Palmetto GBA, Medicare’s Biggest Carrier, Proposes to End Code Stacking for Molecular Clinical Laboratory Tests

Palmetto GBA Identifies Coverage Criteria for Molecular Diagnostics Tests

In Palmetto GBA’s draft LCD, it states that, to be considered for reimbursement, specific molecular diagnostic tests must be explicitly covered by:

• a national coverage determination (NCD);
• a local coverage determination (LCD); or,
• a Palmetto GBA coverage article;

As most pathologists and clinical laboratory managers know, Medicare carriers use coverage determinations and coverage articles to explain reimbursement decisions to physicians and other providers treating Medicare patients.

In addition to the proposed LCD for molecular diagnostics tests, Palmetto GBA also issued a second draft proposal the same day that would affect Laboratory-Developed Tests (LDT).

As the largest Medicare Administrative Contractor (or MAC), Palmetto GBA is responsible for the states of California, Hawaii, Nevada, North Carolina, Ohio, South Carolina, Virginia, and West Virginia. Palmetto GBA described both draft proposals as future draft LCDs.

In the MDT draft proposal, Palmetto GBA defined a molecular diagnostics test as a single test (which often has multiple components) and that delivers one result and involves nucleic acids (DNA/RNA), proteins, enzymes, and/or other metabolite detection. Palmetto GBA said this definition applies to all tests that:

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

If this proposal is approved, it could affect a large number of the molecular diagnostic tests in use today, observed Rina Wolf, Vice President of Commercialization Strategies, Consulting & Industry Affairs, for XiFin, Inc., a company in San Diego, California, that helps labs improve revenue and collections. In an exclusive interview with The Dark Report in its latest issue, Wolf provides detailed information about how the proposed LCD rules could reshape the way clinical laboratories submit claims to Palmetto GBA and other Medicare carriers.

Palmetto GBA’s second LCD draft deals with laboratory-developed tests. It would also have an effective date of February 27, 2012. Similar to the LCD on molecular tests, this proposed LCD would not allow labs to submit claims for all non-standardized organ or disease-oriented laboratory developed test (LDTs) that meet the following criteria:

• Are not FDA cleared
• Are performed or marketed by a sole source, hospital, or reference laboratory
• Have not received a specific AMA CPT code
• Have not obtained an NCD or LCD coverage determination from Palmetto GBA

Require multiple CPT codes in order to submit a claim for a single assay/test.
Like the MDT proposal, this second draft proposal could also affect virtually all non-standardized organ or disease-oriented LDTs. In addition, Palmetto GBA wrote that medical laboratory tests reported with multiple codes (called code stacking) and single or multiple units of service to represent a single test panel are considered investigational and therefore would not be considered a covered service.

Of most concern to medical laboratories is the fact that, because Palmetto GBA said it would consider these MDTs and LDTs to be non covered, clinical laboratories would be unable to submit claims for these tests. If a medical laboratory cannot submit a claim for a specific MDT and LDT, then there is no claim to be denied.

Therefore, the denial cannot be appealed by the clinical laboratory. Such a scenario would leave medical laboratories with no recourse were the Medicare carrier to refuse claims for MDTs and LDT that don’t meet the defined criteria.
A secondary concern among clinical laboratories is Palmetto GBA’s statement that some test panels submitted previously could be subject to overpayment collection if Palmetto GBA considers them to be investigational. In other words, Palmetto GBA may seek to recoup past payments for these tests from labs.
These proposals are a somewhat unpleasant surprise to medical laboratories and pathology groups because they have developed and used MDTs and LDTs for many years and Medicare carriers have reimbursed claims for these assays. While many of these tests are expensive and their use is proliferating, they also help improve patient care in ways that were impossible previously.

Clinical Laboratory Managers Can Submit Comments to Palmetto GBA

Palmetto GBA will accept public comments on its two draft proposals through December 5, 2011. Pathologists and clinical laboratory managers can write to Palmetto GBA to explain how these proposals would adversely affect labs and all healthcare provides who rely on the results of MDTs and LDTs when caring for patients. (The Palmetto GBA contact information is presented below.)
Privately, Palmetto GBA officials have said that if they receive enough comments that require these draft proposals to be rewritten, then Palmetto GBA may delay implementation. For more details and insights about these two draft local coverage determinations, see the full interview with Rina Wolf in The Dark Report’s latest issue, dated November 7, 2011.

To send public comments to Palmetto GBA for the two proposed local coverage determinations, use this email address:

Nita Collins
J1B.Policy@Palmettogba.com