Very Brief Blog: Old School Lab Fraud: Strip clubs and bags of cash in NJ

A few years ago, I was talking to a senior lab industry colleague about trends in Medicare fraud.  Old school, I said, was giving the physician a brown paper bag full of $50 bills.   New school, was having the physician enrolled as a "consultant" for a "registry" and giving him $200 per head or some other figure.  (See 2014 OIG bulletin here).    My colleague said, "Well, there's still plenty of the Old School approach, in New Jersey."  Total earnings of the lab were >$100M during its run.

For a colorful article on the colorful and seamy side of the clinical chemistry business, see a December 5, 2017 article in New Jersey Dot Com, here.  (Medicare payments to the lab were only $2.1M in 2015, available via here; but that's 2 years after initial arrests made in 2013; BCBS cases against the lab dated to 2009).

Brief Blog: MOLDX Statement of Work (Jurisdiction M, 2014)

In the past month two different people have asked me about the MOLDX statement of work.  It's online at a federal RFP website, and I've clipped it here on my documentation blog.

Features of the SOW include:

• pricing of tests not priced on the CLFS, 
• maintaining a test code registry (e.g. Z codes), and 
• providing standard formats for evidence and conducting systematic evidence review.   
• MolDX is also to advise CMS on new national edits.  
• There's an interesting section that very clearly authorizes "coverage with evidence development" or "coverage with data development," although LCDs from MOLDX do not currently use that. 

MOLDX has some policies which don't trace as easily to the SOW, which I discussed here.  These included (1) altering prices of codes that do have CLFS prices, (2) not using CMS CPT codes for two or more tests, because they become "panels," and (3) employing local edits (such as blocking payment of 81433 when 81432 is used) that have not been migrated to "national" edits in the public CCI system.  Update:  Around December 1, they stopped using Mod 22 to up-price certain codes already priced on the CLFS.

Very Brief Blog: Silicon Valley Bank "Diagnostics and Tools," November 2017

In mid-November, Silicon Valley Bank issued a 22 page report specific to "Diagnostics and Tools," subtitled, "NGS and AI drive Moonshot Investments." 

The SVB home page for the report is here; the PDF is online here.

A few weeks ago, we highlighted their more general mid-year 2017 report on health investment trends (here).

Very Brief Blog: Harry Glorikian Releases New Book on Data Driven Healthcare with Coauthor Malorye Alyson Branca

Harry Glorikan, a well-known consultant and expert on the diagnostics and biopharma industries, has released a new book titled, "MONEYBALL MEDICINE: Thriving in the New Data-Driven Healthcare Market," coauthored with  Malorye Alison Branca. 

In 2016, Glorikian published, "Commercializing Novel IVDs: Comprehensive Manual for Success," here.   See also his December 2017 article on risk based regulation of diagnostics, here.

The book already sold out its first printing on Amazon; but ebooks currently are available.  See the Amazon website here.

From the Amazon summary:

MoneyBall Medicine: Thriving in the New Data-Driven Healthcare Market, which includes interviews with dozens of healthcare leaders, describes the business challenges and opportunities arising for those working in one of the most vibrant sectors of the world’s economy. Doctors, hospital administrators, health information technology directors, and entrepreneurs need to adapt to the changes effecting healthcare today in order to succeed in the new, cost-conscious and value-based environment of the future. The authors map out many of the changes taking place, describe how they are impacting everyone from patients to researchers to insurers, and outline some predictions for the healthcare industry in the years to come.

Two other books on related topics in the recent weeks include FOURTH WAVE: DIGITAL HEALTH by Paul Sonnier (here), and REALIZING THE PROMISE OF PRECISION MEDICINE: Patient Data, Mobile Technology, Consumer Engagement, by Paul Cerrato and John Halamka (here).

Very Brief Blog: New Paper on Competitive Dynamics of Precision Medicine in Pharma Development

For years, there has been much ink used in discussing when biopharma should develop mass market drugs and when CDx targeted drugs are a better investment and focus for R&D.

Berndt & Trusheim have released a new 40-page paper on the topic.   The paper is available for $5 from the National Bureau of Economic Research Archive (NBER).   See this link.

New pun = "Pharms race."

I've included the title and abstract below.  It was presented at a national conference on "Economic Dimensions of Precision Medicine" in September 2017.

