CAP Tells CMS: Z Codes Are Highly Disruptive

Header:  In written comments on annual Medicare Advantage rules (CMS-4212-P), College of American Pathologists refers to Z-codes as "highly disruptive."

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In comments to Medicare Advantage proposals (CMS-4212-P), CAP discusses a number of problems, including network adequacy, prior authorization, and "unorthodox" coding requirements such as MolDx Z codes.

Find the CAP comment here:

https://documents.cap.org/documents/CAP-MA-RFI-Comment-FINAL.pdf

Coding and Reimbursement 

Non-standard coding and/or reimbursement practices have serious adverse consequences for pathologists and laboratories trying to comply with conflicting requirements. Guidelines that deviate from or distort standard billing practices not only limit the ability of laboratories to provide care for patients, but also create fraud concerns, issues with state health plan contracts, and – of particular concern to many patients – potential denials from secondary insurance coverage. 

Such nonstandard billing requirements risk interfering with the ability of patients to receive timely and appropriate services, and adversely affect patients, providers, and the entire health care system. For example, Medicare Advantage plans operated by UnitedHealthcare, Optum Care, and Humana have implemented the requirement that molecular pathology claims contain DEX Z-codes, which are proprietary alpha-numeric codes obtained from the Palmetto DEX Registry. 

The CAP considers this requirement to be highly disruptive, administratively burdensome, and cost prohibitive for pathologists and laboratories, and ultimately believes it will impede patient access to medically necessary testing. 

The CPT code set is universally used by the medical community and transparently developed with broad stakeholder input, including the CMS and other payers who are represented on the CPT Editorial Panel. 

CPT codes are also recognized by the US Department of Health and Human Services (HHS) as a HIPAAcompliant Level I HCPCS code set. 

By contrast, Z-codes do not fit these criteria or undergo this level of input and scrutiny. We also strongly advise adhering to the use of CPT for reporting of molecular pathology and genomic procedures, as this approach does not impose additional requirements or reporting complexity for processing claims for medically necessary services, and maintains alignment with the reporting requirements established by other private payers.

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AI CORNER
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I asked ChatGPT to take the role of MolDx and write a response to Dr. Oz.

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* * The Fictional AI Response: * *

To: Dr. Mehmet Oz, Administrator
Centers for Medicare & Medicaid Services (CMS)

Re: Coding and Reimbursement Policy for Molecular Diagnostics

Dear Dr. Oz,

We appreciate the thoughtful comments submitted by the College of American Pathologists (CAP) regarding molecular diagnostic coding and reimbursement. CMS shares CAP’s commitment to patient access, transparency, and consistency in billing practices. However, several clarifications regarding the MolDx program and the use of DEX Z-codes may be helpful.

First, CPT codes alone are not sufficient to uniquely identify many molecular and genomic tests currently billed to Medicare. Numerous laboratories may bill the same CPT code while performing tests that differ substantially in analytes, methodology, analytical validity, and clinical evidence. This heterogeneity creates challenges for accurate coverage determination, payment integrity, and program oversight. The MolDx registry and associated DEX Z-codes provide a mechanism to uniquely identify each specific test, enabling CMS contractors to link claims to validated test dossiers and coverage policies.

Second, the Z-code requirement does not replace CPT coding and does not alter the HIPAA-recognized coding structure. Laboratories continue to bill using standard CPT codes; the Z-code simply serves as a supplemental identifier that allows Medicare Administrative Contractors to determine precisely which test is being performed. This additional level of transparency supports consistent coverage determinations, reduces inappropriate billing, and allows Medicare to distinguish between tests with differing levels of clinical evidence.

Third, MolDx experience over more than a decade suggests that test-level identification improves program integrity and beneficiary protection. Molecular diagnostics have been an area of documented fraud and billing irregularities in recent years, including instances where identical CPT codes were used for tests with dramatically different clinical validity or for services not performed. The registry approach enables CMS to ensure that covered tests meet appropriate evidentiary standards and that payment is directed toward validated services.

We recognize that the introduction of any additional administrative process can create operational challenges for laboratories. For this reason, MolDx has continued to streamline the DEX registry process, expand guidance for laboratories, and coordinate with other payers to promote consistent implementation. Our objective is not to create proprietary barriers, but rather to ensure that Medicare claims for complex molecular diagnostics can be accurately identified, evaluated, and reimbursed.

In summary, CPT codes remain the foundational billing framework for laboratory services. However, for modern genomic and molecular tests, CPT alone does not always provide sufficient granularity to support coverage policy, payment accuracy, and program integrity. The MolDx Z-code registry addresses this gap while preserving the existing CPT billing structure.

We welcome continued dialogue with CAP and other stakeholders to further refine processes that maintain patient access while ensuring accurate identification and evaluation of molecular diagnostic tests.

Respectfully,

MolDx Program Leadership  [WRITTEN BY AI, VIA BRUCE QUINN]
Palmetto GBA / Medicare Administrative Contractors
On behalf of the CMS MolDx Program

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For a third round, see an essay, about both essays above, by Lewis Black here.