Friday, September 25, 2020

CMS Releases National Data File for CY2019: 81408 Is The Fraudomatic Code in Some States - Submit Your Claims Tonight!

On September 16, 2020, I noted that CMS had released Excel spreadsheets of Part B spending by CPT code for every state - here.   On September 22, I released some deep dive analysis of MoPath spending by state - showing massive increases in fraudulent spending, in some cases, the states and CPT codes where the spending was concentrated.  Here.   I noted that the most egregious cases - the ones that popped out high to the naked eye, like Florida, D.C., and Oklahoma - were either under the Novitas or FCSO MACs, both subsidiaries of Florida BCBS.

  • New!  CMS has now released a consolidated file of national Part B spending, by CPT code, for CY2019.  Find the original CMS website data here.
    • I make no promises for transparency or clarity but I've put all my worksheets for this blog in the cloud too, here.

The files can maddeningly tedious because they are broken into dozens and dozens of individually tiny files (e.g. 13 kb, 21 kb) with short runs of CPT/HCPCS codes. 

Luckily PATH series codes, including "U" or PLA codes, are in one file named Y2019_0001U.xlsx on the CMS website linked above.

All Pathology, Lab Medicine

I sorted all the Path/Lab codes by TOTAL (this sums technical component, professional component, other, where they exist).  Total Path/Lab dollars allowed were $7,133,811.

Sorting by "Allowed charges," the top 15 codes were paid 56% of the total or $4.0M.

The highest code was 88305 (surgical biopsy) with 20M services and $1B in dollars allowed.

The next highest code was 80053 (routine chemistry panel), with 29M services and $342M dollars allowed.  As you can see by eyeball, with around 30M services and around 300M dollars that's in the ballpark of $10 per service.

Three MoPath codes were in the top 15:  81408 (Tier 2 Level 9), 81528 (Exact Cologard, circa $500 per case, 482K cases and $245M, sounds right).  Followed by 81479 (mopath unlisted code, used almost exclusively in MolDx states in other recent years), at 109,555 services and $202M cryptically spent dollars - cryptic, at least, to the public with this CMS file. Click to enlarge:

MoPath Codes

I merged all the PLA ("U") codes with MoPath (81162-81599). 

Allowed charges was a collosal $1.7B - last year in 2018 it was about $1B.   

The top 15 codes concentrated 78% of payments, or $1.3B.

The largest code was 81408 - Tier 2, Level 9, $2000 each, 146K services for $290M allowed charges.  That's likely due to stupendous growth in payments for this code in Novitas/First Coast states like FL, DC, OK (here).  

Next was Cologard at $245M.  

Next was Unlisted Code, 81479, traditionally used only in MolDx states, at $202M.  Then BRCA testing (BRCA1-2 & Dup Del), 81162, for 60,000 services for about $120M allowed charges.  Finally, in the top 5, was 81519, Oncotype Dx, with 22,000 services at $85M. Click to enlarge.

Most PLA Codes Unused

Total PLA code spending was $116M, but if you leave off the top 2 (FMI and Oncotype Prostate) the total PLA spending plummets to $16M out of the $1.6B for MoPath - a rounding error.

The highest "administrative MAAA" code was 0003M, at #18, with only $18,781 allowed for 42 services.  Click to enlarge, but most of the numbers will still be pretty small.

The Reward For Most Unbelievable Code Goes to - 81408

Here's the basics:

2017 -  5,817 cases, $9,550,000 dollars

2018 - 62,000 cases, $123,000,000 dollars

2019 - 146,000 cases, $290,000,000 dollars

What code are we talking about?  81408!  This is AMA CPT Tier 2, Level 9, CMS price $2000.

That's 14X growth 2017-2018, and 32X growth 2017-2019.  If spending on this unbelievably rare code set had been kept at 2017 levels, national MoPath spending in 2019 would have been nearly $300M dollars lower.

It's pretty tedious to do 81408 spending in CY2019 by MAC - you'd use the 50 state spreadsheets one at a time - but it would probably show that some MACs were completely resistant to this fraud and others gushed out money like a firehose.  For example, I quickly found that despite TWO YEARS of explosive fraudulent use of this code, according to the CMS Coverage Database, the Novitas MAC still has a billing article A52986 that says "81408 has no edit codes at this time."  Ya think? I think they already noticed that.  This clipping next is from TODAY.  Wake up and smell the coffers being drained.

Click to enlarge, but it may give you nightmares:

81408 seems to be the most popular code with fraudsters, based on other analyses I've been doing.  There are only 24 allowable rare genes listed under 81408 - little gems like "LAMA2 congential muscular dystrophy, full sequence" and CEP290, Joubert syndrome, full sequence (a cerebellar malformation that cause gross maldevelopment in infancy with mean age at death age 7.

You Can Understand It: MolDx and MolDx MACs Journey Toward Liquid Biopsy Coverage (For Both Solid & Heme Cancers)

Regular readers of Genomeweb may have been puzzled by two recent short-format news articles.  One announced that "Palmetto" had finalized coverage of the Natera Signatera test for minimal residual disease detection, in colorectal cancer.   That was September 5.   

But Medicare-oriented readers will be aware that Natera bills under LCDs in California (the Noridian MAC), which simultaneously nixed (aka retired) the same LCD.  

So here's a new item at Genomeweb on September 25, that MolDx has released a master LCD for MRD in solid cancers (including Signatera in colorectal cancer).   And that the new proposed LCD would consolidate MRD coverage in solid cancers and hematopoietic cancers in one document.

What's going on?

I'll explain it.  Let me just flag the bottom line: Signatera (the test most often mentioned) is paid the same in any MolDx state, but through different routes, which are today's "Discovery in Health Policy."

Zip File All-in-One

Also, I've put all the relevant Medicare LCDs, draft LCDs, and articles in one convenient ZIP file in the cloud, here.  [Note, this zip file was updated and corrected at 830 PT 1130 ET].

