Laboratory Test Payments: Crosswalking vs. Gap-Filling

Background: Crosswalking vs. Gap-filling

In accordance with §531(b) of the Benefits Improvement and Protection Act of 2000 (BIPA), CMS solicits public comments on determining payment amounts for new laboratory tests. CMS employs one of two approaches to establishing payment amounts for new laboratory test codes, crosswalking and gap-filling. After considering public input regarding the new test codes, CMS determines which approach is most appropriate for each new test code. If the new test is comparable to an existing test, the new test is “crosswalked” to the existing test, and it is assigned the local fee for the existing test and the corresponding NLA.

If CMS determines that the laboratory fee schedule includes no sufficiently comparable test to permit crosswalking, CMS instructs carriers to “gap-fill” the payment amount for the new test code. Gap-filling is an empirical process of determining a payment amount in a locality using available information sources. Usually the period during which gap-filled payment amounts are instructed is the year following the introduction of a new code. During this period, carriers establish and use these payment amounts; they may be revised in the course of the year.

So What Happened?

When CMS announced that the gap-fill methodology would be used to determine reimbursement for the new Tier 1 Molecular Pathology (MoPath) codes, the industry was concerned that the exercise couldn’t be completed timely or accurately due to the level of information required for gap filling. Further, the new coding exercise was never intended to be a re-pricing exercise. Since the services in question were already being submitted under established methodology codes with existing reimbursement rates, industry members and analysts commented that the crosswalk methodology was more appropriate for assigning rates to the new MoPath codes. The primary concern was with grouping multiple versions of the same test with more or less specificity into one MoPath code which no longer reflected the difference in resources required to address the patient’s specific clinical circumstance. Notwithstanding the lack of acknowledgement that the molecular era of diagnostic testing represented flexibility to address diverse patient specific needs and changing scientific knowledge, the industry still tried to facilitate the process by recommending a crosswalk to the median reimbursement rate of the various versions of the test currently in the market.

In spite of the clear existence of not just comparable, but precise methodology codes that represented the services being performed, the published pricing to date reflects neither a “median” of the crosswalk methodology, nor does it suggest gap filling methodology was employed. Since labs were not asked to provide cost information or other data points as required under the gap-fill methodology, how were contractors expected to obtain this information in a way to price services that were already being performed and submitted under the new codes starting January 1st of 2013? In essence at the time CMS was considering putting the MoPath codes on the PFS rather than the CLFS, the RUC assigned relative value units to codes which provided one data point for the resources required to perform the MoPath services. Essentially a review of the RUC values indicates that reimbursement rates established based on resource requirements would have yielded a rate 3-4 times that currently published by two contractors. Based on the fees we have seen to date, a simple coding exercise, which has turned into the biggest cost cutting exercise seen to date in the Medicare program, does not bode well for personalized medicine or the future of targeted healthcare. Molecular diagnostics represent the best and most promising medical innovation for improving healthcare outcomes while dramatically containing the cost of unnecessary testing and ineffective therapy. Let’s hope the private payor market comprehends this balance better and does not follow suit with pricing poised to hamper advances in healthcare delivery.

Follow publications of pricing on the XiFin website

Regulatory requirements for gap-fill pricing determinations

In determining gap-fill amounts, the sources of information carriers should examine, if available, include: charges for the test and routine discounts to charges; resources required to perform the test; payment amounts determined by other payers; and charges, payment amounts, and resources required for other tests that may be comparable or otherwise relevant. Carriers may consider other sources of information as appropriate, including clinical studies and information provided by clinicians practicing in the area, manufacturers, or other interested parties. To assist each carrier in establishing a gap-fill amount, carriers’ Medical Directors may meet and share information regarding the new test, though without reaching a formal consensus. Establishing payment amounts for new laboratory tests is inherently difficult, precisely because these tests are new and as a result the types and extent of information available about them may be limited.

After determining a gap-fill amount, a carrier may consider if a least costly alternative to a new test exists. If a carrier determines a least costly alternative test exists, the carrier may adopt the payment amount of the least costly alternative test as the gap-fill amount for the new test code. The least costly alternative amount will be considered the local fee, and CMS will use this payment amount in establishing the NLA. However in this case, the carrier must report two payment amounts, the gap-fill amount prior to determination of a least costly alternative and the payment amount that the carrier has determined to be the least costly alternative.