Pathology/Lab Coding Alert

Law impact on labs is more than ICD-10 delay.

You’ve heard the frenzy over the ICD-10 implementation delay and the Congressional rescue from the 24 percent pay cut for physician services, but did you know that there’s a lot more at stake for labs in the Protecting Access to Medicare Act of 2014?

That’s because CMS’s proposal to reprice services paid on the Clinical Laboratory Fee Schedule (CLFS) got a facelift as part of the 2014 law. Read on to see how the change might affect your future pay for clinical diagnostic laboratory tests — and potentially for new tests such as multi-analyte assays with algorithmic analyses (MAAAs), too.

Switch From Technology To Market

The 2014 Medicare Physician Fee Schedule final rule supposedly finalized CMS’s plan to re-evaluate lab-test pricing based on “changes driven by technological advances.” 

But all those plans transform under the Protecting Access to Medicare Act of 2014, which will “drastically alter the payment system for clinical laboratories,” according to Gene Herbek, MD, president of the College of American Pathologists in a statement regarding the new law. 

The new law rescinds CMS’s authority to change CLFS payments based on its assessment of technological changes, and creates a process to adjust payment rates based on evaluating current market payments for each test. 

Data driven: The new plan involves labs submitting data on price and volume for specific lab tests. CMS will then set the lab test price based on a volume-weighted calculation of median price. Data collection should begin January 2016 at the earliest, and new payment rates should go into effect a year later. The process should repeat on a three-year cycle. 

The plan also offers some protections for labs, as follows:

• Payment reductions will be capped at 10 percent of the prior-year CLFS price for the first cycle (2017-2019) and at 15 percent for the second cycle (2020-2022)
• Positive payment adjustments may occur
• Payments will remain level for each three-year cycle
• The recalculated payments won’t be “subject to any adjustment (including any geographic adjustment, budget neutrality adjustment, annual update, or other adjustment).”

This process should “bring predictability in reimbursement over the next several years, provide more transparency, and allow more time for laboratories and other stakeholders to prepare for changes,” said Alan Mertz, president of the American Clinical Laboratory Association (ACLA) in a statement responding to the legislation.

New test pricing remains: Under the new plan, CMS will continue to price most new HCPCS codes under the current process, which involves gathering stakeholder input at a public meeting and either crosswalking or gap-filling to determine pricing. There is one exception to this rule, and that’s the subject of the next section.

Don’t Miss Advanced Diagnostic Laboratory Tests

The Protecting Access to Medicare Act of 2014 creates a new class of lab tests called “advanced diagnostic laboratory tests.” The law defines these as “a clinical diagnostic laboratory test that is offered and furnished only by a single laboratory and not sold for use by a laboratory other than the original developing laboratory (or a successor owner) and meets one of the following criteria:

• The test is an analysis of multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm to yield a single patient-specific result
• The test is cleared or approved by the Food and Drug Administration
• The test meets other similar criteria established by the Secretary.”

Under the new system, CMS will set the initial payment for such new tests based on the actual list charge for the lab test.

This portion of the new law evidently opens the door for CMS to pay for MAAAs that meet the first criterion. Since their introduction to CPT® in 2013, CMS has listed MAAA codes 81500-81599 as not payable, instead directing payers to recognize only the underlying lab tests with no recognition of the algorithm.

Keep On Prepping for ICD-10

The Protecting Access to Medicare Act of 2014 delays the ICD-10 implementation to no earlier than Oct. 1, 2015, as we reported in “You Have At Least 1 More Year for ICD-10 Prep,” in Pathology/Lab Coding Alert Vol. 15 No. 5. 

Unfortunately, CMS hasn’t given much more information since the law passed almost a month ago. A brief note on the agency Website states that with the enactment of the law, “CMS is examining the implications of the ICD-10 provision and will provide guidance to providers and stakeholders soon.” You can monitor the site for any new developments at (www.cms.gov/Medicare/Coding/ICD10/index.html?redirect=/icd10). 

In the meantime, if you’ve got an ICD-10 training and implementation plan in place, don’t scrap it now. Instead, just increase the detail in your training program so your staff is even more thoroughly prepared for the system before it goes into effect. 

“We should not throw away the chance to improve the physician’s clinical documentation just because the code set implementation has been delayed,” says Barbara J. Cobuzzi, MBA, CENTC, CPC-H, CPC-P, CPC-I, CHCC, president of CRN Healthcare Solutions, a consulting firm in Tinton Falls, N.J. “It is always a goal to improve clinical documentation.”