What are the MOLDX MACs?

28 states operate under MOLDX, a consolidated set of LCDs, articles, and coding edits.  MOLDX is a special subcontract or statement of work for Palmetto GBA LLC, a MAC in South Carolina which is a subsidiary of SC BCBS.   The other MACs - Noridian JE, Noridian JF, WPS J5, WPS J8, CGS J15 - operate MolDx based on joint agreements.  (Here).   

They share a common edit file of some 20,000 lines.  Most of the information in the common edit file is public (with email registration) at a website called DEX (TM) Diagnostics Exchange (here).   For example, I tested that the Master Edit File was 5.9MB and matching data files on DEX (TM) were 4.9 MB by my count.   Data fields in the lightly larger M.E.F alone include (a) Z-code identifiers and (b) carrier-set prices, but note that all the carrier-set prices are explicitly releasable under FOIA per Noridian and its public FOIA website instructions and rules here.


The MolDx MACs are shown here by the red "M" symbol:

The Saga and Journey of LBX Coverage: ROUND 1

Regarding links, some links at CMS can change, but the ZIP file cited earlier in this blog has a copy of every document that I mention or link.

Around August 2019, all the MolDx MACs released a draft coverage of DL38290 (or equivalent local MAC L-number) which was entitled the "Signatera" LCD for MRD in colorectal cancer.   

In Summer 2020, Palmetto and other MACs except Noridian finalized this LCD.  \

Noridian explicitly announced in a web article Noridan was rejecting and NOT finalizing the 2019 proposed Signatera coverage - as an LCD.   

The title of the LCD (for MolDx MACs that did finalize the LCD) was changed to delete the word Signatera, but the topic was still MRD in CRC and Signatera was covered by name within the article.   

This final LCD was also released with a coding and billing article (A58283) and a Q&A document (A58280) responding to public comments.

So at the end of Round 1, an MRD LCD had been proposed in all MolDx MACs, this LCD had been deleted in Noridian MAC, and it was finalized elsewhere, with a more general title, and with some associated implementation articles.  Whew.

The Umbrella LCD for MRD Liquid Biopsy: September 2020: Round 2

On September 24, 2020, MolDx (meaning the Palmetto MAC) released a new LCD which will likely replace L38290 when the new LCD is finalized.  The new LCD is numbered L38779 (DL = Draft LCD DL38779) and is titled simply, "Minimal Residual Disease Testing for Cancer."

Get the DL38779 text here (or in Zip file).   Public comments run from yesterday, 9/24, to 11/07.  There will also be an opportunity for comment on November 2, 2020.  I assume that will be virtual (telecon or webinar) due to COVID.

I've included the coverage text in the LCD link just above, the Zip file, and in a separate HTML file here.



Now we get to the really fun part.  If you go to the newly redesigned and improved CMS Coverage Database (database here, my article here), today, you'll get identically titled Billing Articles for SIGNATERA at every one of the four MOLDX MACs - WPS, CGS, Palmetto, Noridian.  

So you'd probably think the identically titled articles are identical, no?  NO.  It's not that simple!

The harmonized MACs (WPS, Palmetto, CGS) have a short shell of a Coding Article that primarily points its reader to the LCD (the colorectal LCD posted last year and finalized in August).   

In contrast, the Noridian article with the same title is longer, because it quotes a full multi-bullet point paragraph of coverage LCD text that Noridian deleted/didn't finalize.   Compare A58448 at Noridian here, with A58330 at CGS here.


After the public comment closes on 11/07, and closes in OTHER MolDx MACs as well, a final LCD could be released in as few as several weeks (requiring among other things a couple-week CMS review cycle for new final LCDs).  But don't count the days.  Final LCDs typically appear after 6 months or more, based on real-world data I've run in the past. 

I think of these LCDs as "umbrella" LCDs but note that MolDx refers to them as "Foundational" LCDs.  MolDx strongly wants to shift from its history of "branded" single test LCDs to issuing only "foundational" LCDs.   An approximation - I'm not sure if it's perfectly true but it seems to work as a generalization - is that the Noridian MAC since May 2020 has generally been rejected (ex post facto) any MolDx LCDs with a branded name in the title.   Since Noridian processes 90% of the MolDx MoPath payments as recently as CY2019 (here), something that Noridian won't allow isn't a good thing for MolDx to propose.  

One issue raised is that under these non-branded umbrella (foundational) LCDs, future tests will be included (or excluded) on a rolling basis based on internal MolDx reviews - which are potentially faster than public comment period activities but provide less visibility.   

For example, if your test is covered in 2 weeks after an internal tech assessment you'll be very pleased, but if your test is non-covered and your competitor's is covered, you'll be less pleased, especially if you think the two tests are equally good.  
The full set of methods and rules for implementation of "foundational LCDs" with internal tech assessments is an issue that will be hammered out in the coming months.



Overall, Natera has performed extremely well over the past year, with share price doubling from about $35 to about $70 in twelve months (Yahoo Finance), and market cap reaching $5.9B on September 25.  Natera was up from $65 to $71 on the morning of September 25. 

As noted above, Natera in the Noridian MAC has the same coverage under an article (A58448) as it "would have had" in the several other MolDx MACs, under an LCD paired with a shell billing article that pointed to the LCD.


Thursday, September 24, 2020

Is Noridian's Coverage Article for COVID Testing Not Right?

 I was recently on the CMS website for new articles and by accident I noticed a Noridian article that seems "not right" regarding COVID testing.

The article is A57338, and it's secondary to their master LCD for molecular pathogen testing L37301.  Famously, this legislates against coverage of viral (or pathogen) panels when the test has more than 1-5 pathogens.

Find the A57338 article at CMS here and a cloud copy here.

Very Odd Things Happen

In Article Group 1 codes, the article provides coverage ONLY in limited circumstances, being hospital or emergency rooms, or else, if ordered by an infectious disease specialist.   (If not an infectious disease specialist, you are expected to be in a remote rural location or island).  