 The Information Pharms Race and Competitive Dynamics 

of Precision Medicine: Insights from Game Theory

Ernst R. Berndt, Mark R. Trusheim
NBER Working Paper No. 24020
Issued in November 2017

Precision medicines inherently fragment treatment populations, generating small-population markets, creating high-priced "niche busters" rather than broadly prescribed "blockbusters". It is plausible to expect that small markets will attract limited entry in which a small number of interdependent differentiated product oligopolists will compete, each possessing market power.

Multiple precision medicine market situations now resemble game theory constructs such as the prisoners' dilemma and Bertrand competition. The examples often involve drug developer choices created by setting the cut-off value for the companion diagnostics to define the precision medicine market niches and their payoffs. Precision medicine game situations may also involve payers and patients who attempt to change the game to their advantage or whose induced behaviors alter the payoffs for the developers. The variety of games may predictably array themselves across the lifecycle of each precision medicine indication niche and so may become linked into a sequentially evolving meta-game.

We hypothesize that certain precision medicine areas such as inflammatory diseases are becoming complex simultaneous multi-games in which distinct precision medicine niches compete. Those players that learn the most rapidly and apply those learnings the most asymmetrically will be advantaged in this ongoing information pharms race.

CMS, FDA ANNOUNCE APPROVAL, COVERAGE OF FMI CDX TEST; NCD ALSO CONTROLS ALL CANCER NGS TESTING

On November 30, 2017, CMS and FDA jointly announced coverage of the Foundation Medicine Gene Panel Test through the Parallel Review process and the PMA approval.

The test is called Foundation One CDx or F1CDx.

• The CMS press release is here.
• Scott Gottlieb, head of FDA, assured Congress on December 7 that FDA is cooperating with CMS and this NCD will guarantee payment at CMS for all NGS cancer labs that cooperate with voluntary FDA PMA approval.
• FMI press release here.  (Includes quotes from Lungevity and CTCA.)  
• FMI press conference on the NCD, see the Genomeweb report, here.
• FMI share price up 10-12% ($60>$65).
• That brings share price back up to the 1Q2015 level.  In 2Q2016 it sank as low as $20.
• Over the first week, FMI price has gone from $53 to $70 to $58 to $67.
• 5 cancers or all cancers?  Since the CMS coverage includes all CDx tumors, and the FMI test includes MSI, and Keytruda and MSI are valid for all solid tumors, you might think the NCD would cover FMI in all solid tumors via the CDx MSI.   
• Apparently not.  
• Apparently MSI is reportable but doesn't have CDX status yet, because FMI is only claiming new patients under the NCD for a few cancers like lung, not for all cancers via the MSI angle.
• Coverage at MedCity News here.  Xconomy here.  Genetic Engineering News here.  Fierce Biotech here.  Genomeweb here.  Blog by CureOne [Med-C] Dane Dickson MD, here.  Coverage at New York Post, here.
• The CMS NCD is on the web here.   
• PDF here.  Track public comments here.
• This is a "draft" NCD, with 30 days public comment through December 29 comment period extended to January 17.
• At 46,000 words and some 62 pages (as PDF), it's one of the longest NCDs ever.
• The FDA press release is here.
• FMI FDA PMA Review Documents...POSTED DECEMBER 18.
• The Foundation One PMA Webpage is here, posting >100pp of FDA review documents on December 18.
• The PMA number is P170019, the Class III PMA Product Category is PQP.
• Summary of FMI versus Oncomine labeling, here.
• Weird fun fact.  The 11-page NCD request (from FMI) is dated November 17, 2017 (!).
• Scope and cost.  The FMI NCD request estimates a potential annual volume of 46,000 cases (at 20% penetration into the relevant CMS advanced tumor population of 230,000 incident cases.)  
• At $3000 per test, that's about $140M dollars per year.  
• But if you included all surviving patients backwards a few years, and for example all women with a 1 cm breast cancer and 1 positive lymph node in the last 5 years, the patient population would be much bigger.
• This NCD provides another reason to fix the goofy update to the 14 day rule that appeared recently.  
• The 14-day rule was liberalized to provide better CDx access to Medicare cancer patients, but "excluding genomic sequencing procedure" tests [!], which the F1CDx test is.   More about 14 day rule brouhaha here.
• Huge dive for MSK 510(k) IMPACT test.
• The MSK IMPACT test was FDA de novo cleared by FDA last month with huge fanfare.  However, the NCD gives much lower status to this clearance route, covering it only in onerous CED trials.  (For example, do a RECIST study monthly at $1000/month for one year and you've spent $12,000.)
• I think CMS wanted to distinguish somehow between PMA and 510(k) gene panel tests, but the NCD proposes to make 510(k) tests use impossibly costly registries.  Of course, it's not just the labs, it's all the cancer patients who don't have a cancer specific PMA gene and NGS test available.

