4 actions labs need to take to prepare for 2015 reimbursement challenges

With ongoing assaults on reimbursement and billing practices, there is no question laboratories and pathology groups are going to be in for a rocky year. How they choose to plan for and respond to changes will be key to their success and survival. A four-pronged positive plan of action and preparedness is a good start: 1) stay alert to current proceedings and prepare to comment; 2) get your systems and processes PAMA-ready; 3) prepare for new codes and potential payment reductions and delays; 4) ratchet up your attention to compliance.

1. Stay Up to Date and Participate

As policy and programs are being reshaped, it is more important than ever to make sure your voice is heard. The commentary period that follows draft guidance is a critical time to provide feedback and potentially reshape policy. The Protecting Access to Medicare Act (PAMA) of 2014, for instance, has many still unresolved questions. To meet the July 1 deadline for CMS to finalize the rule as to the details resubmitting pricing data, as well as what constitutes an applicable laboratory, we should see draft guidance from CMS in the next few weeks. Once the draft is released, a commentary period will open, and given the aggressive PAMA timeline, it cannot be a long one. It will be important to assess impact and areas of confusion quickly, and provide that critical commentary within the allotted time.

Likewise, in October 2014, FDA released yet another draft guidance for regulation of LDTs[1]. The Energy and Commerce subcommittee’s “21^st century cures” initiative has been charged with moving personalized medicine and medical advances forward, and how to reconcile the need for innovation with the current environment of decreased reimbursement and additional regulations. In December it released a list of 11 questions to solicit industry and stakeholder response, with a deadline of January 5, 2015[2]. With such narrow windows for commentary, it’s critical for laboratories to stay alert and respond quickly so these organizations can address concerns and raised questions.  The committee’s promised white paper, called the Innovation for Healthier Americans initiative, was released, but its 400 pages only included a “place holder” Re: FDA oversight with a promise of more to come.

2. Get ready for PAMA

Given the current PAMA timeline, laboratories will need to begin reporting private payor payment rates around January 1, 2016. Now is the time to evaluate your information and billing systems and make sure they are set up to provide the required information. For many, this will require a level of visibility and tracking that’s never been in place before, and some systems will simply not be up to the task.

3. Prepare for new codes

PAMA is not the only reimbursement initiative underway; we also have 21 new sequencing and MAAA codes that went into effect January 1, and many more codes are expected. CMS has instructed the contractors to gapfill only those codes which they are planning to cover. Difficulties are likely to arise because many contractors have implied next gen sequencing would not be considered covered services. Additionally, many of these codes (e.g., prenatal and pediatric) are more specific to non-Medicare populations, and as we saw two years ago with the introduction of MoPath codes, commercial payors and Medicaid entities were challenged when Medicare contractors had not bothered to price them.

Methods of handling drugs of abuse are still in flux, with most commercial payors indicating they’ll accept AMA codes for these, while Medicare will be accepting special G-codes. All of this leads to opportunities for lost revenue for laboratories and pathology groups. It’s important to have an understanding of which code set each payor will be using and to have your systems set up accordingly so that claims go out appropriately.

On the MolDx front, Palmetto, the Medicare Administrative Contractor responsible for the introduction of the MolDx program which is designed to identify, register and perform technology assessments for molecular diagnostic tests, has issued a MolDx Molecular Test Panel Edit Alert, whereby any use of more than one marker for one patient and one date of service constitutes a “panel,” which requires request for a new panel specific Z code, even if panel components already have Z codes. Currently this is slated to go into effect in July, and only for Palmetto’s jurisdiction J11, but it is under scrutiny and laboratories who would be affected by this policy need to stay on top of new developments so that they can respond and adjust practices as needed.

4. Pay attention to compliance

As patient out-of-pocket costs continue to grow exponentially, it is increasingly important to manage patient share of costs in a compliant manner. Assess your billing policies and practices carefully on all fronts—including messaging from sales personnel, literature, and websites. Audits to uncover discrepancies are on the upswing, and payors are increasingly aggressive in searching out information that would indicate the provider was using capped pricing, and/or “routinely” discounting or waiving shares of costs, and using it to curtail payment or secure recoupment. In one documented instance, a provider saw a statement on a laboratory’s website that indicated patients would only be held accountable for $100 for a $3,500 test, and determined it would only pay an out of network benefit of 60% of the $100. With gaps like these, it behooves providers to think carefully through their policies, and determine if the real risks involved with such policies are worth it.

2015 will see continued scrutiny on the lab industry, whether as part of patient responsibility audits, or documentation requests to support medical necessity, or as part of the OIG and Government Accountability Office’s ongoing efforts to uncover questionable business and billing practices by pathologists and/or laboratories. Time spent now on having the proper information gathering and documentation processes in place will be paid back many times over in the months to come.

Laboratories that struggle to respond quickly to changes in policy or procedures, or to provide requested information will suffer the most from reimbursement delays and denials; and in an era of eroding margins, could spell real trouble for some. Conversely, those with flexible systems that can address different and new code sets that vary by payor, and that provide the level of documentation and visibility that’s now required, will have better control over their revenue, a stronger bargaining hand during contract negotiations, and a firmer grip on their business overall.