WILD RIDE TO GET HERE

Genomics billing has been thought tremendous changes over the years.  Some might even call it a rollercoaster.  Just think of the transition from CPTs from when we had process codes many years ago to the transition to tier 1 and tier 2 codes.  You may recall even a time when there weren’t even any CPT codes and you needed to apply to get a code for billing.

 

This doesn’t even consider the massive reimbursement swings we have seen in billing.  In the late 2000s for our early genomics clients we saw average reimbursement of around $20,000.  For many years there was a steep drop in reimbursement and then we saw reimbursement start to increase again around the mid-2010s.  Now the Medicare fee schedule has been decreasing the last couple years in large part because of PAMA.  We also saw the dramatic change to a national laboratory fee schedule eliminating localities, which significantly changed the geographic significance of labs.

 

PAMA PANIC

With the passage of PAMA in 2014 and its implementation scheduled for Jan 1 2018, there was panic introduced into the lab space with giant reimbursement cuts expected.  Following is the Medicare PAMA information as published by CMS prior to the 2018 implementation:

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/PAMA-Regulations.html

 

We have lived through 2018 and the 2019 Medicare Clinical Laboratory Fee Schedule is available now so that we can see what 2019 will be.  The 2019 CLFS can be found here:

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/Clinical-Laboratory-Fee-Schedule-Files-Items/19CLABQ1.html

 

FINANCIAL IMPACT

With 2 years of reimbursement rates now known, the impact of PAMA has been mixed.  Following is the table of reimbursement rates for 2017-2019 for a few common cancer genetics (CGx) codes:

 

HCPCS SHORTDESC 2019 2018 2017
81162 Brca1&2 gen full seq dup/del     2,027.64     2,252.93   2,503.26
81201 Apc gene full sequence        780.00        780.00
81292 Mlh1 gene full seq        675.40        675.40      649.78
81408 Mopath procedure level 9     2,000.00     2,000.00

 

 

Chart 1: 2017 to 2019 reimbursement rate trends CGx

 

Pharmacogenetics (PGx)

Following is the table of reimbursement rates for 2017-2019 for a few common pharmacogenetics (PGx) codes:

 

 HCPCS SHORTDESC 2017 2018 2019
81225 Cyp2c19 gene com variants      293.40        291.36        291.36
81226 Cyp2d6 gene com variants      454.07        450.91        450.91
81227 Cyp2c9 gene com variants      176.03        174.81        174.81
81240 F2 gene        67.50          65.69          65.69
81241 F5 gene        83.82          75.44          73.37
81291 Mthfr gene        59.88          65.34          65.34
81355 Vkorc1 gene          88.20          88.20

 

Chart 2: 2017 to 2019 reimbursement rate trends PGx

 

For 2019 all HCPCS codes Medicare reimbursement is down on average 2.3%.  This alone is astonishing given the expectation that all codes would be down 10% every year under PAMA.  However, this is only a comparison of existing codes, and may not give a complete picture of reimbursement. There are a number of codes that were added and deleted (53 added, 6 deleted).  Given the low number of deletions (effectively some codes were swapped for others and crosswalked), we can reasonably conclude that large numbers of changes in CPT codes did not significantly impact on the average reimbursement.  Excluding the single code 81334 where reimbursement doubled from 2018 to 2019, the average was down 6.0%.  Approximately half of all codes were unchanged in reimbursement from last year.  A full 53 CPTs are now reimbursable for 2019 that were not paid in 2018, representing a 28% increase in payable codes.

 

The 2017-2019 average change in reimbursement is +15.8%, which does not even account for the number of codes that are payable since that time, which is a net increase of 125 payable CPTs or over half of all current codes.

 

There are a few cases where some of the new codes are replacing prior codes.  For example, the deletion of BRCA1, BRCA2 gene analysis codes 81211, 81213, and 81214, which were replaced by CPTs 81163, 81164, 81165, 81166, and 81167.  Since this is not a coding article, but is focused on the reimbursement, we are not going to go into detail on all of the crosswalks, code selection, etc.  What is notably strange about the Medicare laboratory fee schedule in this example is that the individual component CPTs of the 81162 reimburse less than the bundled code.  That’s right – if you unbundle, you will get paid less.

 

NET FINANCIAL

The net effect of the 2019 Medicare laboratory fee schedule (MLFS) is that on the whole it is mixed, with reduction in reimbursement for many codes, but so many new payable codes that on average we expect labs that focus on genetic testing and pharmacogenetics to be on average about as well off financially this year as last year.

 

THE FUTURE

Don’t expect this to last.  At these payment rates, laboratories can still be highly profitable on the samples they are bringing in.

 

However, the market is getting more complex and reimbursement on the whole is decreasing.  The easy money of family history is basically gone.  Additionally, many MACs are making getting reimbursed more difficult, which results in additional work in the lab revenue cycle management (RCM) process and also results in more tests that are not paid.

 

We expect the future to hold more cuts for genomics.  Given the marginal cost of running tests and the fact that so many labs run multiple tests, we anticipate Medicare will bake this into future pricing and begin to bundle more tests into a single code and that pricing will continue to decline.

 

 

ABOUT APACHE HEALTH

Apache Health is an RCM analytics, benchmarking, and auditing company.  The founders of Apache formerly ran a large billing company that was eventually sold to a private equity group.  Apache’s predictive analytics will benchmark billing performance and project exactly how much more revenue you should earn.  Using many factors and a blend of artificial intelligence and specialty specific benchmarks, the model projects whether changing the laboratory revenue cycle management (RCM) process would improve collections for your particular mix of tests and payers, and adds in our own tools that improve compliance and increase revenue.