But the article then lists codes 87631 (respiratory pathogens any type, 3-5) and CMS COVID codes U0003, U0004.  

That can't be right.  Use of CMS COVID codes like U0003 can't be restricted to hospital and ER only and when ordered by an ID specialist.  (For just one example, CMS explicitly pays for COVID testing collected in nursing homes (here).)   But we all know CMS is supposed to pay for COVID tests ordered in a doctor's office or collected by a Quest.  These CMS COVID codes can't be covered "only when ordered by an ID specialist," or only for inpatients, etc, but the article says so in black and white.

Article Non-Covers Codes Already Explicitly Listed by CMS as Covered

And CMS has an explicit listing of codes COVERED FOR COVID TESTING, and it includes codes NEVER COVERED by Noridian like 87632.   Crazy!  Look here (click to enlarge):

Go figure.  And by the way, I pulled the CMS coverage codes from the CMS website today, so one would assume it's correct. 


Nerd Notes.  When it came out, the article and LCD provide coverage for inpatients, or urgent care/emergency room.  In general, CMS bundles ALL tests for inpatients, and bundles tests OTHER THAN HUMAN GENETICS in the emergency room (hospital outpatient).  So the LCD actually covered molecular pathogen tests in settings where they weren't payable.   (A little different today since CMS has set certain COVID codes to be payable in ER setting).

Nerd Notes.  The Article has been update multiple times, most recently 7/17, 8/13, and 9/16.  However, the revision history section explaining what's new at each step, stops at 7/30.   

For an April blog (not updated) on CMS coverage for COVID here.

Very Brief Blog: CMS Updates Coverage Site User Interface, More Features

For years and years, CMS has had a website that provides search services for national coverage decisions, local coverage decisions, and articles. It's here.  It's quirky and clumsy but it's what we had.

Earlier this month, they released some new search features which are discussed in a two page PDF - here.

But wait, there's more.

CMS has now rolled out a new, more modern, search page.   Enter it here.

Note that this web page is like Google, it will start auto-filling what it thinks you might want:

Once you have gotten to a document, something new appears, a number of pull-down menus left-to-right that let you narrow your search (by MAC, by State, etc).

Don't Ignore Old-Fashioned On-the-Menu Reports

There are a lot of times you still want to use the old search interfaces and reports - for example, if you want all the active LCDs for Florida.   However, the new tools and new interface option make it clear they are trying hard to keep up with modern web design and they deserve credit for that.

Another feature to be aware of, the What's New, Local Coverage "REPORT" (click REPORT tab), which gives you all new articles in that week's update either nationwide or in a geography of interest.


Depending on how you enter the "new" search website, it may give offer you a pop-up tutorial (in 5 or 10 pop up screens in sequence).  I don't see it again, so it may be smart enough to offer that only once.

Very Brief Blog: MOLDX DEX (TM) Website Down Again This Weekend; Transition to Palmetto GBA LLC Management

Last weekend, the DEX (TM) Diagnostics Exchange was down for transition to Palmetto GBA LLC management (the contractor that manages MolDx).

MolDx is posting that DEX (TM) will be down again this weekend (September 25-28) for further transition to Palmetto GBA LLC.  See DEX (TM) here.

In August 2020, MolDx updated rules for using DEX (TM).  It's M00148, V14 here, here.

Exact Sciences Stock Skyrockets on Liquid Biopsy News

This week, Genomeweb reported that UBS (which in part issues investment advisories) had downgraded Illumina's stock rating (here).  The major recent activity at ILMN was buying Grail, a well-funded company advancing tests for cancer detection.  

Today, at the Cowen Liquid Biopsy investment summit, Exact Sciences includes a slide that while 166 people need to be screened to detect just 1 colon cancer, a Multi Cancer liquid biopsy test could potentially be able to detect a cancer while screened only 30 people (19 page deck here).  I haven't heard the whole talk yet but it has a link on the Exact website here.  Cowen's next slide releases product-specific data.

On the last slide above, see the specific data from its clinical trials on a future product.  Note that data is broken out on the right by cancer - liver, lung, ovarian, pancreatic, and so on.  Note, of course, that you can't possibly screen 30 people to get 1 case of pancreatic cancer, the cancer itself isn't common enough.

Stock Shot Upward - Billions in Market Cap

Exact stock shot up by what CNBC is currently rating at 24%.  Since the market cap has been about $10B , that's about $2B-3B in stock market value. 

The five-day performance from Yahoo Finance is here:


Note that while today's activity is very exciting, if you take a one year view, today's peak is still below past highs over $94 that occurred at several timepoints in the past twelve months:

Wednesday, September 23, 2020

Nerd Blog: If you ever see, "Access to CMS.GOV denied" on your browser


PS None of my frenetic internet-recommended fixes and efforts and reboots on 9/22, 9/23 helped, but the CMS website worked fine for me on 9/24.


Quick note since some others may see this sometime.  

A few years ago, and again today, I'm having difficulty accessing CMS.GOV on either of my laptops, although I can access it on the same laptop if I unplug my computer's ethernet and use my phone as a hot spot.   This is clearly some kind of DNS or internet protocol error.

Specific to CMS

I'm not the only person who's ever seen this.  Here are two websites that specifically discuss difficulties that can come and go in reaching CMS.GOV

Could Occur with Other Websites

There's also a more general condition; you can just google ( You don't have permission to access _ on this server ) where _ is nothing - don't put anything - and you'll see many Q&A's of people tearing their hair out.  (For example, one Windows trick is going to the CMD file and typing ipconfig /flushdns , which, for example, did not work for me, but gives the idea of the nerdiness of the problem.)  


I did things like reset my DNS and cleared browser caches and nothing has worked yet.  The same problem is on both Macs and PCs in my house, but there's no problem if using an iPhone hotspot.  Rebooting did not help.  Would rather not use my iPhone as a hotspot every time I need a CMS document on my laptop.   

