Tuesday, October 4, 2016

Does CMS Calculate Gapfill Medians Wrong? (Revisited)

I have argued before that multiple policy and regulatory statements about the laboratory fee schedule gapfill mathematics process clearly direct CMS to take the "median of MAC" prices.

However, in the recently released CMS spreadsheets for September 2016 gapfill calculations, CMS is clearly taking the median of the 57 fee schedule zones.  Not the 12 MACs.
(By my count, there are 12 MACs (6 in MolDX: Noridian x 2 + WPS x 2 + CGS + Palmetto) and (2 NGS + 3 Novitas + Novitas + FCSO + 1 Cahaba).  So that's 6 + 6 or 12.)  
If you take the median of 12 MACs, so defined, it would be the average of the two middle prices, a MolDX price and a Novitas price.  For example, in a hypothetical where the MolDX price is $3000 and the Novitas price is $2000, the median of 57 fee schedule zones is $2000, but the median of 12 MACs would be the average of the two middle MACs, or in the example, $2500.

Nerd Policy Quotation

42 CFR 414.508(b)(2) states: "In the second year (of the gapfill process) the test code is paid at the national limitation amount, which is the median of the carrier-specific amounts."  In recent rulemaking, CMS updated the word from "carrier" to MAC - same point.  No one ever says there are 57 MACs - so the median of MACs should be the median of 12, not the median of 57.