Friday, January 15, 2021

Very Brief Blog: In Midst of Pandemic, Novitas MAC Tightens Rules for Respiratory Illness Testing

MolDx and Viral Panel Codes

On Monday, January 11, 2022, the MolDx MAC system held a contractor advisory meeting in which a half-dozen experts discussed uses of microbiology panel testing (respiratory, GI, meningitis, etc).  The discussion was somewhat extended and I don't have short bullet-point takeaways from it.   Panelists emphasized that different syndromes were different, different panels and settings were different, patients were individualized, etc.   At some point Noridian will post a transcript of the session. The MolDx system may be considering revising its policy (policies) for panel testing, which currently focus coverage on 5-pathogen-and-less panels.

Novitas Launches Proposed LCD for Viral Panel Codes

The Novitas MAC has released a new policy on respiratory pathogen molecular testing. with a public meeting to be held on January 29, and a comment period open until February 27.

See the Novitas LCD here (DL38916) and the billing article here (DA58575).  

LCD DL38916 Is Very Concise

The coverage section is very concise.  

  • Respiratory panels of 5 and less are covered (1) when timely results can be delivered in an outpatient setting, and (2) clinical management can result in an improved health outcome.

This coverage section has the pro's and con's of 21st Century Cures reforms for LCD structure and process.  The LCD coverage section is supposed state what is covered, why, and when, and not need updating very often.   An attached billing article gives details such as covered CPT code numbers.

In this case, the coverage section is fairly ridiculous, not defining "timely result" and leaving to the reader to figure out when "clinical management results in an improved outcome" to allow even the 3-5 panel tests.

The LCD goes on when an extensive literature review and discussion, including a summary of guidelines.

Novitas held a contractor advisory committee public meeting on respiratory panels in June, 2019, which leaves an audio file and transcript - home page here.  In the LCD, they record CAC members were polled and responded the panels are accurate and may improve outcomes.  The advisory meeting was held long before the COVID pandemic.

Billing Article DA58575

Note that the coding section has covered codes - group 1 - and non covered codes - group 2.   Covered codes including 86731, respiratory pathogens, N=3-5.  2022 codes will be added, including 87428, 87636, 87637, 0240U, 0241U.

The billing article lists a series of non-covered codes, including the standard codes for respiratory pathogens, 6-11 and 12-25 targets (87632, 87633) and a list of 7 non-covered PLA codes for large panels (larger than 5 targets, often around 20). 

The article adds no more to the LCD's superficial rules that results must be timely and can improve patient care.

Zip File

I've put the LCD, article, and 2019 transcript in one cloud zip file here.

You Tell Me: Trends in 87633

87631, '32, and '33 are a triplet of codes for respiratory virus panels, 3-5, 6-11, and 12-25 pathogens.

Interestingly, these codes drop in Medicare utilization from 2018 to 2019.

  • In 2017, national utilization of 87633 was $28M.  
  • In 2018, national utilization of 87633 was $42M.   
    • Remarkably, a great preponderance was in California, with $26M.
  • In 2019, national utilization of 87633 was only $31M.   
    • The delta might be accounted for by the drop of utilization in California, which fell from $26M in 2018 (part of $42M) to only $15M in 2019 (part of $31M).
    • Almost all the utilization in 87633 in 2019 was in So Cal ($15M).   

The national drop from 2018 ($42M) to 2019 ($31M) was probably due to introduction of a MolDx/Noridian LCD, L36315, in mid-2019, which blocks payment to California labs for 87633.

Who Were the Leading Providers of 87633?  Mostly So Cal

Going back to CY2018, when there was $41M of spending on 87633 and $25M in California, the top providers (each with over $1M allowed) were mostly in Southern California.

The top 11 providers (out of 230 providers) billing for 87633, provided $21M of 87633, or about half the national volume.

click to enlarge - CY2018 providers of 87633 (national) - most in SoCal

Very Brief Blog: CMS Leader Seema Verma Checks Out, Notes Many Agency Accomplishment, Minimizes Reference to "Trump"

On January 15, 2021, CMS Administrator Seema Verma left a long essay on the CMS website, describing the numerous accomplishments and achievements of the agency under her tenure of the past four years.

Notably, Verma makes NO mention of President Trump's name.  The essay is about 5000 words.

Separately, Verma submitted her resignation letter to President Trump, dated January 14.  The three-page letter was also posted on her Twitter account - here:

While the resignation letter necessarily is addressed to President Trump, and thanks him for the chance to lead CMS, I don't believe she mentions his name again. 

I've put both the 13p essay and the 3p resignation letter as PDFs in one cloud zip file here.


Yesterday's Blog Predicts This

I had noted yesterday the abrupt disappearance of endless references to President Trump's leadership and President Trumps vision in CMS press releases and headlines (here).  

A New CMS Press Release Today Also Omits Trump's Name

Today's Verma resignation letter and public essay by Verma downplay Trump's name.  Similarly, a new press release today (on a prior authorization final policy) omits Trump's name entirely, although the original draft policy had been released "under President Trump's Leadership."   Here.)


Note on tone.  In as much as the resignation letter is addressed to the President, the many uses of "we" might be taken to include him, and at the close, she does thank him for "your leadership."  However, the blog essay also uses "we" and "us" throughout, and never mentions the President directly.

