Effects of MoPath on Net Revenue for Labs
March 1, 2013The release of the new MoPath codes by several Medicare Contractors have triggered a flood of analysis regarding the impact of the new prices on net revenue for labs doing molecular diagnostic testing. Early impact analysis shows that labs could be reimbursed 25-50% less under the new Molecular Pathology coding method when compared to reimbursement under the old stacking codes. This is understated when you take into account the dramatic reduction for high volume pharmacogenomic and oncology tests. For instance, testing of EGFR mutations is recommended by the American Society of Clinical Oncology for any advanced non-small cell lung cancer patient that could be treated with an EGFR inhibitor. This represents one of the single largest subsets of oncology patients in the US. Medicare reimbursement on testing for EGFR mutations was generally over a thousand dollars under stacked coding but the new medicare fee schedules suggest prices of just over $100. This would represent a decrease in medicare reimbursement of almost 90% based on the current fee schedules.
Because the highest cuts are taken on these larger volume services, the impact on coding has been understated. Newly released Noridian and Cigna Government Services fee schedules further exacerbate the already dramatic decreases in reimbursement initiated by other Medicare Contractors. The roughly 16% cut that Myriad genetics will see for the integrated BRACAnalysis test demonstrates a reduction in payment for a service that Medicare and Noridian clearly knew what, why, and how much they were paying for. As we continue to see additional contractors release their fee schedules, it is becoming increasingly clear that CMS has taken this opportunity to use the new molecular pathology codes as a cost cutting exercise. One can argue the appropriateness of using the gap fill process, but even those rules have not been followed.
Here is why payors may choose to deny these tests rather than pay them as they may have under the “stacked coding” methodology:
- In the past, a payor may not have known that a test being performed was available from an in-network lab. The “stacking codes” would not have provided enough visibility to an insurance carrier to make that determination, while the new codes often do.
- Now that tests represented by the new Tier 1 and Tier 2 codes have greater visibility, payors are second guessing the medical necessity of some services that have been performed for years and are in common use. Under “stacking codes”, insurance carriers may have paid for an analyte specific test even if they had a negative or limited coverage policy for that service. Carriers are now able to deny such tests indiscriminately putting the onus on labs and ordering physicians to defend the medical necessity of these services.
- If a lab was testing analytes/genes that are not covered under the new codes, they may have correctly applied stacking codes based on the methodology being used for that service. Labs are now forced to use a Not Otherwise Classified (NOC) code. These codes are generally denied indiscriminately by an insurance carrier forcing labs to go through resource intensive appeal processes.
When taking into account the huge reduction for higher volume tests and the increase in denials, the reduction in reimbursement will actually be much greater than the initial impact analysis performed by analysts. Many labs have indicated that they will be forced to discontinue certain testing at the current rates. Regardless, labs need to closely track and monitor low payments and denials and proactively collect patient medical data to defend both the medical necessity and pricing of their services.
XiFin is tracking published MAC allowed amounts, see the list here
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