Are Commercial Payers Using Proposed CMS Gapfill Rates to Ratchet Down Reimbursement?

During the summer, the Centers for Medicare & Medicaid Services (CMS) published proposed interim gapfill prices for 15 molecular tests. The agency said it would likely publish final prices later this year for placement on the Clinical Laboratory Fee Schedule.

The proposed prices cut payments to some tests as much as 85 percent from the current rates set by regional Medicare administrative contractors, or MACs, and several tests by more than 70 percent. The proposed rates have been much aligned by the laboratory community as a result, with significant pushback from the sector. Sector advocates such as the Coalition for 21st Century Medicine said at the time the proposed rates were published that they were "inconsistent" with the intent of the Protecting Access to Medicare Act, or PAMA. That law intends to reset some Medicare rates lower to commercial levels, but capped at annual reductions of no more than 10 percent.

But are commercial payers using the proposed rates of reimbursement to push down their own payments? It depends on whom you speak with. Two sources close to the situation have told Laboratory Industry Report that some commercial payers are indeed using the proposed rates as leverage to make their own cuts, particularly among Medicare Advantage enrollees. Both asked that their identity be kept anonymous.

According to one of the sources, a lab executive, some payers cited a table of proposed rates published in the July 21 issue of Laboratory Industry Report that "appeared to be final mentioned and therefore 'justifies' their low pay rate for Medicare Advantage beneficiaries."

Another source, who advises laboratories, confirmed that the labs had been under pressure.

The sources indicated that the three plans that have been advocated for lower rates are UnitedHealth, Humana and WellCare. All three carriers have sizable Medicare Advantage populations.

Laboratory sector observers say that commercial payers have been ratcheting down payments for tests in recent years, using their large patient populations as leverage.

In some instances, cuts for some tests have been significantly below Medicare rates. UnitedHealth and Humana did not respond to requests seeking comment. WellCare denied it was pressuring labs to accept reduced payments.

"As a provider of government-sponsored managed care services, including Medicare Advantage and Medicaid plans, WellCare adheres to the determined CMS Fee Schedule for the appropriate plan year and pays the standard rate for all codes as outlined in our contracts with laboratory providers," said a statement provided by company spokesperson Crystal Warwell Walker.

Meanwhile, at least one lab executive contended they have not been pressured to reduce their commercial reimbursement in line with the proposed Medicare cuts.

"That is not our experience," said Veracyte Chief Executive Officer Bonnie Anderson. The California-based Veracyte is facing a potential 30 percent cut in reimbursement— nearly $1,000—for its Afirma thyroid cancer test. "We negotiate rates for our tests with commercial payers, which are supported with the value we deliver in patient benefit and surgical cost reductions."

Anderson added that "our contracted rates are not tied to CMS rates and we have not had our commercial contracts challenged during this CMS process. We are confident CMS will finalize rates that are consistent with reimbursement rates in place now for Afirma." Veracyte recently won a local coverage determination from the Noridian MAC for its Percepta lung cancer test.

Other labs contacted for this article did not respond to a request seeking comment.

Takeaway: Commercial payers are potentially using the gapfill rates proposed by CMS as a template for cutting their own reimbursement for testing among their Medicare Advantage population, although it is unclear how widespread the practice currently is.