Very Brief Blog: PRIOR AUTH RULE; CMS Finalizes with Blazing Speed, Payers Rebel

CMS released a proposed rule in December regarding EHR and other requirements for Prior Authorization, and conducted an abbreviated comment period that riled some healthcare providers.   

Remarkably, on January 15, 2021, CMS released the final rule (in the inspection copy that precedes Federal Register publication).   This was lightning speed, usually several months (or more) follow after the close of a comment period (January 4).

The rule doesn't so much change the existence of prior authorization, which many providers wish would happen, as change the format and channels for prior authorization.  More advanced methods of electronic communication are required, with visibility in uniform formats to both patients and providers. 

See the CMS fact sheet here.   Press release here.  See the CMS inspection copy final rule here.

The Payer industry disliked the initial rule proposal, and has already pretty harshly slammed the rapidly prepared final rule as half baked and slapdash.  Here.


I don't know if this rule will be delayed by the Biden administration or not.  Another rapidly appearing rule, appearing under the unusual mechanism of "interim final rule," on Part B drug pricing, has been under court injunctions to postpone implementation.  Here.  This is the "Most Favored Nation" (MFN) drug price rule that pegs US Medicare prices for drugs to European prices for drugs.

Proposed rule press, December 10, here.  The proposed rule press release states:

Today, under President Trump’s leadership, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would improve the electronic exchange of health care data among payers, providers, and patients, and streamline processes related to prior authorization to reduce burden on providers and patients.

In contrast, the January 15 press release on THE SAME RULE, deletes any mention of President Trump entirely.

Today, the Centers for Medicare & Medicaid Services (CMS) finalized a signature accomplishment of the new Office of Burden Reduction & Health Informatics (OBRHI). This final rule builds on the efforts to drive interoperability, empower patients, and reduce costs and burden in the healthcare market by promoting secure electronic access to health data in new and innovative ways. These significant changes include allowing certain payers, providers and patients to have electronic access to pending and active prior authorization decisions, which should result in fewer repeated requests for prior authorizations, reducing costs and onerous administrative burden to our frontline providers. This final rule will result in providers having more time to focus on their patients and provide higher quality care.


See my earlier blog: "After January 6 Disorder, CMS Stops Referring to President Trump's Leadership."

Thursday, January 14, 2021

Very Brief Blog: AMA Asks for Comments on First-Quarter New PLA Applications

AMA takes PLA code applications quarterly, and posts them for comment for several days.  

See the PLA home page here.  The Agenda of PLA codes for the February 6 CPT Editorial meeting is up at the AMA website, pdf  here.  

As per the Calendar, request permission to comment by January 21.

It looks like there are about 14 code applications, including for the PGDx elio tissue complete test (a 510k-cleared distributed 505-gene tumor test).  Five tests or for MindX RNA tests for memory, pain, mood, stress, and longevity.  

After January 6 Disorder, CMS Stops Referring to President Trump's Leadership

During the Trump administration, routine press releases from CMS have headlined with, or opened with, a touting of President Trump's leadership.

For example: in August, the Medicare Coverage for Innovative Technology (MCIT) policy was proposed "under President Trump's leadership" (here).   The leadership quote was raised from the lead, to the headline, when CMS wrote on the same topic in September (here).  

Policies ensuring "swift" vaccination under a "comprehensive plan" were released "under President Trump's leadership" in November (here).  Changes in renal dialysis payment rules that week also came about "under President Trump's leadership" (here).  And so on.

The phrases "under President Trump's leadership" and "President Trump's vision" seem to have vanished now, after the Capitol riots on January 6.   For example, in the press release that finalizes the same MCIT rule which was headlined under President Trump's leadership just this fall, now there is no mention of the word Trump at all - here.

In remarks this week to ABC, HHS Secretary Alex Azar distanced himself by pointedly framing January 6 as, "The rhetoric last week was completely unacceptable."

Tuesday, January 12, 2021

Big News: CMS Releases Final Rule on Special Coverage for Innovative Technologies (MCIT)

Last fall, CMS proposed a special coverage rule that would provide automatic, four-year coverage for Breakthrough Devices after FDA approval or clearance.  On January 12, 2021, after market close, CMS released a fact sheet and the final rule, largely as proposed.  It's called Medicare Coverage for Innovative Technologies - MCIT.  The rule also includes a section where they codify in regulation some generic, longstanding Medicare policies about defining "reasonable and necessary," e.g. "meets the patient's need" and "provided by appropriate personnel."

  • See CMS Fact Sheet here.
  • See CMS final rule press release, here.
  • See the final rule text here.  (76pp)
  • The full Federal Register typeset publication will be later.
  • Coverage at MedCity News here.  At MedTech Dive here.
Some facts to know - 

Diagnostics are in.

CMS continued to be a little confusing about diagnostics, but they're eligible.  CMS notes in discussion that it had asked the public whether coverage should apply only to "breakthrough devices" or whether they should "also include diagnostics and drugs."  (Diagnostics are DEFINITELY devices for the FDA, and many have had breakthrough status already).   After repeating that view, CMS states clearly on page 38 of the early release version that any medical device so classified by FDA and reviewed as breakthrough, is covered under MCIT, "including in vitro diagnostics."  Whew.  

Preventive devices are out.

