Monday, March 18, 2024

CMS Reveals: One ADLT Application in Three Fails

"ADLT" is a narrow, special class of lab test with special pricing.  About 15 of 23 applications for this status have succeeded.  About 1 in 3 goes belly-up.


What are ADLTs?

Created by the 2014 PAMA legislation, ADLT means advanced diagnostic laboratory test.  However, it's not "advanced" in  a general sense.  It's a very specifically defined category.  Applicable tests skip the crosswalk-gapfill pricing process and are paid list price, and then, an annually reset market survey price.

See an ADLT CMS web page:

Two Types of ADLTs

ADLTs are always sole-source tests.  Meeting that rule, they may be (A) multiple analyate tests with algorithms that are covered by Medicare, and are clinically unique; or (B) FDA cleared or approved tests.

There are about 15 ADLT tests created over five years, via an application to CMS and CMS approval. (See web page above).

What's New: The Pass Fail Rate Revealed

You can't tell how many applications for ADLTs that CMS has received.  At least 15, since 15 succeeded.  But 15 out of how many?   20?  30?  40?   No way to know. (*).   

At the American Clinical Laboratory Association meeting, March 14, 2024 in DC, CMS official Jason Bennett spoke about the process.  He's director of the "Technology, Coding, and Pricing Group" at CMS.  He described the ADLT procsss and remarked, there have been about 22 or 23 total applications.  That means the failure rate is about 1 in 3.   The most common cause of failure is not proving the test provides unique clinically valuable information.   The sole source lab requirement can also trip up some applicants.

Timetable Starts to Slip

CMS promised to turn around the ADLT application, which merely reviews a few rules, in a month or so.  However, lately, some applications have taken over a quarter.  Bennett mentioned this and attributed it to short staffing and budget caps.


(*) In 2023 I requested copies of all the applicaitons (turns out, there are 22 or 23) via FOIA.  I haven't got this yet.   PAMA price information is shielded from FOIA, but as CMS remarked in PAMA rulemaking, ADLT applications are not (but some internal biz info could be blacked off).

Nerd Note

PAMA statute only required ADLT tests to be multi analyte, algorithmic tests, covered by Medicare. 

During ADLT rulemaking, CMS on its own added the requirement that an ADLT MAAA test must be clinically unique.   (That factor doesn't apply that to the FDA-approved ADLT tests).  


The table below (click to enlarge) shows ADLT codes, whether FDA approved, year of first price, current price (01/2024), price delta if any, and CMS Pt B payments in CY2022 (data from 9/2023).

click to enlarge

CY2022 Pt B payments for ADLT codes were $265M, of which 64% went to FDA-approved ADLT codes.   The three largest ADLT codes were over $50M and comprised 76% of the dollar volume for all ADLT codes.

(This concentration of most ADLT spending in the top 3 codes mirrors the concentration of most PPLA code spending in the top several codes and most Category III spending in the top several codes). See my August 2023 blog.