Predictive Biosciences holds all the cards for a promising future—it’s received more than $25 million in venture capital and its bladder cancer test is being distributed by ARUP Laboratories. Yet despite having such tangibles in hand, Predictive’s ever-more precarious fate rests on whether it will ever obtain money owed from the most reliable payer in health care history. When the Centers for Medicare and Medicaid Services (CMS) announced late last year it was putting more than 100 new molecular pathology codes on the clinical laboratory fee schedule, it handed the duty of price-setting to its Medicare administrative contractors, or MACs. Although the new payment rules went into effect on Jan. 1, the MACs had until April 1 to set draft prices. Most have yet to reveal their full prices, and CMS is not expected to announce all of them until April 30. That will be followed by a 60-day public comment period. MACs that have released some pricing—Palmetto and Noridian—have been issuing revisions after coming under pressure from regional lobbies such as the California Clinical Laboratory Association. Meantime, some labs are not getting paid for molecular testing performed on Medicare patients. Although many labs have a mix of business that […]
Predictive Biosciences holds all the cards for a promising future—it’s received more than $25 million in venture capital and its bladder cancer test is being distributed by ARUP Laboratories.
Yet despite having such tangibles in hand, Predictive’s ever-more precarious fate rests on whether it will ever obtain money owed from the most reliable payer in health care history.
When the Centers for Medicare and Medicaid Services (CMS) announced late last year it was putting more than 100 new molecular pathology codes on the clinical laboratory fee schedule, it handed the duty of price-setting to its Medicare administrative contractors, or MACs.
Although the new payment rules went into effect on Jan. 1, the MACs had until April 1 to set draft prices. Most have yet to reveal their full prices, and CMS is not expected to announce all of them until April 30. That will be followed by a 60-day public comment period.
MACs that have released some pricing—Palmetto and Noridian—have been issuing revisions after coming under pressure from regional lobbies such as the California Clinical Laboratory Association.
Meantime, some labs are not getting paid for molecular testing performed on Medicare patients. Although many labs have a mix of business that has allowed them to weather the payment delays, it’s put a company like Predictive in a bind, as about half of its revenue comes from performing molecular testing on Medicare enrollees. And it’s become even more precarious since company officials projected Predictive would increase test volumes fivefold in 2013, reaching 40,000 by the end of the year. Predictive Chief Executive Officer Pierre Cassigneul said the unrealized Medicare revenues have totaled more than $2 million to date—an enormous amount for a startup company. It was getting paid about $400 a test under the old code-stacking price structure.
As a result, even though Predictive is in what Cassigneul termed a fast-growth mode, it has instituted a hiring freeze and has been trying to cut costs.
“We can’t sustain this much longer,” he said.
Also waiting on about $2 million in molecular-related Medicare payments is ProPath, a Dallas-area pathology and molecular lab. However, molecular is a relatively small part of its business and it can wait out the dry spell, said Krista Crews, ProPath’s executive director. ProPath’s MAC is Novitas, which recently took over from Trailblazer.
Although Predictive is based in Massachusetts, its laboratory is in Ohio. That state’s MAC, CGS, has yet to release pricing for many molecular tests, including Predictive’s bladder cancer test. A meeting with CGS officials in mid-April did not allay any of the company’s fears.
“We are trying to resolve our situation with CGS but it is hard to understand where they stand and what they will do,” Cassigneul said.
A CGS spokesperson did not respond to a request for comment.
The friction between the labs and the MACs was fairly evident at the recent American Clinical Laboratory Association annual conference. LabCorp Chief Executive Officer Dave King called on the MACs to be more willing to collaborate with the labs. But Marc Hartstein, director of CMS’s hospital and ambulatory policy group, suggested that labs have not been forthcoming on their pricing information.
“The process has been difficult for all of us,” he said.
In the meantime, Cassigneul said Predictive is looking for alternative forms of financing. With pricing in flux, neither banks nor factors—which lend against accounts receivable—will lend the company any money. So Predictive is going back to its venture capital investors—not to expand product lines, but to ensure they remain functioning.
“We’re being strangled fairly rapidly, and it has to stop,” Cassigneul said.