Devices are only covered under MCIT automated coverage if they are otherwise  eligible for coverage.  For example, eyeglass and dental devices wouldn't be covered even if they were MCIT, because they are excluded by statute.  Regular Medicare-covered devices are "reasonable and necessary to treat illness," not primarily "preventive."  It's not clear many preventive devices would be breakthrough status anyway, since BT status includes being intended to treat or diagnose a serious or fatal illness.

Normal Payment Rules Apply.

Normal payment rules apply, so if a product is bundled in a fixed price under a certain setting, the MCIT rule won't have any effect.  

Normal illogical fee schedules and cumbersome coding delays also apply.  CMS makes several remarks that MCIT is only one of their many initiatives to reduce burdens and delays.   Note, too, that CMS opened an office for Technology Payment Policy last November (here).

You Have to Apply

If you went through FDA breakthrough review status, you have to apply for the CMS coverage.  Details will follow.   CMS writes, "Manufacturers simply need to notify CMS of their interest in MCIT for their breakthrough device via an email box and specify the desired start date for coverage.  CMS will coordinate with FDA and the manufacturer to ensure a smooth start to coverage once the breakthrough device is FDA market authorized."  The covered devices under MCIT will have their own CMS webpage.  It looks like your start date can be delayed if you can't ramp up and commercialize as fast as your FDA approval.  

Commercial Payers - attention will be paid.

One notable rule was reference to "commercial payers" as a major determinant of coverage, outside the breakthrough device part of the policy.  CMS is not using this as a hard-and-fast criteria, but rather includes text that between now and 2022, CMS will develop a process through which it might cover something covered by commercial insurers if it does not meet particular Medicare rules provided in the regulation.  

It seems to me that few things covered by most commercial insurers would literally fail to meet Medicare's pretty bland and generic rules (such as "furnished by qualified personnel" and "meets patient's medical need.")  CMS is likely to include a discussion of commercial insurers' positions as part of NCDs and LCDs at some future point, for example.

Implementing Coverage for "Indication for Use."

The Breakthrough coverage is based on "indication for use."  I submitted a comment that sometimes FDA itself vacillates in its approval documents for a device between "intended use" and "indication for sue," but CMS left the final text pointing only to "indication for use."   

Like USPSTF recommendations, FDA "indications for use" aren't always easy to translate into coverage rules (e.g. an MRI scanner might be approved to "image the human body" which isn't a medical necessity scenario for coverage.)   So we'll see how the policymaking over interpreting "indication" text in the labeling plays out.  

Two Year Lookback

CMS offers 4 years of coverage from the time of FDA approval, but will implement MCIT on a rolling basis if devices still have half the time (2 years) left to run.  So 2019, 2020 Breakthrough approvals can apply for coverage.  As CMS states, "Breakthrough devices market authorized within 2 years prior to the date the final MCIT rule became effective will be eligible for coverage."

Volume of Cases?  2 to 4?  Really?

CMS estimates that each MCIT application will require 15 minutes, that there will be 2 the first year, and 3, 4, 5 submitters in each subsequent year (after which applications will "level off.")   

In part, this depends on CMS being aware of only several BT products so far.  See, however, an article in Nature Biotechnology by Johnston et al. (38:933, here), finding there have been 222 products in the BT pathway by January 2020, and the number was rising rapidly.   

In addition, multiple products can enter the BT pathway because there is no approved product (say, 4); and after one of those 4 is approved, the other three remain in the BT pathway.  (4 products might eventually be approved because they entered at timepoints when no product of the type was yet approved).  

Cocktail Party Question: How Far Back Does  This Idea Go?

The idea of giving special coverage status to BT devices goes back at least to 2016; see my history article here (original from August 2019 and survey back to 2016).

CMS Acknowledges BT Devices Might Fail LCDs, Without This Regulation

In the regulatory cost section, at the end of the rulemaking, CMS notes it is aware of at least 2 recent medical devices that were rated substantial advances for new technology add on payments by CMS leadership, but failed to get LCD coverage (that is, had explicit LCD non coverage).  This can't happen again, for BT devices at least, under the rule.

Other Notes


Original version was also posted to Linked In here.


FDA Home Page

See the FDA homepage for the Breakthrough Device program here.  It's a review program - products are admitted in this "review pathway" because they are likely to meet breakthrough criteria and have promising features.  It's not based on the final results of clinical trials and final review.  

Device is expected to provide more effective treatment, or diagnosis, for a life threatening or irreversible condition.   The device must meet ONE of the following;  (1) breakthrough technology per se, (2) no  approved alternatives [LDTs don't count against this, they're not "approved"), (3) significant advantages over approved alternatives, (4) availability is "in the best interest of patients."

MCIT & Opposition

The approved policy for MCIT overcomes objections of some academics that CMS should conduct its own review and not be handcuffed to accepted a prior FDA decision -  Neumann & Chambers, here.  

AHIP, the insurance plan group, had opposition to the MCIT proposal (comment here.)  AAMC had concerns that some products might be arbitrarily excluded because of differing interpretations of the amount of Medicare-age patient data (here).

Financial Spin

While the market (DJIA) was unchanged on the next day, Renalytix and Exact Sciences were both up about 4%.  Here.   Press release from Renalytix praising CMS for the ruling, here.  For Exact, with a market cap around $25B, a 4% boost is worth about $1B.

Wording of Device Indications

I mentioned that device indications are sometimes pretty open-ended at FDA.  