The FDA writes that with 324 genes and "two signatures," the F1CDx  test can identify which patients under 5 tumor types may benefit from any of 15 FDA targeted treatments.  The two "signatures" are for MSI and for total mutational burden.  Thus, the test creates an FDA-approved route to a TMB assay result.

CMS coverage is for patients "with advanced cancer, e.g. metastatic," with no prior NGS test, who "continue to seek further cancer therapy."  "Coverage" occurs when there is at least one on-label FDA approved diagnostic and at least one CDx drug in that kind of cancer.   "Coverage with Evidence Development" occurs in other situations, which are complex but generally distinguish one track of CED for FDA approved/cleared tests used in registries, and and another CED track for LDT tests used in NCI trials.

Synchronized Harold Varmus Op Ed in Science

In parallel, coordinated but subscription-only editorial by Harold Varmus appeared in Science today, arguing that payers should require CED in genomic test coverage, as well as use of genetic data registries.   See Science here, see Genomeweb here.

Much more detail after the break.

Very Brief Blog: Mandatory Hospital-Physician Demo's Thrown Overboard by CMS

It's been pending since Thomas Price was (briefly) head of HHS.   For those who protested and/or despised mandatory regional CMS bundling demonstration programs, such as for hip replacement, they're gone.

CMS announced today that several mandatory demo projects were being thrown overboard and the Federal Register announcement is December 1.   The demonstration programs required countless thousands of manhours and many hundreds of pages of federal rule-making to set up.

Read about it at CMS press release, here, and Fierce Healthcare, here, MedCity News here. CMMI will continue to do demonstration programs, but not mandatory ones.  (See recent "reform CMMI" articles here).

Brief Blog: 2018 HCPCS Coding Decisions Released; Another Bad Year for DME; Diabetes Strike-Out

Each January, CMS accepts applications for new HCPCS codes.   CMS holds a public meeting in May-June, releases preliminary decisions in early September, and releases final decisions about Thanksgiving.

The only easy category is codes for new intravenous drugs, and each year there are quite a few of those.  Most of the applicants get the code they ask for.

For other therapies and equipment, it's a cold harsh process.    CMS has released its coding decisions for CY2018, on the HCPCS website, here.   I've also put the 5 PDFs in one zip file in the cloud, here.

It was a strike-out for all three diabetes technology codes I was tracking. 

• No code for the Medtronic 670G artificial pancreas; 
• No code for the associated, PMA-grade glucose strips or high accuracy PMA-grade meters, and 
• No code for a telemedicine scale used in diabetes prevention programs.   
• Dexcom also lost its attempt for more specific battery coding for the Dexcom G5.  
• Nearly all of several dozen other equipment or supply code applications failed.

Very Brief Blog: Medicare Advantage Gets Multiple New Rules, Policies, Demo's, and VBID Time two

In mid-November 2017, CMS had two rounds of announcements that update the Medicare Advantage program.

Rulemaking for MA 2019

On November 16, 2017, CMS released Medicare Advantage and Part D policymaking for CY2019.   The CMS press release is here.   The Federal Register website is here.  The typeset rule will publish on November 28.  The index for recent MA policy documents is here.

MA and Provider Enrollment.  One change that will affect all Medicare Advantage providers: CMS pulls a rule, issued last fall, that would require all downstream MA providers to be enrolled in Medicare.   Rather, CMS will only require that MA providers "not" be on a CMS preclusion/exclusion list.   This applies to Part D as well. 

