmetto, the majority of denials are due to lack of evidence of clinical utility. Palmetto wants to see published studies demonstrating that physicians actually make clinical decisions based on test results. Labs performing tests that have been denied coverage by Palmetto must seek payment from the patient’s private insurance carrier or from the patient. Rina Wolf, vice president of commercialization strategies, consulting, and industry affairs for Xifin Inc., a revenue management firm based in San Diego, is advising clients who are affected by this pricing to submit their concerns, along with supporting documentation as to their costs and any potential impact on access to these tests, to Palmetto. BRACAnalysis Testing For BRACAnalysis testing (CPT 81211), Cahaba set pricing at $2,900, which is 13 percent below what the test developer, Myriad Genetics, had been paid previously. Palmetto has not established a payment rate for that code since the testing is performed outside its jurisdiction. Myriad submits claims to Noridian, the MAC in Utah, for payment, not Cahaba, notes Amanda Murphy, an analyst with investment banking firm William Blair. However, Cahaba rates may be factored into the overall median calculation that CMS uses to calculate 2014 reimbursement for the new molecular diagnostic codes. Gapfill Timetable CMS has given its MACs until April 1 to complete gapfill pricing for the molecular pathology codes new to the Part B lab fee schedule. CMS will post the rates on its Web site by April 1 for a 60-day period of public comments (not reconsideration requests). Later, when CMS finalizes the gapfill rates, it will accept reconsideration requests on the gapfill amounts for 30 days. Once the reconsideration process is completed for a cycle, the CMS determination is final and not subject to further reconsideration. Source: CMS Web site, www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/clinlab.html