Wednesday, August 5, 2020

My Comment on the 2020 CMS Gapfill Process

This year, CMS is pricing some 37 new codes, mostly PLA codes, by the Gapfill method.  These are codes for which Gapfill pricing was selected in Fall 2019.  For my original blog when the proposed pricing results were released for public comment in June - here.  My public comment, which I'll discuss below, is here.

The most notable feature of the gapfill process is that, while CMS technically has some 8 MACs set prices, the MolDx system sets uniform prices and therefore controls the median price, regardless of what the several non-MolDx MACs due.  Therefore, the MolDx price is all-important.  In addition, one non-MolDx MAC, the NGS MAC, matched all MolDx prices, too.

Given the importance of the MolDx MAC, it's important to know that this year, MolDx staff are basing pricing of all gapfill codes on a uniform spreadsheet of information they've posted at the MolDx website. 
  • It's posted prominently on the MolDx home page, the current link is here.  
  • I've also posted a cloud archive of V.1.1, here.
I think the uniform format is a big advance, and kudos to the MolDx team for taking this move.  That said, there are also some problems and bugs to be worked out.   For example, 5-year volume and cost projections are requested, in different accounting categories, with minimalist instructions, so different labs may make very very different assumptions about how to fill this out.  More instructions and a fictitious example could help.   

At best, cost based pricing is treacherous; CMS won't want to pay for any size investment in R&D or overhead or lab costs, but paying for bench supplies and disposables and no R&D and no overhead doesn't make any sense either.   In particular, Medicare doesn't pay for "research" (doesn't pay for tests that are not medically necessary for the patient), but Medicare pays for sunk R&D as part of pricing, whether it's drugs, or a pacemaker inside a hospital charge, or an Illumina sequencer (part of its cost is Illumina's R&D and overhead), or any other equipment or product in the supply chain.   I've made a simple graphic:

After spending several months on the topic, the interface between the 4 gapfill pricing rules and the spreadsheet, I came up with this table:

I've put a copy of my white paper style public comment to CMS, in the cloud here.