Bringing VBID into General MA.   Another change is that CMS will allow many features of "Value Based Insurance Design" (such as reduced copays for selected services) to occur within Medicare Advantage plans.  However, plans are forbidden to advertise VBID features.  They can respond to VBID questions if asked, making cross-plan research very difficult for patients.

Narrowing the Definition of Marketing.  CMS is required to by statute to closely scrutinize "marketing" materials of MA plans.  It will define this more narrowly so that only advertising directly aimed at driving a patient's plan selection will be "marketing."

Trade press on MA rulemaking at National Law Review here, Lexology here.

CMMI Demo for MA VBID Expands 

Shortly thereafter, on November 22, CMS  announced an expanded Demo Program for Value Based Insurance Design test models in 25 states.   For example, diabetes patients might get free eye exams, though other types of patients wouldn't get free eye exams.   For the MA-VBID expansion, see the press release here, the fact sheet here.  More detailed policy documents and application guidance at the CMMI MA VBID homepage, here.

Trade press on CMMI VBID at Fierce Healthcare here, at Modern Healthcare here, at Becker's Hospital Review, here.

For a new November 27 article on VBID in general, Fierce Healthcare, here.

It would take a full time expert to dissect the differences between the VBID expansion proposed in annual rulemaking for all 2019 MA plans, versus the VBID expansion described at the CMMI website.  Maybe one difference is that the CMMI expansion is already locked and loaded, but the rulemaking version for everyone might get delayed or derailed in notice-and-comment policymaking.  But clearly, CMS is taking on VBID and promoting it across multiple policy channels.  The new main arms of VBID are reduced copays for existing benefits, and creation of narrowly available special benefits only for certain patients.  If the special benefits are outside of Traditional Medicare, they must also be treated as "special benefits"

Update: December 5, 2017: United Healthcare launches more VBID MA programs, here.

Very Brief Blog: Flurry of Sources on Liquid Biopsy including FDA-AACR Conference

In October 2017, the FDA and AACR held a joint full day conference on promises and challenges in the Liquid Biopsy field.  The workshop was co-chaired by Carlos Arteaga and Pasi Janne for AACR; and Julia Beaver, Gideon Blumenthal, and Reen Philip for FDA.  (This was the second FDA-AACR workshop; the first was in July 2016).

• Full workshop transcripts and slides have now been posted, as well as video.  Here.
• The consolidated slide deck is 12 mb, 236 pp.  The transcripts total 117 pp.
• Agenda here.
• For subscription meeting coverage at Genomeweb by Molika Ashford, here.

In addition, both Genomeweb (subscription) and the Next Generation Technologist summarized some AMP discussions of Liquid Biopsy at the recent Salt Lake City conference in November 2017.   Genomeweb here; Next Gen Technologist, here.

See also a long article in CAP TODAY in October 2017 on liquid biopsy, here.

____

MedCity News had coverage of highlights from the June ASCO conference, here; Genomeweb here.  Genomeweb also covered reference materials issues last summer (here).

Very Brief Blog: Updated Resources for "Center for Innovation" Reform & New Directions

In September, with a WSJ editorial, CMS Administrator Seema Verma kicked off an open comment period on ways that CMS could adapt and improve the Center for Innovation (aka CMMI).   (Here).

The comment period closed on November 20, and several public comments are available now.

• The Center for Healthcare Quality and Payment Reform issued a 20 page whitepaper, here.
• Hospitals:
• The American Hospital Association made its CMMI comments public in a 17 page letter, here.
• Federal of American Hospitals, 17 pages, here.
• Digital: 
• Healthcare Informatics trade journal, here. 
• Electronic Health Record Association (EHRA), 3 pages, here.  
• American Telemedicine Association (ATA), 4 pages, here.
• Premier made public a 19-page letter, here.
• Personalized Medicine Coalition 6-page letter, here.
• Physicians:
• Review of physician group comments, at MedPage Today, here.  
• Internists' viewpoint at MedicalXpress, here.  ACR, here.
• See a short review at Fierce Healthcare, here.  And at Healthcare Dive, here.  Becker's Hospital Review, here.
• Blog by Micklos & Wrobel at Health Affairs, here. 
• These authors represent the Health Care Transformation Task Force.
• Open access article by David Pittman at Politico, here.
• I haven't found any consolidated, open access database for all comments.
• Kaiser Health News says that Canada admires the CMMI, here.