For example, the Lilly Alzheimer PET scan (Amyvid) is indicated "to estimate beta-amyloid density in adult patients who have cognitive impairment who are being evaluated for causes of cognitive decline."  Which patients?  When?  Everybody?   Always?
Siemens PET/CT K113448 has a section, "Indications for Use" that simply defines the product as a PET/CT system (not an "indication") then states "the systems are intended to be used by appropriately trained health care professionals to aid in detecting, localizing, diagnosing, staging, lesions, tumors, disease, and organ function for the evaluation of diseases and disorders such as, but not limited to, cardiovascular and neurological disorders and cancer.  The images can also be used to aid radiotherapy planning."   Pretty hard to convert that into a LCD for which PET scans are medically necessary and which aren't.  


References to the White House 

In the CMS "Fact Sheet," CMS quotes President Trump's October 2019 Executive Order on CMS reform.  "[President Trump's Executive Order 13890 focused, in part, on CMS streamlining coverage, coding, and payment for innovative technology, including breakthrough medical devices.  This final rule delivers on President Trump’s order by creating an unfettered path to coverage beginning as soon as the same day as FDA market authorization for breakthrough devices."   

While the policy highlights Trump's E.O., it avoids language sometimes used previously in press releases and fact sheets, which went to lengths to specially laud his vision and leadership several times while announcing a regulation.  "Thanks to President Trump's leadership....Thanks to President Trump's vision for America's seniors..."   These latter types of rhetoric are missing today.

The CMS "Press Release" for MCIT has paragraphs of quotes from Seema Verma, but does not mention President 

Contrast this to the December press release on prior authorization policy, writing, "Today, under President Trump’s leadership, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would improve the electronic exchange of health care data among payers, providers, and patients."

Wednesday, January 6, 2021

Very Brief Blog: CDC Belatedly Supports Major COVID Sequence Surveillance

Update: Link to new, NYT story at bottom.


Last spring, I assumed that NGS sequencing of COVID could help fill in gaps in our public health knowledge (for example, using big data to track the movements and patterns of 200 strains of COVID in a city, when we lacked people and case workers to do so).   Plus, obviously, tracking in real time the appearance of novel virus strain behavior like fatality or contagiousness.   Not so; we've read that the US is something like 30th or 60th in its rate of sequencing COVID in its population.

Timely to see a news wire on January 5, 2021, that CDC is now investing in much larger scale U.S. sequencing studies through HELIX.   

Quote: “Having a robust surveillance effort in place is critical to understanding how the SARS-CoV-2 virus is evolving, and how our public health response needs to adapt,” said Dr. James Lu, M.D., Ph.D., co-founder and President of Helix. “By bringing together the strengths of Helix, Illumina, and the CDC, we were able to quickly evaluate the prevalence of this new variant and take learnings from this effort to better and more proactively characterize future strains that will emerge.”

Find the press release here:

Coverage at CNN here.

At 1 pm eastern, 10 pacific, January 6, NY Times posted a lengthy story [1900 words] on the need for more use of COVID-SEQ in the U.S.

Tuesday, January 5, 2021

Very Brief Blog: Final NCD for Colorectal Screening Liquid Biopsy: January 14, 2021?

A quick note to remind us that last fall, CMS announced a proposed national coverage decision on colorectal cancer screening tests.  In the proposed decision - CAG-00454N - CMS will cover blood-based biomarker tests for colorectal cancer if they are FDA-approved and have performance of 74% sensitivity (picking up 3/4 of actual cancers) and specificity of 90% (1 in 10 results are a false positive).   See the proposal here.

According to CMS regulations and proposal tracking sheet, the final decision is slated to appear on January 14, 2020.  Historically, CMS nearly always nailed these due-dates, although in the last couple years, several of them have lagged by several months (e.g. the CAR-T decision).   

There are a number of ins-and-outs to the proposal, for example, annual and biannual test intervals can interact with the sensitivity/specificity statistics, and some tests might be better at picking up advanced adenomas, which don't seem to be counted as the NCD defines tests in terms of cancer metrics.   Nonetheless, if the final decision is more or less in the format of the proposal, it will provide clear measures and accelerated coverage to the multiple colorectal blood tests that are in, or will soon enter, FDA pipelines.   


Generally, CMS only adopts new preventive benefits if they are authorized as line items by Congress or if they are adopted via NCDs after they are endorsed by the US Preventive Services Task Force.   Due to nuances of Medicare law, CMS has authority to create new preventive benefits in two areas, colorectal cancer and prostate cancer, based on its direct and de novo assessment of the preventive test technology.  It's unlikely, though, it would review a preventive test prior to FDA approval, and the proposal currently in play is designed to be triggered only after FDA approval.


Epigenomics, the named test in the proposed NCD, issued a Euro5M convertible bond in January (here).

Monday, January 4, 2021

Very Brief Blog: AMA releases January 1, 2021 PLA Codes

AMA releases new batches of Proprietary Laboratory Analysis codes every quarter.   The new batch for January 1, 2021 is out.  Codes released this week will be effective in one quarter (April 1, 2021) except for COVID-related codes, which AMA releases as "effective immediately" on a rolling basis.

See the home page for PLA codes here:

See the codes here:

Note that AMA accumulates PLA codes on a rolling basis quarter to quarter, but then cuts this online PDF list back each January, when codes from several previous quarters are officially published in the annual CPT handbook.

