Lawmaker Requests Exam of Palmetto MDx Pricing

A California congressman has asked the Centers for Medicare and Medicaid Services (CMS) to examine Medicare administrative contractor Palmetto GBA’s pricing structure for dozens of Tier 1 molecular tests recently placed on the clinical laboratory fee schedule. Rep. Duncan D. Hunter, a California Republican, sent a letter to acting CMS Administrator Marilyn Tavenner on Feb. 27 requesting a “comprehensive overview of the procedures utilized by Palmetto in establishing its fee schedule.” Palmetto has jurisdiction in California, Nevada, and Hawaii, as well as some Pacific territories, and was one of the first MACs to announce its pricing under the gap-fill methodology mandated by CMS as a means of pricing new molecular pathology codes. Hunter raised concerns that the fee schedule recently announced by Palmetto in early February reduced Medicare reimbursements for some high-volume molecular tests by 60 percent to 70 percent, while rates issued by another MAC he did not mention by name issued pricing more than double that of Palmetto’s. “This creates the appearance that the determination of these rates was arbitrary and performed at random,” Hunter wrote. More letters from members of Congress may be forthcoming. Michael Arnold, executive director of the California Clinical Laboratory Association, said his group is disseminating information to that state’s congressional delegation on the Palmetto pricing issue. Arnold sent a letter to Palmetto on March 11 stating that its process for arriving at the prices it did lacked transparency and asking for a disclosure of its methodology.