Get the cited public comments in one zip, here.

To my eye, there are three general topics that CMMI should address to speed all its projects.   

First, CMMI has an amazing (an legally un-tested) authority to waive any Medicare law in the process of doing a demonstration.   However, this legal authority seems clearly pointed (to this non-attorney) at only its demonstration authority, not its permanent project implementation authority.  CMS should figure this out and take a clear position. 

Second, Congress allows CMMI to implement permanent projects when they are certified to be cost neutral or cost saving, and quality neutral or quality improving.  From the extremely limited use of this certification process in six years, there don't seem to be clear guidelines as to how certain is certain enough for certification (no model can perfectly predict later costs and outcomes in a nationwide population).

Both the above topics are fundamental to all CMMI model designs, tests, and expansions, and leaving them fuzzy means that the designers and evaluators don't have clear guidelines and guardrails and targets in the business of  planning for and achieving success.

Third, CMMI has always stated it does not intend to test technologies and services, but rather broad schemes like ACOs.  Yet there are all kinds of technologies that fall outside current narrow or dated rules, and this could be a very fruitful use of CMMI projects.  For example, the Diabetes Prevention Program (DPP) has been the first program shifted by rulemaking into a new, innovative benefit, and it's a technology-or-service.  GAO has encourged CMS to look at cost saving new technologies even when they slip outside current benefit structures (here), but CMS poo-poo'd the recommendation.  

It's easy for some projects to be cost-saving and yet be bogged down in Congress for years.   Congress and CBO rated a telehealth expansion (targeted to fixing certain nuances of Medicare Advantage financing rules) as cost-saving for CMS and taxpayers yet it's bogged down on the Hill for several years without passing.  Dumb!   (It might be moving now, by extracting current HR 3727 from a slow moving Senate bill CHRONIC, and then tacking HR3727 onto a pending Medicare Extenders omnibus bill.)  The point is it takes the Hill 3 years or more to pass even an endorsed, cost-saving slam dunk bit of legislation, and CMMI could accomplish this in two hours.  

Very Brief Blog: ACLA Again Asks CMS to Stop PAMA Implementation

CMS released final PAMA rates on November 17; ACLA has issued an urgent press release  asking CMS to stop implementation of PAMA.   See ACLA webpage, here; PR Newswire here.

How To Comment on CMS 14 Day Rule Revision Errors

UPDATE:

CMS ISSUED INSTRUCTIONS TO PROVIDERS AND CONTRACTORS 

THAT SIMPLY POINT EVERYONE TO "STATUS INDICATOR A" 

FOR GUIDANCE, THUS OVER RULING ALL THE 

WEIRD MIS STATEMENTS IN ACTUAL RULEMAKING.

See later blog January 9 2018, here.


ORIGINAL BLOG FOLLOWS



On November 2, CMS released outpatient hospital final rulemaking for CY2018.   CMS revised the "14 Day Rule," with the general intention that genomic tests that are currently billable by the hospital, on outpatients, in less than 14 days, can be billed by the performing reference laboratory.  Thus, the rule should be cost neutral while shifting the pains and burdens of billing MACs to the reference laboratory.

However, CMS struck some unusual positions in the rulemaking. 

The rule hinges on "molecular tests" (which CMS does not define very clearly in the first place), while excluding "PLA code tests and genomic procedures."   Since CMS has already been classifying genomic PLA code tests and GSPs as "molecular tests" that are billable by the hospital, "Status A," and CMS has introduced no new modifiers or status indicators for implementing the new 14 day rule revision, the exclusion by of some Status A tests by"text" and the inclusion of the same tests by "status indicator A" in tables is confusing. 

In addition, CMS had proposed in the original rulemaking that it would include ADLTs of the MAAA type (Type 1) but exclude ADLTs of the FDA approved type (Type 2).   You would only have noticed this if you had read the proposed rule citations and cross-references to regulations by number extremely carefully.   The world is still waiting for CMS to create ADLT application forms, but some tests would qualify for both Type 1 and Type 2 ADLTs, or shift from Type 1 to Type 2 based on a new FDA approval, and since all ADLTs are sole source and not performed by the hospital, the rationale is unclear.  Also, why classify ADLTs as in or out based on FDA approval when other molecular tests are "in" (such as EGFR or BRAF tests) regardless of FDA approval.