Upcoming PLA submission dates are January 7 and April 8.  April 8 submissions will probably be included in the June 2021 CMS annual new test pricing process.

By my count there were about 12 PLA codes released October 1, and only 6 released now for January 1.

The six new PLA codes are,

  1. 0242U, Guardant 360 CDx (FDA-approved LBx test)
  2. 0243U, Perkin Elmer pre-eclampsia biochemical assay
  3. 0244U, Paradigm Diagnostics, MAP Pan Cancer tissue test, 257 genes
  4. 0245U, Interpace Diagnostics, ThyGeNEXT thyroid oncogenes, 47 genes (fusions), includes risk of malignancy
  5. 0246U, San Diego Blood Bank, PrecisionBlood, 51 RBC antigens
  6. 0247U, Sera Prognostics, preterm birth biochemical assay (LCMS)
Regarding Sera PreTRM, see a January 2021 article about a real world study with Anthem, here.

Very Brief Blog: NIH RADx-Funded Novel COVID PCR Device...Being Advertised

 For COVID, emergency use authorizations (EUAs) come in a range of sizes and formats - for lab-developed tests, for test kits to run on big platforms (Thermo Fisher, Roche, Hologic), for compact devices (Cepheid)...and for novel devices.   

I've been uncertain how the timeline for novel devices compares to the other modalities.   I was surprised but happy to see a advertisement for the VISBY device in a new issue of CAP TODAY...suggesting it is well along in the real-world commercialization path.

In September, 360Dx described the device as "Patient-side, Disposable, Molecular PCR Diagnostic Device, a single-use PCR machine the size of a cassette. Founder Adam de la Zerda called the device the 'first and only' single-use PCR instrument up to now and emphasized that everything about the instrument 'has been for single-use.'  "   

The FDA EUA is here.   An October article about its NIH RADx (rapid diagnostics) funding is here.   In September, the company remarked it had filed for CLIA waiver earlier in the year (here).   I believe CLIA-waiver status is still under review.   (In the COVID antigen space, there are EUA and CLIA-waived tests, though).  

The September article also contained the remarks, "[It] doesn't include a service component, which de la Zerda highlighted as a benefit. If the device breaks down, instead of having to wait for a technician to come and fix it, as in the case of a standard PCR machine, the user can just throw it away."


According to an October article, CUE Health in San Diego received $481M in federal funding for a novel compact (but not disposable) diagnostic platform for COVID.


For recent open access articles discussing NIH RADx, here, here.  


I'm not a regulatory expert, but just to mention, there are differences between CLIA-waived for healthcare settings, and FDA permission for home use (like a pregnancy test).  Here, here, here.

Very Brief Blog: CMS Applying CLIA-Waivers to COVID CPT Codes

In Medicare claims processing, CMS processes laboratory CPT codes against edits related to CLIA lab status.   Most lab codes can only be processed for an entity with full CLIA certification, but dozens are "CLIA WAIVED" and this is flagged by added "QW" as a two-place modifier.

On December 23, CMS released some updated QW additions, specifically to the rapid antigen code 87811 and to the multi-antigen code (influenza + Covid) 87428.

Find the CMS source document here:

CMS also has a master list of all new and old QW codes online here.  For a MAC webpage with notes on how to use QW, here.  For the full text of R10529OTN, including instructions to MACs on what an EUA is, see OTN10529 here.  OTN means "one time notification."

As occurs with other CMS transmittals, the dates can be quirky.  This one is released December 23, effective October 6, but needs to be implemented (by MAC computers) only by April 5, 2021.   

To skim recent CMS announcements, here.

Tuesday, December 29, 2020

Very Brief Blog: Medicare's 2018 Spending for CYP (PGx) Codes; Falling 2018-2019

The entry point for this blog is that I noticed a drop in national Part B spending for the most frequent pharmacogenetics codes (81225, 81226) between 2018 and 2019.  2018 Part B payments were $28M (81225, $10M, 81226, $18M) while 2019 Part B payments were $20M (81225, $8M, 81226 $12M)

Data analysis shows the change moving into 2019 was driven mostly by changing payments in Georgia, after the MAC transferred from "Cahaba MAC" to "Palmetto MAC," which introduced MolDx Z-codes and edits.


In CY2018, Medicare spent $33M on CPT codes 81225-81231 (CYP genes), of which $28M went to the top two codes, 81225/81226 which are CYP2C19 and CYP2D6.

I looked at the state and MAC distribution of CMS payments for these two codes.

For both CYP 2C19, $10M, and CYP 2D6, $17M, about 55-60% of payments went to providers in Georgia and Tennessee:

If we look at MAC level payments, these were dominated by the Cahaba MAC (over 50%), followed by either the Novitas MACs or the MolDx system MACs:

Cahaba, with 7% of the US Part B, paid a disproportionate number of PGx claims in 2018, over half of US claims for either 81225 or 81226.  

Transitions 2018, 2019

Georgia had a large portion of 81225/26 CYP payments in CY2018, but the dollar volume fell from $12.9M in CY2018 to only $1.5M in CY2019.   This was related to the transition from Cahaba PGx edits to Palmetto MolDx PGx edits.

CY2018, left.   CY2019, right. (Georgia only)


Rather than focus on PGx...

