CMS Disguises COVID-19 Rate Cut as Incentive to Process Tests Faster

Few would argue that the current turnaround time for COVID-19 testing is too long. But there are good reasons why it’s taking labs so long to process and report test results, including unprecedented volume in demand and shortages in supplies and personnel. So, the idea of offering labs add-on payments as an incentive to speed up the process is one based on ignorance. And when you add in the fact that the add-on payment is actually just a recovery of a rate cut, it becomes almost cynical. Regrettably, both of these things are true of the new Medicare reimbursement policy for COVID-19 testing in 2021 announced by CMS on Oct. 15. Medicare Reimbursement of COVID-19 Testing When the public health emergency first began, Medicare paid labs $51 per test for high throughput COVID-19 diagnostic tests. Recognizing that the rate was inadequate, CMS raised it to $100 per test. However, effective Jan. 1, 2021, labs will only qualify for the $100 payment rate if they complete the test within two calendar days of collecting the specimen. Labs that take longer than two days will be paid only $75 per test. The Way It Works Technically, the amended Administrative Ruling (CMS 2020-1-R2) lowers the base rate payment amount for COVID-19 diagnostic tests run on high throughput technology to $75. However, labs will qualify for a $25 add-on payment if:

• They complete the billed test in two calendar days or less; AND
• They complete the majority of high throughput COVID-19 tests in two calendar days or less for all of their patients (not just their Medicare patients) in the previous month.

Labs that qualify will use HCPCS code U0005 to bill for the add-on payment. Labs that fail to meet the add-on payment criteria will receive only the $75 base pay rate. The new payment policy “supports faster high throughput testing, which will allow patients and physicians to act quickly and decisively with respect to treatment decisions, physical isolation, and contact tracing,” notes CMS Administrator Seema Verma in the announcement press release.