To my understanding, CMS's internal definitions of "molecular pathology tests" relative to the 14 day rule have mostly been intuited by reading what tests they do and do not classify as "Status A" for hospital billing purposes on a rolling basis.[*]   Those billing status classifications - including for 2018 - simply don't match the verbal text of the final rule.   Also, it makes no sense to exclude PLA tests that are genetic tests, or genomic sequencing procedures that are generally less expensive than code stacking the relevant single genes.   These comments about excluding PLA and GSP codes appear only in the final rulemaking so the world didn't have a chance to tap CMS on the shoulder until now.

CMS formally only takes comment on "new" things appearing in the final rule.  CMS proposed no regulation in the July rulemaking, so the whole regulatory text for 14 day rule is "new."  Also, it appears CMS has made clear errors in the verbal text relative to the intended concepts.  All CMS remarks about PLA and GSP tests are "new."  The public can make comment to CMS now.

I've made a ZIP file that contains all the documents that might be relevant to a comment.  This includes

1. The original July rule proposal;
2. The final November version;
3. Addendum B, which classifies all CPT codes by outpatient billing status;
4. Addendum D, which explains the cryptic status indicators;
5. Current text of 42 CFR 414.510, including the new section created by rulemaking this month.

In Addendum B, I've tried to collate all the U codes, M codes, and molecular CPT codes on one sheet, since they are scattered in different places in the CMS spreadsheet.  I might have missed something, so the entire 16,000 line original table is also there.

The Formal Comment Page is here.

The ZIP FILE is here.

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[*] I flagged this obscure phenomenon for readers back in May, 2017, here.  (I also noted then that some of the "A" classifications appear wrong by CMS's own protocols. For example it generally excluded genetic sequencing of pathogens but erratically included one or two.)

CMS To Abandon Longstanding Chemistry Panel Pricing in 2018, Opening a Two-Billion-Dollar Vulnerability

CMS has long had complex, manualized rules (not present in regulations) for pricing clinical chemistry panels. These panels are a "big deal" - $700M a year, and panel pricing saves AT LEAST $50M a year (see my article here), but may save several times that, because of current behavioral incentives not to report partial panels.  And if panels were priced at the summed cost of analytes, with no panel discount, payments would be over $3B, not $700M.

CMS will discard its longstanding chemistry panel pricing in 2018.   While CMS says it will "continue to review the issue," based on 2016 data already available, payments for analytes will go up at least by $40-50M dollars and potentially more, because there will be brand new massive incentives to submit partial panels of analytes for line item payments that are multiples of the panel price.  Why bill a 15 analyte panel for $13 when just 14 analytes will pay $75?  (See analysis at bottom).  

CMS writes,

How will CMS determine the price of automated testing profiles (ATPs) under the private payor rate-based CLFS payment system?
     For CY 2018, payment for tests that were bundled into ATPs will instead be made at the individual HCPCS code level. In other words, we will pay for each appropriately billed HCPCS code based on the CLFS amount for the specific code billed by the laboratory.
     Moving forward we will continue to consider the efficiencies of ATPs and the appropriate payment methods for these tests under the new private payor rate-based CLFS.
     Medicare administrative contractors will continue to apply editing to ensure that if a laboratory panel HCPCS code is submitted and is payable, an individual laboratory HCPCS code that is part of the same panel is not also paid separately

My answer: OK, we'll see how that works for you.

EXAMPLE - Two Billion Dollars of Free Money !

For example, the 15-analyte Comprehensive Metabolic Panel is the most popular panel, with 29M orders in 2016 and $323M in payments (CMS Part B; code 80053).   The new price for 80053 in CY2018 is $13.04, as set by PAMA.

However, at 2018 prices, the 15 analytes add up to $82.88.   If you leave off any one analyte - almost all of which are $5-6 - the remaining 14 analytes will pay about $75.  

Back of envelope math suggests that if, with the maximum behavioral element, all 29M panels were ordered in the 14-analyte format, CMS payments would rise from 29M x $13.04, or $377,000,000, to 29M x $75, or $2,175,000,000 (over $2B).   That's almost two billion dollars of free money in 2018 alone!