If instead we used all non-proprietary genetic CPT codes (811xx, 812xx, 813xx, 814xx), there were $736M dollars paid in CY2018, of which $128M were paid by Cahaba (18%).   In CY2018, $104M/$735M or 14% of all US non-proprietary genetics were paid to labs in Georgia, which has 3% of the FFS Medicare population. 

Using 2018 CMS cloud data for state files, and 2019 CMS excel data for state files, and using codes 811xx-814xx, we see $104M in payments in Georgia in CY2018, and $11.5M in CY2019.


Palmetto (MolDx) took over GA/TN in 2018,  but based on comparison of payments 2017-2018-2019, it appears that MolDx edits weren't fully implemented into well into 2018 (here). I've listed the payments under Cahaba, the 2017/partial 2018 contractor. Palmetto would have introduced a highly restrictive PGx policy at some point before the end of CY2018.  Palmetto updated its PGx policy in its MolDx regions in mid 2020.


When AMA and CMS transitioned from "stack codes" for mopath payments to specific CPT codes (such as for "CYP2C19") in 2013, there was a huge boom in PGx/CYP payments, which suddenly came to comprise half or more of CMS mopath payments around 2014.  

CMS rapidly rolled down LCDs that controlled PGx/CYP payments, and these payments fell drastically from 2014 to 2015 to 2016, as shown in the bar chart below.  (I've pulled this slide from an available lecture, and haven't revisited the original data today).

CYP (PGx) Pt B Spending Falls Sharply 2014-2015-2016


Saturday, December 26, 2020

Blog #5 of 5: 81407 as Weirdest Tier 2 Code (&) Strange Impact on 70/30 Billing Rule (&) Wacko CLIA-CMS Edits

Triggered by the December 22 release of the OIG report on lab spending for CY2019, I've written a set of 5 blogs.

  • #1 - OIG report; Focus on 81408 as biggest genomic code
  • #2 - Review of all Tier 2 payments (81400-81408)
  • #3 - Review of MolDx Tier 2 payments
  • #4 - Review of NGS MAC Tier 2 payments
  • #5 - 81407 as the weirdest Tier 2 code
click to enlarge

Blog #1 here, Blog #2 here, Blog #3 here, Blog #4 here, Blog #5 here.


Earlier this month, OIG announced that hitherto nearly unknown Tier 2 code 81408 had become the largest genomic CPT code in the Medicare system, with nearly $290M of payments in CY2019.  I've discussed aspects of this in several preceding blogs.   I've also looked at the Tier 2 system (codes 81400-81408) as a whole which are extraordinarily skewed to billing via the Novitas system (e.g. of $400M in Tier 2 codes in 2019, only a couple percent of all Tier 2 codes were paid via the MolDx and NGS MAC systems together, which are the vast majority of US population and states).   '

  • Tier 2 payments in 2019, at $400M, were almost as much as paid for all genomic codes just a few years ago (2017).  

In looking at Tier 2 codes, I noticed that the several labs that account for most Tier 2 code billing, tend to bill zero or very little of code Tier 2 Level 8, 81407 (here).   

You can see this in a basic national chart of Medicare Tier 2 code payments in CY2018.   Payments for 81406 were $22M, for 81408 $123M, but 81407 plummets to only $6M:

When I review of the genes earmarked by AMA CPT for Tier 2 codes 81406, 81407, and 81408, it's unclear when 81407 would work this way.  

(A partial explanation is that 81406 and 81408 have CMS MUE edits of 2, allow 2 payments per day, while 81407 has an MUE edit of 1.  However, that doesn't account for the plummeting utilization of 81407 compared to 81406, 81408, shown above.)

Exercise for the Reader

I'll leave it as an exercise for the reader to log on to CMS public records for recipients of payments in 2016, 2017, 2018, with a search on Code 81407.   

In contrast to the skyrocketing growth of 81408 in these three years (and 2019), 81407 was billed by a few labs that came and went from year to year without any pattern.   

Labs billing 81407 often had unusual names; I'm making this one up, but names like "ABC Laboratory, Boca Raton, FL" would not stand out.   

Sometimes, the only internet footprint of these labs is (A) registering an NPI number, (B) showing up in CMS records for Tier 2 codes with a few million dollars of payments, and then (C) a tiny bankruptcy notice in some court filing that Google detects.  Well, I'm not saying there's anything wrong with that.

Impact of Huge Lab Price Ranges on 70/30 Rule

In 1994, the OIG introduced the term "shell laboratory," remarking, " [it] conducts very little testing on the premises, even though it is Medicare certified....Despite the location of the actual testing, the local ``shell''  laboratory bills Medicare directly for these tests."  Correspondingly, Medicare statute at 1833(h)(5(A) allows referred test billing only if less than 30% of a lab's tests are referred out.  

However, in 1989/1990, when the 70/30 percentage rule was introduced by Congress (see OBRA 1989 §6111 and OBRA 1990 §4154), most lab tests had similar prices, e.g. $5, $10, $15.   

Today, lab tests run from $3-$4 (82962, glucose, 81002, urinalysis, 85611 prothrombin) up to over $5000.  

