Wednesday, March 15, 2017

Do CMS Panel Pricing Policies Apply to Gene Panels?

In a previous blog, here, we discussed that CPT and CMS had generated a complex web of coding and pricing options to pay for BRCA testing, one of Medicare's top three genetic tests (by dollar volume).

Beginning in January 2017, CMS has a fee schedule priced gene panel test that includes BRCA-1 and BRCA-2 testing, but has a much lower total price.

Does this conflict with CMS's decades-old policy to never pay more for components of a panel that it would pay for the entire panel?

My answer is "probably so," but CMS has not faced the issue yet.  Research on the topic indicates that CMS's lab panel pricing policies are memorialized in varies program documents, but not fixed in law or regulation.

Because PAMA is a law, and raises some thorny issues for CMS regarding the interaction of PAMA law and CMS internal lab test policies, CMS should probably put its panel policies into formal, enforceable regulations.   When doing so, CMS should assess the fit of its panel policies to gene test panels.  It looks like this could quickly become a multi-hundred-million dollar issue for CMS.  Details after the break.

Longstanding CMS policy caps payment for any one or more laboratory tests, at no more than the price of a panel that the tests are included in.   This policy is manualized in the “Medicare Claims Processing Manual, Chapter 16, Laboratory Services" (here).

While CMS’s language is somewhat cumbersome, CMS makes the point repeatedly over several pages that the price paid for one or a set of laboratory tests can never exceed the total price of a panel.
Section 90.1.1. 
Profiles are specific groupings of blood chemistries that enable physicians to more accurately diagnose their patients’ medical problems.  While the component tests in automated profiles may vary somewhat from one laboratory to another, or from one physician’s office or clinic to another, in order to develop appropriate payment amounts, A/B MACs (A) and (B) group together those profile tests that can be performed at the same time on the same equipment.   
The A/B MAC (A) or (B) must group together the individual tests in the profile when billed separately and consider the price of the related automated profile test.  Payment cannot exceed the lower of the profile price or the totals of the prices of all the individual tests.  (This rule is applicable also if the tests are done manually.)  The profile HCPCS code and each individual test is priced at the lower of the billed charge or the fee amount; and payment is made at the lower of the profile/panel price or the total of the prices for all covered components. 
Until January 2017, there was no CMS fee schedule panel code where the panel test price set by CMS exceeded the price of individual components that were coded and priced a la carte by CMS.  Now there is an issue.   It occurs in the field of BRCA testing, where a number of codes have developed year-by-year with different price points.   Using the oldest codes for BRCA-1 and BRCA-2 testing plus dup-del analysis (which is almost always performed), CMS would pay $$2780 (81211+81213).   Using a new single code for BRCA-1, BRCA-2 testing and dup-del analysis, CMS would pay a bit less (81162, $2503).   Under a panel that includes BRCA-1 and BRCA-2 testing, and MORE GENES as addition, CMS pays only $931 (81432) in MolDX states, or $1533 (81432+81433) in other states.   This appears to be a "conflict of laws" or rather a "conflict of coding policies."   

It doesn't make sense to pay two or three times as much for standalone BRCA-1, BRCA-2 testing as CMS pays when the same reports are placed in a gene test panel.  (As most people say when this is pointed out, "a fourth grader could understand this."

Was Implementation of Panel Pricing Policy Frozen by Executive Order?

If CMS was planning to implement the panel pricing policy for genetic testing 1Q2017, it may have been derailed by the executive order to freeze federal agency rulemaking and policymaking.

Does Longstanding Panel Pricing Policy Conflict with PAMA Statute?

Last year, CMS held several hours of public discussion about the thorny challenges it faces in implementing the new PAMA 216 market pricing law in the situation where it has separate policies for panel test pricing.   As it has done in other circumstances in the past, CMS should probably enumerate its rules for panel test pricing in regulation (through July 2017 rulemaking) to reduce the risk of future conflicts and debates between PAMA statutory law and the "common law" of CMS panel pricing.

See a transcript of CMS's confusing public meeting as it attempted without much success to resolve PAMA law & legacy panel pricing policies, September 12, 2016, here.

A recent New Hampshire court case provides even more impetus to put CMS's panel pricing policy into regulation.  A federal judge threw out as invalid CMS decision-making that proceeded just through a website FAQ and not through federal rulemaking (March 2, 2017; NH Hosp. Assoc. v Burwell, here or here.)

In 2016, the PAMA Clin Lab Advisory Committee generated two documents on the interaction of PAMA law with Panel Policy - here and here.