Check my math.  It's about $18M more taxpayer money automatically paid out for every 1% of tests converted from 80053 billing to 14-analyte billing, so eventually at the maximum, with 100% converted, the payout is about $1.8B higher.

Click to enlarge.

Note - You'd want to delete a code that disables several panels at once, such as "chloride," otherwise some of the 80053 line items codes would condense around some smaller panels and shrink the payment away from the item maximum. 

Use Secretary of Health Units of Measurement that People Can Understand

Just 5,500 tests converted to N-1 billing (0.01% of tests out of 29M tests) would cost CMS $400,000 - the same dollar amount that Secretary Price was fired over.

CMS CLFS 2018: Final PAMA Prices (No Suprises) and Final CW/GF on 127 Codes

On November 17, 2017, after market close, CMS released the final PAMA fee schedule for 2018.   This is a new lab fee schedule based on market rates surveyed over the past year.

CMS also issued final crosswalk/gapfill determinations for new codes for 2018.

See all files online at CMS, here.   Note that the Excel spreadsheet is only PAMA-based prices (codes used in 2016 and priced based on 2016 data; no new 2017/2018 codes).    CMS issued a separate PDF of new crosswalk/gapfill prices.

CMS commented that it is still working on an ADLT application, which is overdue.

Crosswalk/Gapfill: Unprecedented Number of Price Reversals

CMS handled 127 agenda items in the gapfill/crosswalk process.  This included new standard CPT coedes, new PLA codes, codes crosswalked in 2016 and re-crosswalked to the same values again due to a technicality, and codes lacking prices in the PAMA reporting process. 

An unprecedented proportion of codes, 51/127, or almost half, had price changes between the proposed and final version.   This includes about 35 of the first 59 decisions (over half), which were on new or reconsidered codes.[*] 

While only one or two codes were referred to "gapfill" in the initial proposals, [19 or 20] are referred to the contractor gapfill process in the final decision.   This includes several codes that seemed to almost spontaneously jump to gapfill, after CMS and panelists had already settled on a crosswalk.    In some cases this made a lot of sense; the "genome" sequencing code was proposed as a $600 crosswalk, even though the "exome" sequencing code had a PAMA price of about $3000.   In the final version, "genome" will be gapfilled.

CMS proposed a number of MAAA tests with list prices in the $3000 range to be crosswalked to the Cologuard test 81528, about $500.   Such codes were finally crosswalked to 81519, Oncotype DX, circa $3400, in the final decision.

Several novel gene panel tests, such as for neuropathies, were crosswalked to the Lynch syndrome or colorectal gene panel test, 81435.  This is unfortunate as this code received an unbelievably low PAMA price of $38 (!), although it will only fall in 10% increments from the 2017 price of about $800. 

PAMA Policy

CMS released a PDF with some comments on its PAMA policy (basically, nothing in the PAMA pricing files or medians changed.)   CMS recognized there were illogical outlieres, like 1 penny or $99,999, but did not discard these because they would have little impact on medians.   CMS discussed again its limited use of hospital reference lab data.

CMS dealt with a few odds-and-ends, such as special price rules when the NLA is 0 but some local fee schedules are grater than zero; and a few special statutory prices such as HA1c and Pap smears.   CMS corrected a few phase-in prices that were wrong due to "transcription errors." 

Panel Pricing Chaos - Or Boondoggle?

The biggest announcement was that CMS will suspend its automated test panel aka clinical chemistry test panel rules effective January 1, 2018.   These rules forced payments for single analytes to always be lower than a corresponding panel.  Now, partial panels can receive a la carte stack prices that are higher than the panel the analytes are found on.   It would not be surprising to see a Congressional fix of 10 or 20 words to repair this, since it will cost CMS $50M or more per year (see here).  For example, 15-test-code 80053 is used about 30M times per year.   The panel payment will be $13, but any 14 analytes will add up to $75 at a la carte prices.  At the $13 rate, CMS payments will be around $380M, but if every doc prudently ordered a smaller, 14-analyte or "N-1" panel, CMS payments would be about $2.2B.   For every 1% of docs that orders the 14-analyte panel, CMS gives out $18M extra.

___
[*] Action count based on word search of the boilerplate phrase "We initially believed."  Gapfill count based on the phrase "CMS and its contractors..."