The main message is, Google shows that others have had the same problem sporadically and you're not crazy.

Very Brief Blog: CMS Releases Updated Mid 2020 Medical Director Directory

 For years, CMS has published an online directory of Medicare Contractor Medical Directors (MAC CMD's).   It's been updated to June 2020.  Find the PDF online at CMS here.

You should be able to convert the resulting PDF to an Excel file via this website, but I don't know anything more about that website and don't otherwise vouch for it.  I've used it.

DOJ Settles $11M Case Against Lab; Focus on Software Expenses between Lab and Providers

On September 22, 2020, DOJ announced a settlement of $11.5M against Bio-Reference laboratories which "admits to improperly billing government."  Part of the billing was for inpatient tests not segregated from outpatient tests during the billing process.   Both Medicare and Tricare and discussed.  note that since about 2014, Medicare also bundles many outpatient lab tests (but not genetics) under a complex and regularly changing set of rules.

The much larger part of the case relates to payments and values exchanged related to software used in the provider's systems.   I don't know the details of the law, but this must be a complex area because of the increasing reliance of the modern health system on electronic transactions, electronic pre-authorization through shared records and software, collating and integrating EHR and lab data, imaging, appropriate use criteria, electronic orders, etc.    

I note CMS issued a proposed rule to modernization anti kickback and value sharing regulations, in February 2020 (here).  As I understood it (and I'm not an expert here), the rule excluded labs from the modernized value-based or shared savings rules which are required to integrate and cooperate in modern health systems and reduce healthcare fragmentation.  In August 2020, CMS announced it was delaying that final rule due to complexities in its structure (here). 


Tuesday, September 22, 2020

Acting Manhattan U.S. Attorney Announces $11.5 Million Settlement With Biotech Testing Company For Fraudulent Billing And Kickback Practices

Bio-Reference Laboratories, Inc. Admits to Improperly Billing Government for Hospital Inpatient Testing and Donating Cost of Medical Software to Physicians Based on Volume of Business

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Scott J. Lampert, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS OIG”), and Leigh-Alistair Barzey, Special Agent in Charge of the Northeast Field Office of the U.S. Department of Defense - Office of Inspector General’s Defense Criminal Investigative Service (“DCIS”), announced today an $11.5 million settlement of a False Claims Act case against BIO-REFERENCE LABORATORIES, INC. (“BRL”), a New Jersey-based biotechnology company that provides molecular and diagnostic tests.  The settlement resolves claims that from 2009 to 2012, BRL fraudulently billed federal healthcare programs for testing conducted on hospital inpatients that should have been billed to the hospitals instead, and that BRL knowingly donated the cost of electronic medical records software to physicians’ offices throughout the country based solely on the volume of business generated by those practices, in violation of the False Claims Act and the federal Anti-Kickback Statute.  
Under the settlement approved by U.S. District Judge George B. Daniels, BRL will pay $11,500,960.00 to the United States to resolve the fraudulent billing and kickback claims.  BRL also made extensive admissions regarding the company’s conduct.  

Acting U.S. Attorney Audrey Strauss said:  “Bio-Reference Labs received millions of dollars from federal healthcare programs through its fraudulent billing and kickback schemes.  The company knowingly and recklessly billed the government for tests it should have billed to the hospitals instead, and provided kickbacks to doctors in order to induce them to order more tests.  Our Office will continue to hold healthcare providers accountable when they engage in fraud and other illegal conduct.” 

HHS Special Agent in Charge Scott Lampert said:  “The irresponsible behavior by Bio-Reference Labs compromised the integrity of the Medicare program, and wasted millions of taxpayer dollars.  Working with our law enforcement partners, HHS-OIG will continue to ensure that healthcare providers that do business with federally funded health care programs do so in an honest fashion.”

DCIS Special Agent in Charge Leigh-Alistair Barzey said:  “Fraudulent billing and kickback schemes threaten the integrity of TRICARE, the Defense Department's healthcare system for military members and their families.  Today’s settlement is the result of a joint effort and it demonstrates the DCIS’s ongoing commitment to work with the USAO-SDNY and HHS-OIG to investigate and prosecute companies that seek to fraudulently profit at the expense of federal health care plans.” 

As alleged in the Complaint filed in Manhattan federal court:

Fraudulent Billing Practices & Kickback Scheme

From 2009 through 2012, BRL knowingly and willfully billed Medicare and Tricare for certain testing performed for hospital inpatients that should have been paid by the hospitals themselves.  As a result, BRL received reimbursement from Medicare and Tricare for tests that the federally funded programs had already paid for, because hospitals receive payments for all items and services provided to the patient under the inpatient prospective payment system (“IPPS”), unless an exemption applies, which is inapplicable here.

In addition, in violation of the Anti-Kickback Statute, BRL knowingly and willfully offered and paid remuneration, in the form of a percentage of the cost of electronic medical records software, to physicians based on the volume of business generated by those physicians in order to induce them to use BRL’s services.  The Anti-Kickback Statute prohibits medical service providers, such as testing facilities, from paying any remuneration to providers in order to induce them to refer medical services.

