3 Ways Palmetto’s MolDx Program May Jeopardize Labs

The Palmetto MolDx program works in conjunction with the two LCDs introduced at the October 19th CAC meeting. The primary LCD that is required for this program to operate as envisioned by Palmetto, is the Molecular Diagnostic Tests LCD which defines a Molecular Diagnostic test as non-covered if it meets the following criteria: Non-coverage policy applies to all tests that:

1. Are Non-FDA cleared laboratory developed tests (LDTs), or
2. Are performed or marketed by a sole source, hospital or reference laboratory, or
3. Have not received a specific AMA CPT code, or
4. Have not obtained an NCD or a coverage determination from Palmetto GBA (LCD or article)

This LCD is currently in the comment period through Dec 5th and is likely to be altered on the basis of comments received. Based on the wide scope of tests that would get caught up in the LCD’s current wording, we believe that the comments will minimally result in the change of the words “or” between the 4 listed criteria to “and”. By forcing labs to obtain a Z code prior to submission of any claim and by defining tests with non-coverage as investigational, Palmetto is effectively attempting to close the loop for providers utilizing the appeal process to obtain coverage.

Palmetto’s selection of denial code for services that fall within the scope of the LCD will influence the appeal aspect further. If Palmetto uses CO50, the medical necessity denial code, the appeal process will be less affected. If, however, a denial indicating the test is “investigational” is used, the appeal will be more difficult. Those commenting on the LCD may want to address the issue of the LCD considering tests “investigational” versus simply “non-covered”. With the MolDx program guidelines, Palmetto’s second LCD (Non-standardized organ panels) targeting Molecular Diagnostics tests by eliminating any coding that requires more than one CPT code to report, is even more deliberate in its attempt to eliminate adherence to established coding guidelines and consequently, the use of the Medicare laboratory and physician fee schedules.

If Palmetto’s intent, as represented, is simply to identify services performed and determine medical necessity, this LCD serves no other purpose than to subjectively set pricing. Palmetto’s MolDx program requires the submission of a test specific Z code assigned by McKesson for diagnostic services using “stacking CPT codes” (83890-83914), micro-array CPT codes (88384-88386) and cytogenetic CPT codes (88230-88291) or NOC codes. Palmetto has indicated that labs may continue using the appropriate CPT codes, but simply add the Z code descriptor for the test in the “NTE” segment at each respective procedure code level in the electronic submission file. One question posed to Palmetto is how to submit a claim when a single patient encounter for the same DOS includes multiple services that contain CPT codes that need to be consolidated to one line item. Palmetto indicated that in order to electronically process claims, they cannot handle more than one Z code in the “NTE” segment per line item. Accordingly, each test may need to be submitted as a separate claim as long as Palmetto can handle using the Z code to determine a duplicate service is not being filed. Alternatively, Palmetto suggested that the tests be segregated to not consolidate to one line item and that Palmetto may be able to handle multiple lines with the same CPT code as long as there was a different Z code. Stay tuned as we await Palmetto’s final guidance on these open items.