Let's stop at Medicare largest genetic test in 2019, 81408, at $2000.   It seems like a lab can refer out about 1,000 cases of 81408 for every 2,000 tests of 81002 it does in house (the 70/30 test percentage rule; see here).  
If there were #2,000 in-house $3 tests, that would garner $6,000, while the #1,000 81408 tests referred out would be payable at $2M.   A lab could seemingly could bill $2,006,000 while meeting the 70/30 rule at SSA 1834(h)(5).   This could lead to a sort of industry that outsources 81408 tests selectively.   (By the way, it would require only 500 patients, to reach $2,006,000, with each of the 500 patients getting 4 of the $3 test and 2 units, the payable limit, of the 81408 $2000 test).  

CMS paid for 146,000 81408 tests in 2019; it's not known how many were paid as reference tests (send out tests) from places like "ABC Laboratory" that vanish within the year.  

Referred lab tests (if scrupulously coded, which might not be the case) should have a -90 modifier, e.g. 81408-90.  

CMS doesn't publish data what proportion any particular lab code arrives with -90 modifiers, although those facts might be obtainable via a FOIA request.   

CLIA Edits for Tier 2 Codes: The Final Shock

I'm guessing that CMS processing lab codes on claims to require a CLIA number and category that is the same as those listed in the CMS CLIA/Code/Claim requirements files.  If so, the requirements are just batty.   

Most genetic codes require "220,310" which is "chemistry" or "immunology" status.  A few require 900 "cytogenetics."  

OMG.  The requirements for the Tier 2 codes are published by CMS as in the table below.  All can use 610 (histopathol) while several can also use 220, 310, 400, which are Dx Immunol, Chem, and Heme.  I'm not expert in this and it looks as if you would have to have CLIA certification 610 histopathology to bill whole gene sequencing code 81408.   I don't know that for sure and will check around, but it looks crazy.  See the chart below of what CLIA subtypes are assigned to what CPT codes.

This makes another point.  At least in principal, many CLIA classifications are predicated on CPT codes.  When CPT codes skew to grab-bag codes (like 81408 or 81479), it's not possible to tailor the CLIA classifications to the needs and qualificiations of a particular identified test.   We think of CPT codes as designed to handle provider-payer communications, but they also have a regulatory function in applying CLIA rules.

Blog #4 of 5: NGS MAC Manages 20% of Medicare, Pays 0.1% of Tier 2 Codes

Triggered by the December 22 release of the OIG report on lab spending for CY2019, I've written a set of 5 blogs.

  • #1 - OIG report; Focus on 81408 as biggest genomic code
  • #2 - Review of all Tier 2 payments (81400-81408)
  • #3 - Review of MolDx Tier 2 payments
  • #4 - Review of NGS MAC Tier 2 payments
  • #5 - 81407 as the weirdest Tier 2 code
click to enlarge

Blog #1 here, Blog #2 here, Blog #3 here, Blog #4 here, Blog #5 here.


Earlier this month OIG reported for Medicare that CPT code 81408, a hitherto almost unused Tier 2 code, was the highest-paid genomics code in 2019.  

This led me to study where it's billed (mostly states under Novitas, including Mississippi and Oklahoma), and its growth rate (81048 grew 580X in just three years 2016-2019).   

Then, I turned to Tier 2 billing as a whole (all the codes 81400-81408), here.   I had noted that billing for code 81408 plummeted 99% when Palmetto took over the southern states TN GA AL in across 2018/2019.  That led me to look at Tier 2 billing as a whole, and, in the MolDx system as a whole (here).  I discovered that only 2% of  all Tier 2 dollars 81400-81408 in 2018 were paid by the MolDx MACs, despite their paying a predominance of mopath codes overall.   

In all this, I've said that most of the billing went out via Novitas, which has no edits on Tier 2 codes per its public LCD.   (That's about $400M in Tier 2 codes in 2019, almost as much as the entire domain of mopath spending in 2016/2017.)   You may be asking, what about NGS MAC?   

Tier 2 Payments by NGS MACs, CY2018

NGS MAC has 10 states, three in the midwest under Jurisdiction 11 (MN, WI, IL) and 7 in the northeast under Jurisdiction JK.  

Together these are about 20% of fee for service Medicare.  

The cumulative billings for Tier 2 codes in these states for CY2018 are in this table:

NGS MAC has 20% of Medicare Population and 20% of States

RESULT:  NGS MAC has 20% of Medicare population but pays 0.1% of Tier 2 budget.

Take a moment to catch your breath.


So MolDx MACs had 2% of payments in 2018 ($4M/$190M), and NGS MACs had 0.1% of payments ($268K/$190M).   

I suspect the level of payments in MolDx MACs remained more or less similar in 2019 (circa $4M) and in the NGS MACs (circa $300,000) while the national Tier 2 spending (thus, mostly under Novitas and First Coast) grew from $190M to $400M.    Here's what Novitas says about Tier 2 edits:

Novitas LCD re Tier 2 Codes

Thursday, December 24, 2020

Blog #3 of 5: Inferring MolDx Edits on TIer 2 Codes: Amazing Data

Triggered by the December 22 release of the OIG report on lab spending for CY2019, I've written a set of 5 blogs.

  • #1 - OIG report; Focus on 81408 as biggest genomic code
  • #2 - Review of all Tier 2 payments (81400-81408)
  • #3 - Review of MolDx Tier 2 payments
  • #4 - Review of NGS MAC Tier 2 payments
  • #5 - 81407 as the weirdest Tier 2 code
click to enlarge

Blog #1 here, Blog #2 here, Blog #3 here, Blog #4 here, Blog #5 here.