As part of the settlement approved today, BRL admitted, acknowledged, and accepted responsibility for the following conduct:

            Inpatient Testing Claims

  • From 2009 through 2012, BRL billed Medicare and Tricare for certain testing (i) listed on the Clinical Lab Fee Schedule (“CLFS”) and (ii) performed on beneficiaries who were hospital inpatients at the time of service. 
  • Specifically, from 2009-2012, approximately 2.51% of all of BRL’s Medicare and Tricare billing originating from hospitals consisted of testing performed on hospital inpatients and listed on the CLFS.
  • For example, from 2009-2012, BRL did not bill Triad of Alabama/Flowers Hospital in Dothan, Alabama (“Triad”), for any inpatient testing.  As a result, from 2009-2012, BRL improperly billed Medicare and Tricare for approximately 2.51% of all testing BRL performed for Triad and its associated pathology practices on behalf of Medicare or Tricare beneficiaries.
  • In 2009, BRL’s requisition form – the form BRL provided to hospitals to order tests for their patients – did not contain any place for a hospital to indicate whether the patient was an inpatient or an outpatient.  But as of at least January 2010, BRL management had a clear understanding of the necessity to bill hospitals – and not Medicare or Tricare – for testing performed on hospital inpatients and listed on the CLFS.  Indeed, on January 27, 2010, the Director of Genpath Accounts Receivable wrote to management, “I’m afraid that we can end up billing Medicare for hospital patients.”  Nevertheless, the requisition forms remained the same, and through at least 2012, BRL billed Medicare and Tricare for hospital inpatient testing listed on the CLFS.

            Software Cost Donations

  • In addition, from 2009 through 2012, BRL provided a percentage of the cost of electronic medical records transition software (“EMR Software”) to physicians’ offices based on the volume of business generated by those offices. 
  • Specifically, from 2009 through 2012, BRL engaged in a practice – at the direction of its management – entitled the “3 to 1 calculation,” meaning that BRL conditioned the provision of payment for EMR Software to physicians’ offices on whether a physician’s office would generate revenue equal to three times the value of the EMR Software BRL provided. 
  • For example, on January 24, 2009, a BRL employee, in an email to BRL management, applied the 3 to 1 calculation to a particular physician’s office and suggested that BRL provide the payment for EMR Software, but noted, “You find the legal way to say that.  I don’t feel they will make us put it in writing.” 
  • Similarly, on January 7, 2011, BRL management evaluated a BRL salesperson’s request for payment for EMR Software to a particular physician’s office, and directed that salesperson to “[b]uild volume to meet 3x rule.”
  • During this timeframe, BRL provided payment for EMR Software based on this formula to 69 separate physicians’ offices. 


*                *                *

BRL agreed to pay a total of $11,500,960.00 to resolve these claims: $1,396,386 to resolve the Inpatient Testing Claims and $10,104,574 to resolve the Software Cost Donation claims.  OPKO Health Inc. (“OPKO”), which merged with BRL in 2015, will serve as guarantor of BRL’s obligation to pay the settlement amount.

In connection with the filing of the lawsuit and settlement, the Government joined two private whistleblower lawsuits that had previously been filed under seal pursuant to the False Claims Act. 

Ms. Strauss thanked HHS-OIG and DCIS for their assistance with the case. 

The case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Michael Byars and Ellen Blain are in charge of the case.

Health Care Fraud
James Margolin, Nicholas Biase (212) 637-2600
Press Release Number: 

Tuesday, September 22, 2020

CMS 2019 MoPath Spending Analyzed: Massive Growth, Fraud Made Visible

In the past several weeks, both the OIG and MEDPAC have reported on Medicare molecular pathology spending in CY2018.  See OIG here, MEDPAC here.   In a nutshell, investigators for both organizations found that between CY2017 and CY2018, MoPath spending shot up from about $500M to $1B.  

Before this 2017/2018 doubling, MoPath spending had been roughly level for several years, with that $500M dominated by a few large tests like BRCA, Exact Cologuard, Oncotype Dx.

In several recent past years, I've found that the MolDx program channels a large part of CMS Part B mopath spending, such as 80%.  As we'll see in a moment, that's no longer the case at all.   

Now that CY2019 state level data has been released (here), there's a shocking discovery that MoPath spending growth has skyrocketed in unusual states, in several cases by 500-700% in one year.    This may be related to massive genetic test fraud reported by the Department Justice through their sting operation "Operation Double Helix" - here and here.  CMS funds seem to be protected in states that use NGS MAC edits (CMS JK, J6) or alternately, in states that use MolDx edits.  

Data in a Nutshell

I've put my Excel research file in the cloud here.   Methods - Basically, I went through 50-plus Excel files state by state, pulled a sum of spending for 811xx 812xx 813xx 814xx 815xx, plus adding spending for 0037U (FMI F1) in Massachusetts.   (Except for 0037U, I didn't assess PLA codes.)  Please note I'm assuming CMS assignments between state jurisdiction codes and actual states were correct during several hours of manual work, and assuming that other manual data collation was correct.  The data doesn't include hospital outreach labs.

Total MoPath 2019 Spending:  $1,642,287,344

     Up from circa $500M just 2 years ago.*  

     I'm just showing CY2019 Part B; CY 2019 Part A + outpatient Part B will be closer to $2B.

Spending in MOLDX states:  $569,720.113 (35% of total)

     Spending, within MOLDX, in Noridian states: 90%

     In recent prior years, MolDx was closer to 80% of total.

Spending in Non-MOLDX states:  $1,072,567,231 (65% of total)

State-Level Data Shows Fantastic Growth Rates

Here's where it gets really interesting.   

  • Spending in Florida was $123M in 2019, but only $17.5M in 2018, a 7X growth rate in one year.
  • Spending in DC was $43M in 2019, but only $7.5M in 2018, a 5.7X growth rate in one year.
  • Spending in Oklahoma was $123M in 2019, but only $33M in 2018, a 3.7X growth rate in one year.  

Some of this 500%, 700% growth in a matter of months almost certainly represent fraudulent payments under Operation Double Helix.  CMS will release payments by individual providers and labs for CY2019 in about mid 2021 (here) and we'll know more about where the $500M landed by NPI number and street address.   

Wisconsin spending seems high at first at $243M or 15% of USA total, but this includes about $120M for Exact Sciences Cologard.  In Massachusetts, FMI garnered $79M under code 0037U.

Louisiana seemed a little high at $70M, but that's actually down 20% between 2018 and 2019.

How Florida Got 7X Payments and $123M in One Year

Not encouraging.  25% or $32M came from Tier 2 code 81408.  14% or $17M came from BRCA.  Another 9% or $11M came from Tier 2 code 81407.  

