In both the summer proposed hospital outpatient policies and the proposed physician payment policies, CMS proposed taking software-intensive whole-slide imaging (WSI) tests off the Clinical Laboratory Fee Schedule (CLFS).
Forget the current payment amounts for a moment. CMS proposes that, under Part B, WSI tests would be contractor-priced—eek! In the hospital outpatient setting, where contractor pricing is generally verboten, CMS would temporarily assign the WSI codes to APCs with payment rates roughly similar to what they previously received under the CLFS.
Analysis
For me, the central question is whether these tests are, or are not, CLIA laboratory tests.
If they are clinical laboratory tests of the laboratory type (not the physician pathologist type) then they are paid under the CLFS and governed by CLFS pricing rules, including the PAMA framework. See Social Security Act §1834A. Plain English, no wiggle room.
I do not think CMS can simply say: “Yes, these are clinical laboratory tests, but despite §1834A, we no longer like pricing them on the CLFS.”
But if CMS removes the codes from the CLFS on the theory that they are not CLIA laboratory tests, we enter topsy-turvy land.
###
Medicare Doesn't Define Laboratory Test!
Medicare doesn't have its own definition of (clinical) laboratory test. PAMA (SSA 1834A) added the term CDLT Clinical Diagnostic Laboratory Test, but no definition. One assumes therefore the relevant definition is that of CLIA, which is a bulky paragraph that makes any human tissue, fluid, etc, and any analysis method, a CLIA test.
Code Application (AMA) versus Test Category (Medicare)
One of the craziest examples is that Category III codes for digital pathology will be reviewed by CAP, and Pathology Coding Caucuse, require proof a lab offers the test, require a CLIA license, in a new proposal, even require a letter from the CLIA Lab Medical Director.
Yet, CMS has proposed that digital pathology tests are NOT laboratory tests, NOT CLIA tests, at all. And if CMS doesn't classify the codes as CLIA tests, then laboratories can't bill them (there are national CMS claims processing edits that labs can only bill lab codes, not, say, MRI of the head).
Date-of-Service Rules
If they are not clinical laboratory tests, then WSI tests presumably would not be subject to the laboratory date-of-service rules. See next point.
OPPS and Even Inpatient Bundling
If they are no longer subject to the strange, sometimes backward-looking laboratory date-of-service rules....then they may no longer be bundled into inpatient and outpatient hospital payments in the same way CMS takes for granted today.
Codes like 0220U, a digital pathology code, have NOT been payable in the hospital outpatient setting, because they carried status indicator (SI) Q4. Now, they are proposed to be switched to status indicator O1, and paid $750 in the same setting.
ADLT Status
If they are clinical laboratory tests, they may be eligible for Advanced Diagnostic Laboratory Test status and ADLT pricing.
If they are not laboratory tests, they presumably are not eligible.
PAMA
If they are not clinical laboratory tests, they would not be subject to PAMA pricing and reporting rules.
Enrollment
Today, an entity performing CLIA tests obtains a CLIA certificate and enrolls in Medicare as a clinical laboratory.
But if H&E-based WSI-AI tests are not CLIA tests, can the entity performing them enroll as a clinical laboratory—or not?
As I noted in an earlier blog, CMS initially would not let HeartFlow enroll in Medicare at all. HeartFlow, now a major public company, was eventually permitted to enroll as an independent diagnostic testing facility, or IDTF.
Billing by a CLIA Laboratory
CMS is proposing that certain WSI tests should no longer be CLFS tests. That seems difficult to reconcile unless CMS also regards them as no longer being CLIA laboratory tests.
But my understanding is that a laboratory enrolled in Medicare as a clinical laboratory can bill laboratory services—not E&M visits, or foot surgery, or an MRI of the head. These are provider-to-code hard wired edits, where the provider must be of the CLIA type or hold a CLIA certificate to bill the CLIA codes.
If CMS no longer regards certain PLA-coded WSI services as CLIA laboratory services, CMS may be able to remove them from the CLFS. But would CMS also have to remove them from the listing of services that an enrolled CLIA laboratory is permitted to bill? The lab would still be a CLIA lab but the WSI code it invented and got coded, would get yanked off its billable codes list.
70/30 Rule - and Other Reference lab rules.
Labs can bill for reference lab tests that they refer out to a specialty lab, if such referrals are not more than 30% of the lab's volume. (This is to avoid the lab becoming a "paper shell" that doesn't run a lab but only refers tests out.) However, if digital pathology codes are not CLIA tests, then presumably they wouldn't count toward the 70/30 rule. ...But, if they were not CLIA tests, then a CLIA lab probably is blocked from billing them. And if the digital pathology are kept on the CLIA list at CMS so the lab where they are run can bill them, then those tests should be priced by CLFS per statute at 1834A, but CMS wants them off the CLFS and contractor priced... topsy turvy land, again.
Another aspect, aside from 70/30 rule, when labs acquire a specimen and refer it to a special reference lab (like Mayo or ARUP), there are special claims rules, modifiers, putting the CLIA or NPI of the CLIA performing lab, etc. None of these would apply if digital pathology is "not a lab test" in the first place.
Billing by an IDTF?
IDTFs generally are prohibited from billing CLIA laboratory services. That's old news.
But CMS now appears to characterize these WSI services not as clinical laboratory tests, but as general diagnostic tests covered under Social Security Act §1861(s)(3).
If they are general diagnostic tests under §1861(s)(3), and CMS formally treats them that way, then perhaps they could be billed by an IDTF—even though the service involves a glass slide, tissue, and a microscope.
Level of Supervision
CMS maintains a table where it assigns "level of supervision" to all tests which are not CLIA tests. Pathology tests are exempt from this table, because by definition they are under general supervision. But CMS is saying that digital pathology tests are no longer CLIA tests (neither of the clin lab type nor the pathologist type), but rather, are general tests under 1861(s)(3), so they will have to be assigned levels of supervision.
###
Head-spinning stuff.
There may be additional consequences that have not yet occurred to me.