This week, OIG released data that Tier 2 code 81408 was the highest-spending code of all genomic CPT codes (here).  This code rocketed in utilization by 580X (not 580%, 580X) from 2016 to 2019.  Moreover, most (or all) of that spending on 81408 was in handful of states with no edits on the code.

This led me to do a second study of Tier 2 spending more generally - all the codes from 81400 to 81408.  I published that earlier (here).   Spending nationawide rocketed from $190M in 2018 to almost $400M in 2019.  

Now, rather than looking at "national" data, I compare MolDx MACs to other MACs.  WE'LL LEARN:  If MolDx edits were applied nationally, all Tier 2 spending would fall by 96%.  Amazing but true.


Back Story

I had previously noted that the spending for Tier 2 codes was irregularly distributed and in a limited number of states, most especially for the $2000 code, 81408 (a code never paid in the NGS MAC or MolDx MACs).  

But after looking at national data for Tier 2 codes in 2018 vs 2019, I wondered how the MolDx states compared, and across all Tier 2 codes.

My Research on MolDx Rules

First: No consolidated publication.  As far as I know, there's no published general MolDx "policy" for Tier 2 codes.   

Second: Datamining the DEX Exchange.  You can go to the DEX Exchange website owned and run by MolDx, and look up individual Tier 2 codes by gene name (by gene names indentified inside each Tier 2 code by AMA definitions).   You could tally those up in a spreadsheet.  However, Palmetto includes a pretty strict disclaimer about using the data (other than reading it!) (here).   I looked up several genetics labs in the MolDx region, and the largest one had about 90% of its genes registered with MolDx were publicly listed on DEX as "N" nonpayable, so that suggested the edits were pretty numerous and stringent.  

Third: Inferring Edits from Payment Profiles.  But there's another approach.  I went to the CMS cloud database for CY2018 (here), and the State data files.  I downloaded all usage and spending data for all codes 81400-81408 (Tier 2 codes) for all 50 states.  

Then: I then subtracted the 24 states (and DC) that aren't part of MolDx.  

For this purpose, since MolDx took over TN/GA/AL in mid-2018, I left those out of those "newest" MolDx states, since MolDx didn't manage them for MolDx edits for the full year (see here).

Here is the result for MolDx Tier 2 payments in CY2018:

 MolDx Tier 2 Spending 2018

So we can see that MolDx authorized 28,742 across all Tier 2 services in Cy2018, dollars allowed being $4.6M.  

But, utilization dropped to around 1000 cases for 81405 and 81406, and payments from MolDx occurred in only 1-2 states.   There was NO payments by MolDx for either 81407 or 81408.

It's possible to look up each code, each state, each lab, behind the above table.  CMS public data will tell you every lab that billed, say, 81404, in what state, for how many patients.  For a deeper analysis of the ratios of distribution of these tiers of payments in 2018, here.

How does this MolDx utilization of Tier 2 codes - 28,742 services, $4M - compare to national utilization of Tier 2 codes?  

Pretty damn amazing.  Overall, MolDx pays a huge proportion of Mopath spending, as much as 80% as recently as 2017.  (NGS MAC, for example, pays almost nothing in Mopath codes, except for Cologuard in Wisconsin).   

But that MolDx domination of MoPath payments comes to a halt when Tier 2 codes are involved.

For the two highest Tier 2 codes, MolDx pays nothing.  For four other Tier 2 codes, MolDx pays only 2-8%, although its rules apply to about half the US population. 

Net-net, if MolDx managed Tier 2 codes nationally, spending would fall over 90%.   This is driven, of course, on the assumption that 81408 spending at $123M would fall to 0%, its MolDx rate.  Table:

MolDx pays 8% of services, but only in the low-cost tiers, so overall MolDx pays only 2% of Medicare Tier 2 dollars.  


I had had an inkling of this when I looked at 81408 data for CY2018, CY2019, comparing TN-GA under Cahaba edits versus under Palmetto MolDx edits:


Foonote 1.

Payments for all Tier 2 codes in 2018 were $37M in GA and $15M in TN.  This is out of keeping with MolDx edits, and I found some web source stating that MolDx wasn't applied until a few quarters after the February 2018 takeover of other Cahaba-state edits. 


Footnote 2.

CMS has released national payment data for CPT codes for 2018 and 2019.  That's how we know that 2019 Tier 2 payments were about $400M.   But 2018 data is available in cloud database format, and 2019 data is only publicly available in pretty awful individual state spreadsheet files.   My guess for 2019?   Well, 2018 there were $4M of MolDx Tier 2 payments and $186M of non-MolDx payments.  Since there are $390M of total payments in 2019, I'm betting MolDx payments were close to the same ($4M) and that neans that about $386M was in other states.  I'm not eager to cut and paste the data from 50 files just to prove that.  

CMS cloud data for 2018 lets you be even more granular than the state and MAC level, and drill down how different labs billed different patterns for the 81400-81408 code series.  This is pretty detailed stuff and I've put it on a side blog here.  For example, the 10 labs that did most of the billing for 81408 in 2017 (when total Tier 2 billing was $70M) did 70% of the billing for all Tier 2 genes in 2018, when billing was $190M.  

Footnote 3.

NGS MAC pays even less (!!) for Tier 2 services than MolDx does.  See the next blog, Blog #4.