That's half the total or about $60M of $123M in just three CPT codes, two of them vague ones.

For more on 81408 fraud, see my September 25 blog here.


MolDx is Protective, Though It's Not Required

Note that none of the MolDx states had the super high growth rates seen in other MACs, in Florida, Oklahoma, DC.

However, you didn't have to be in a MolDx MAC to successfully avoid the eye-popping super-fraud.  None of the many states under the NGS MAC (J6, JK) had any eye popping fraudulent growth, and toward that end they didn't require in NGS MAC the level of rules and suprastructure built up for MolDx.  

In addition, note that while neither NGS MAC states nor MOLDX states have such large Double Helix Fraud as to be visible to the naked eye, like a 10X increase in 81408, newspapers last fall did report that both NGS MAC states (Illinois) and MolDx states (Georgia) did have some focal cases that DOJ connected to Double Helix (here).  E.g. per that link, an Illinois case involved just $4.6M (NGS MAC) while a Georgia case involved $154M but may have been charged and billed in Florida.

Pay and Chase - Alive and Well

I worked in the CMS system 2004-2008 and MUCH was spoken that "as of now and forward, we're catching payments up front, we're avoiding pay and chase."  

If you look at 2018, 2019, 2020 announcements, someone will regularly say, "From now forward, we're avoiding pay and chase."  2019 statement here.  I can guarantee you the press release verbiage was the same in 2004.  

Comparing New Data to DOJ Press Release in Fall 2019

DOJ reported $2.1B in fraudulent "charges."   First, we wouldn't expect to see the dollars in "payments" that appear in "charges."  Medicare doesn't pay charges, they pay fee schedule rates.  A charge might be $2000, a fee schedule payment $1000.  I believe that CMS payment files I am data-mining for CY2019 reflect paid claims, adjucated and not (at the time of compiling) recouped.  

I believe (but I'm not certain) a claim rapidly recouped or reversed wouldn't have shown as a payment 18 months later.  In any case, it's clear from the 2019 state payment data that at Novitas and FCSO MACs, it's still pay and chase on a colossal scale, even on errors the naked eye can see - no machine learning or AI required.


* As I noted in the introduction, OIG reports $1B in Medicare genetic spending in CY2018, and I find $1.6B in CY2019.   BUT: My data doesn't include hospital testing, while OIG's does.  The comparable number in OIG terms for CY2019 may eventually be published as $1.8B or $1.9B, adding in (legitimate) hospital genetic payments.

CMS Releases Proposed Prices for Clin Lab Fee Schedule CY2021 - Public Comment Open

CMS has posted Preliminary Payment Determinations for the CY2021 Clinical Lab Fee Schedule on its website.  I've also placed a cloud copy here.   

Notation in the Excel spreadsheet informs us that comments are accepted until October 21, 2020 at:

There are 132 agenda items, the most ever.


By my count (and using the Excel filter/display function) about 53 of 132 codes are gapfilled.


Based on past years, a significant proportion (a third?) of these values can change between the proposed and final pricing determinations.


CMS covers the first COVID testing codes from last spring at about $50 (carrier rates, standard COVID) or $100 (CMS administrator's rate, high throughput COVID) - U0001-U0004.   CMS recommended all of these codes be "gapfilled" during 2020.

CMS also recommended additional COVID codes be gapfilled: 87635, 86328, 86769, 


For observers of Myriad's Genesight test and pricing (currently locally priced at $1569 by MolDx; see recent news reports quoted here) - CMS sends the 14 gene psych PGx panel 0173U and the 15 gene psych PGx panel 0175U both to gapfill.    0173U and 0175U belong to RPRD Dx and Genomind, respectively.  If these codes enter the Gapfill process, which is dominated by the 28 MolDx states controlling the gapfill median, the simplest prediction is that MolDx prices these PGx tests at the parity rate to Myriad Genesight and AltheaDx test both at $1569 and due to the 28 MolDx prices, the 2021 gapfill median will be $1569.*


Six codes were under the reconsideration process, meaning stakeholders were unhappy with their pricing by crosswalk last fall.  4 of the 6 are to be gapfilled in CY2021.  In these cases, panel experts had unanimously or almost unanimously recommended gapfill.  In the other two cases, a large majority of panelists had recommended the same crosswalk.


In a new trend, two multi-pathogen tests were approved by AMA as MAAA CPT codes (81XX4, 815X3).  They were crosswalked to 87631 (resp virus 3-5 $143) and 87506 (GI virus 6-11, $263), respectively.    The text for the tests tests doesn't sound so dissimilar - 

Genome-web cytogenomics

Three codes for genome-wide cytogenomics were gapfilled.  0209U: No public comment; panel recommended gapfill.   0156U: Applicant asked for current microarray cytogenomics code 81229 x 1.5 (about $1500).   021U: (chromosomal analysis + exome sequence): applicant asked for very elaborate crosswalk stack (I believe about $12,000); gapfill.  


That's a long sentence but shows my three years of studying German grammar in college weren't wasted (long sentences).

Monday, September 21, 2020

Very Brief Blog: Next PLA Deadline October


PLA codes continue to grow - numbers up to have been assigned, and another couple dozen codes will be released at the end of September.   If you want to get on the PLA code bandwagon, the next AMA CPT deadline is October 1, 2020.   The AMA PLA committee will vote on the codes within a few weeks although the codes won't be released until around December 30.  See information on the application process from links in the main PLA web page here.  It's a short online application just a few paragraphs long.

In addition, on the main CPT PLA Codes Homepage here, CPT should release the results of a couple dozen new PLA codes in the July 1 quarterly cycle, around September 30.  Currently they're up to PLA code 226 (0226U), so the next batch will probably approach 0250U at the top end.


AMA CPT makes PLA codes on a quarterly calendar but they've been releasing COVID codes on a rapid basis, in a couple weeks.

