On May 9, 2013, CMS published a long-awaited list of interim prices for new molecular diagnostic codes. This list is a key step in the process of changing the way molecular diagnostics are reimbursed. New CPT codes for molecular diagnostic tests became effective in 2012, but CMS opted not to allow their use for Medicare claims until January 1, 2013. In late 2012, CMS announced that it would use a “gapfilling” process to establish pricing for the codes, which requires the Medicare Administrative Contractors (MACs) to establish initial prices for the codes. Ultimately CMS will use those contractor-specific rates to establish national rates. During the first five months of 2013 some laboratories have received little to no payment from the MACs for the new molecular test codes due to delays in establishing prices. CMS originally said it would post MAC prices by April 30, but that deadline passed without explanation. Finally, on May 9, 2013, CMS published the list of MAC-established interim prices, a list of the rationales behind some of the MACs’ pricing decisions, and a Notification of Comment Period. With some interim prices set, labs should start seeing payers reimburse claims for more of these tests, but there is still a great deal of concern over the low rates established for many of the tests, including some that have been widely covered and reimbursed for several years. Stakeholders can submit comments on the interim prices and rationales between now and July 8th. After the 60-day comment period ends, CMS intends to share the comments with the MACs and is expected to publish the final MAC-specific price list by September 30, 2013.

Publishing the price list is part of CMS’ “gapfilling” process that was triggered when the new codes went into effect for Medicare claims on January 1. Before the new codes were developed, laboratories were reimbursed for these tests under a “stacked” billing system where payment rates were based on adding and/or multiplying, or “stacking,” several codes that described various test processes used in conducting a particular test. CMS and other payers were concerned that the use of “stacked” process codes failed to identify sufficient information about the tests being performed, and there was too much variation in the codes being billed by different labs for the same test. In response, the American Medical Association undertook a multi-year process and developed the new codes for reporting molecular tests.

Under the “gapfilling” methodology developed by CMS, in the first year a new test is in use, each MAC establishes its own payment amount for the test. In the second year CMS calculates the median of the contractor-specific rates, and that median becomes the national limitation amount for the test. The national limitation amount is a ceiling that MAC-specific amounts must not exceed.

Although publication of the interim list shows the price-setting process is advancing, the price list is incomplete and inconsistent, no rationale is provided for many pricing decisions, and prices for some test codes are significantly below the amounts that the MACs previously were paying for the same tests when they were billed with stacked codes. There are significant blanks in the data for some test codes and for some MACs. CMS explained this can mean either: (1) no claims were received by that particular MAC for that particular test code; or (2) the MAC determined that Medicare could not pay for the test. In most cases the contractors failed to adequately explain the basis for their interim prices, however.

The publication of interim prices on May 9 initiated a 60-day comment period. CMS asks commenters to provide specific cost, test methodology, and other information that will help CMS and the MACs review the price for a particular code.

Michael Snow