Tiny Handheld from Silicon Valley Startup gets EUA for COVID PCR

A Silicon Valley startup that I had the chance to give some early advice to, a Stanford spinout, has won EUA for a tiny COVID PCR advice.

See coverage at 360Dx here, see Reuters here, see FDA package insert here.

According to one report, VISBY raised $70M in April 2020.  See their home page here.  The slogan is, "PCR in the palm of your hand."

Sunday, September 20, 2020

Palmetto Rebrands DEX (TM) Diagnostics Exchange as "PALMETTO" Entity; Palmetto Letter re Pricing File

 I spend a lot of time on the MolDx and the DEX (TM) Diagnostics Exchange websites, and around Sunday, August 16, I noted that MolDx had posted a "splash screen" that it has acquired the DEX (TM) Diagnostics Exchange.  See August blog here.

I spent several hours again this Sunday (September 20) on the DEX (TM) and they posted some downtime due to re-branding.  When it came back up, the logo now announces that DEX (TM) is part of Palmetto.  See figure:

DEX is a goldmine of information (in fact, nearly every field in the MolDx Master Edit File is publicly available on DEX (TM), including additional fields like lab contact persons and addresses not store in the M.E.F.)   As Palmetto notes, "The test registry catalog is available for reference and review by other stakeholders in the healthcare system."   The homepage adds, "The Diagnostics Exchange is an open, online test registry and workflow solution for information and evidence about MDx tests."

Previously Used "DEX" TM to Find Overpayments

I've previously used "DEX" (TM) combined with merging other CMS information sources (and FOIA requests) to identify overpayments.  For example, I first noted anomalous overpayments for EGFR codes to some labs but not others in 2015 (here).  After I notified both CMS and MolDx of the anomaly, the overpayments were corrected and stopped.

Didn't Expect to Find New Overpayments, But I Did

Because of changes in MolDx management, I've assumed that overpayments (even accidental ones) ahd probably stopped, or were de minimus.   But over the years, I've gotten several copies of the MolDx edit file again through FOIA (e.g. here, here.)   (It's easy to get a copy of a previously FOIA'd document; just ask FOIA for the results of a particular FOIA transaction number.)   

The MolDx edit filt is not that interesting: almost all the data fields are on the DEX (TM) public website database (or in some cases other Palmetto websites).  I identified 4.9 MB of MEF data fields on the DEX Diagnostics Exchange public website, mathcing MEF data fields; the MEF is 5.9 MB.

Fields in MEF but not MolDx edit file include (1) the Z codes (which nobody outside Palmetto has any need for) and (2) carrier prices, which are always available from MACs through FOIA (see MAC FOIA rules here).  Even carrier prices (and MolDx manages about 1000 of them) aren't actually confidential in any sense because CMS releases all payments to providers by CPT code and payment level every year in a huge cloud database for public inspection.  A few other fields include e.g. public LCD numbers.  A few other fields are not important (e.g. last internal review date of the data line).

To my surprise, I started seeing an uptick in overpayments or erroneous payments creeping into the MolDx payments again in the past year, much as they had in 2015.  (I mentioned some of the dubious payment edits in a blog).  

Payment errors aren't unexpected; the Edit File has grown form 12,000 lines in 2019 to 20,000 lines in 2020, so nobody could be expected to keep every line correct.  The important thing is when errors creep in they get corrected...

Whoops! DEX Cease and Desist Letter - Notification to Readers

After noting to MolDx management that there were several new overpayment mistakes in the DEX (TM) - for example, codes with fee schedule prices around $1200 mispriced at around $2300 - I received a letter from Palmetto notifying me that such topics were confidential business matters of Palmetto GBA.  As I interpret it, and I'm not an attorney, any readers who have received copies of "Z code" information or "MEF" information are asked to delete them.  

I don't want to paraphrase the letter so you can read it >>> here.


FOIA Information Not for Qui Tam - 

Non-FOIA Information Can Support Qui Tam

Readers of this blog and the Medicare trade press probably know that a Palmetto employee settled a qui tam (whistleblower) case against a genetics company for $9M in 2019 (note, with no admission of error by any party.)

You're probably asking yourself: can you file a qui tam case with FOIA evidence of payment errors?   Like the payment errors I find through FOIA requests and report on a rolling basis to MolDx? 

I'm not an attorney, but the general answer may be "no," based on a Supreme Court case in 2011 (Schindley v US rel Kirk; however later case law includes some exceptions).   So under Schindley, evidence of a line item $20M overpayment in a FOIA document might be hard to use in qui tam case.  (That's one major reason I've never filed a qui tam case, on my FOIA findings, although I'm also busy doing real work.)  

However, under Palmetto's interesting position in a letter of September 18, Master Edit File (which shows quite a few clear, large payment errors) is asserted to be NOT a FOIA-category document, making it seem at least categorically possible it could be used in a whistleblower case , i.e. the SCOTUS Schindley rule would now seem to not apply if the information is not FOIA type.

Back to "DEX" (TM) - A Nationalized Program

A quick look at the current "DEX"(TM) website shows that has has about 14,400 tests (144 screens at 100 tests per screen).  Similarly, I tallied 1591 institutions registered with at least 1 test at DEX.  Of the 1591 registrations, I tallied 1308 in MolDx states (there are 28 MolDx states).  642 registrations were in Noridian MAC states, 455 in the WPS MAC states, and 177 in the CGS MAC states.  If I counted correctly, only 52 are in the Palmetto MAC and only 43 in Palmetto's home state of South Carolina.  

Outside of MAC jurisdictions, there were 282 registrations: 28 in the FCSO MAC, 115 in the NGS MAC, and 140 in Novitas MAC.   

DEX registered tests are dominated by a small number of labs: of 100 1591 institutions with a Z code, the top 10 labs hold about 5000 of all the Z codes, or 35%.   

Most CMS MoPath spending flows through MolDx edits, about $400M out of every $500M (here).

"DEX" - Competitive Advantage 

One of the advantages of using DEX aggressively is competitive advantage.  While a number of LCDs are published on the MolDx (and participating MAC) websites, many coverage decisions are unpublished or hard to find.  However, all of the 14,000 tests on the "DEX" (TM) website have a data field for whether they are covered or not.  For example, if you get a MolDx denial for gene ABC, and you find your competitor has a "Y - Covered" status for gene ABC, you've got a good argument for parity treatment of your lab, too.


Friday, September 18, 2020

After Five Months, MOLDX Authorizes Use of PGDx ELIO IVD Cancer Assay

Personal Genome Diagnostics (PGDx) got FDA clearance for its multi-hundred gene elio test in late April, 2020 - here.   Styled as clearance K192063, under product code PZM and classification 21 CFR 866.6080 (NGS tumor profiling), the elio test can be run locally on a standard platform.  (Product description clipped at bottom [*]). 

  • The 32-page FDA review is online here.   
  • The full 108 page 510K decision summary is also online at FDA here.   
  • The K192063 home page is here (check for updates).
  • As an IVD, elio should have detailed FDA-authorized "instructions for use" - I haven't seen those yet.  A copy is usually on the FDA website.  
    • Lacking a copy of the IFU, the two-page product brochure is here and a two-page product features flyer is here.
The new-news is that PGDx has released a press release that it is now covered by the MolDx program (here).

Nerd Notes

It's unclear exactly how MolDx will handle usage of the test from this point forward.   

  • Will elio be issued one Z code, that is "turned on" for any hospital client to use?   
  • Or will each hospital using elio have to get its own Z code?   
    • If the latter, with local hospital Z codes, will each hospital using elio have to show its on-site validation to MolDx for review?

  • It's pretty clear coverage falls under the NGS solid tumor LCD, see A57831 here.  So no review for "coverage" or "clinical utility" was involved. 
  • On the other hand, regarding edits, LCD L38045 has been active since February 2020, and in a August 2020 copy of the MolDx Master Edit File, a lot of solid tumor tests were not crosswalked to L38045 for editing (here).


It looks like the MolDx review of the elio IVD took some length of time between the April 24 FDA authorization and the September 9 press release.   

Noting that, several stakeholders have asked me about the necessity of lengthy MolDx review of an FDA IVD for analytical accuracy (the coverage under L38045 was already in place and not under discussion).   For example, CMS Coverage Group endorses and requires coverage of any and all FDA approved or cleared NGS companion diagnostic or any FDA approved or cleared NGS hereditary risk profiling test, two categories which are very similar in FDA review standards to the elio 108-page review released in April.  If the clearance labeling for elio had been worded only a tiny bit differently, the test would have been auto-covered by the somatic and germline CMS NGS NCD without any MAC review of analytical validity of its NGS platform.   



PGDx elio tissue complete, the first FDA-cleared comprehensive genomic profiling kit, is used to identify alterations in the tumor and inform treatment decisions for patients with advanced solid tumors. The kitted system allows molecular laboratories anywhere to perform this advanced genomic testing of cancer in a more efficient, standardized, and accurate manner. By providing tests that can be run locally and automating the data analysis process, PGDx is enabling the adoption of precision medicine in healthcare systems across the country, no matter where a patient seeks treatment.

PGDx elio™ tissue complete

PGDx elio™ tissue complete is an FDA-cleared diagnostic kit and accompanying software for molecular labs that provides comprehensive genomic profiles of all solid tumors. PGDx elio tissue complete detects single nucleotide variants (SNVs) and small insertions and deletions (indels) in 500+ genes, select amplifications and translocations, and genomic signatures including microsatellite instability (MSI), and tumor mutation burden (TMB). Designed to be used locally at any laboratory across the country, PGDx elio testing and automated bioinformatics ensures both consistency and quality of results regardless of location.



Re uncertainly of single, or hospital-specific Z codes, I couldn't find any info yet at MolDx:

Digital Health Applications: Debates Similar to the "LDT" Debate in Labs; Nature Digital Medicine Journal

Part of my work is in digital health, and that community of companies has debates about FDA regulation of digital health, similar to the diagnostics debates about FDA-authorized IVDs versus LDTs.

See a window into that digital regualatory debate in a recent conference summary from "Digital Therapeutics East" - article here.

A current Senate proposal, S. 3532, would allow Medicare coverage of "prescription digital therapeutics" in some circumstances (here).

Meanwhile, I note there is a new NATURE journal, NATURE DIGITAL MEDICINE, now being published.  Home page here.

Thursday, September 17, 2020

Seema Verma Makes Somewhat Vague Remarks on COVID test reimbursement

 As first reported in a subscription article at Inside Health Policy, and as summarized open access by McKnights...  Seema Verma made some remarks on September 15 about potential new reimbursement paradigms for COVID testing.   It seems related to pay-for-performance, but from the quoted remarks, it's difficult to see what any actual change is really being contemplated.

McKnights here open access.   Inside Health Policy here subscription.

The headline "hints at new strategy" is about right.


Medicare Releases Claims Processing Instructions for New 2020 NCD for Germline NGS in Cancer

Early in 2020, CMS released a major update to its NCD for uses of NGS testing in cancer patients.  The update focused on new rules and coverage for germline risk testing (especially for FDA authorized tests) using NGS - here.

On September 11, 2020, CMS released Transmittal 11837, which provides its MACs with official notice that the new NCD exists and claims processing instructions.

  • See CR11837 here.
  • See Medlearn Matters version here.
Notoriously, in 2018, CMS issued a transmittal about the original NGS NCD which included some new text that changed the meaning of the NCD released earlier in the year.  So far, it doesn't look like any weirdness is going on in CR11837.   

The instructions ask MACs to work together for uniform implementation up to such time as CMS may determine shared (mandatory) implementaiton rules are provided.