today’s presentation
DESCRIPTION
CCLA 2014 Annual Conference Update from Washington: Key Reimbursement & Regulatory Developments Westgate Hotel San Diego, CA November 6, 2014 Dennis Weissman, President, Dennis Weissman & Associates, LLC Washington, DC. Today’s Presentation. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/1.jpg)
CCLA2015 Annual Conference
Washington Update for Labs:Key Reimbursement and Regulatory Policies & Outlook
Westin South Coast Plaza Costa Mesa, CA
November 5, 2014
Dennis Weissman, President, Dennis Weissman & Associates, LLCWashington, DC
![Page 2: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/2.jpg)
Today’s Presentation
• Medicare Reimbursement Update • Federal Regulatory Initiatives• Proposed PAMA rule • Q & As
![Page 3: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/3.jpg)
Bundling Payment for Hospital Outpatient TC Services
• Effective Jan. 1, 2015, reimbursement for TC of pathology services provided to hospital outpatients no longer paid separately by Medicare
• All pathology TC codes are bundled except 88309, 88348 & 88333
• Proposed OPPS for 2016 to expand packaging to include three now exempted codes
![Page 4: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/4.jpg)
2016 Medicare CLFS Holds Steady
• No change for Clinical Laboratory Fee Schedule in 2016
• No further automatic cuts under ACA in 2016• Inflation adjustment of 0.1% expected while
productivity adjustment estimated to be 0.6%• No change projected since PA can’t reduce the
inflation adjustment below zero
![Page 5: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/5.jpg)
Major Cuts Proposed for Drug Tests
• Medicare payment for drug testing codes to drop in 2016 under proposed CLFS changes
• Cuts of 25% or more for definitive drug tests under preliminary determinations by CMS
• For presumptive drug testing, 3 new G codes p• For definitive drug tests, 4 new HCPCS codes
crosswalked to CPT 82542 • Final CMS determinations due in November
![Page 6: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/6.jpg)
Pathology Payment Update for 2016
• Pathologists & independent path labs due sizable payment increases in 2016 resulting from Misvalued Coding Initiative, including establishing RVUs for new & revised codes
• CMS estimates overall increase of 8% for pathology services – 4% increase based on changes in relative value units used to calculate PC plus 4% increase in practice expense used in TC & global payments
• Final Physician Fee Schedule due in November
![Page 7: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/7.jpg)
Medicare Sequester Extended • White House & Capitol Hill leaders negotiate 2-year
budget & debt ceiling deal • Raises debt limit and evenly boosts defense and
discretionary domestic spending by $80 billion thru 2017
• Once enacted, deal would extend Medicare sequester including 2% cut for providers including labs through 2025 plus make additional changes to Medicare & Social Security programs
• Agreement would take contentious spending & debt ceiling issues off the table for 2016 election
![Page 8: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/8.jpg)
Regulatory Updates • Transition to ICD-10 effective October 1 – CMS
applies 1 year grace period for Part B claims for physician & other practitioner but not clear if this applicable to labs under CLFS
• Status of FDA’s draft guidance to regulate laboratory developed tests -- no final action in 2015 with policy outlook unclear in 2016 election year – Alan Mertz to focus on details
• CMS proposes rule for data collection in repricing lab tests under CLFS based on private payer rates beginning in 2017
![Page 9: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/9.jpg)
Proposed PAMA Rule• CMS released a proposed rule (131 pages) on Sept
25 to revise the Medicare Clinical Laboratory Fee Schedule (CLFS) as required by the Protecting Access of Medicare Act of 2014 (PAMA)
• PAMA represents the first major reform of the CLFS since 1984 – will it mean disruptive change?
• Creates a market-based lab payment system under Medicare to be calculated via the weighted median of private payer rates (based on lab volume) for each test on CLFS
• Final comments due to CMS by Nov. 24, 2015
![Page 10: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/10.jpg)
Definition of Applicable Lab Required to Report Payment Data
• Entity is either a laboratory or has at least one component that is a lab as defined by CLIA
• Reports tax-related income to IRS under unique Tax ID Number (TIN)
• Lab receives more than 50% of all Medicare revenues from fee-for-service Medicare as well as applicable co-pays, co-insurance & deductible amounts (includes CLFS or PFS)
• At least $50,000 of Medicare revenues come from CLFS per annual collection period
![Page 11: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/11.jpg)
Many Labs Excluded
• All health system & hospital labs having same TIN as parent organization – major problem area
• Most physician office labs & many independent labs don’t receive $50K annually in CLFS revenues
• CMS estimates only 6% pf POLS and 48% of independent labs will have to report
• CMS claims reporting labs will account for bulk of all Medicare CLFS data – 99% of independent lab revenue and 96% of POL of Medicare payment
![Page 12: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/12.jpg)
Lab Collection & Reporting Requirements
• Initial data collection period from July 1 thru Dec. 31, 2015 with reporting period set from Jan. 1. 2016 thru March 31, 2016
• Thereafter, reporting every 3 years with collection period constituting entire year
• For example, for collection period Jan. 1 thru Dec. 31, 2018, the reporting period would run from Jan. 1 thru March 31, 2019
• This means no new rates until 2020 after after initial changeover in 2017
![Page 13: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/13.jpg)
Are Future Adjustments Allowed Under Market-Based Approach?
• No across-the-board, year-to-year adjustments including:
-- No inflation (CPI) updates -- No geographic, productivity or budget neutrality adjustments• Exception for new Advanced Diagnostic Tests
performed by a single lab whose rates to be revised annually
![Page 14: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/14.jpg)
What Labs Must Report
• Specific HCPCS code for each test on the CLFS• Each rate every private payer paid for the test• Volume for each private payer rate• Capitation rates are excluded
NOTE: Applicable rate includes any patient- cost sharing amounts and is determined after all price concessions (discounts, rebates & coupons) are applied
![Page 15: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/15.jpg)
How New CLFS Rates Are Calculated
• For each test on CLFS, CMS will use required data reported from all applicable labs
• CMS will array the data from all labs by rate, from low to high
• Each rate will be weighted by the volume of tests furnished at that rate
• CMS will calculate the middle rate in this array (volume-weighted median) which becomes the new Medicare payment rate (still subject to sequester, if applicable)
![Page 16: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/16.jpg)
Definition of Private Payer
• Health insurance issuer• Group health plan• Medicare Advantage Plan• Medicaid managed care organization• Excluded are Medicaid fee-for-service and
other government payers
![Page 17: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/17.jpg)
What’s At Stake?• In 2014, Medicare Part B spent $7 billion to
63,730 labs for performing 451 million tests for 27 million Medicare beneficiaries
• $4 billion went to independent labs• $1.7 B went to hospital-based labs• $1.3 B went to physician office labs • Top 3 labs (Quest, LabCorp & BRL) paid $1B• On average, labs paid $109,898 each in 2014• Half of all labs received less than $1,019 each
![Page 18: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/18.jpg)
Payment Reductions Under PAMA• 10 percent a year per test code for first 3 years
is maximum under PAMA• Law allows up to 15 percent cut per year for
each code in the following 3 years • CMS estimates 4.5% decline for 2017 ($360M)• CMS projects 5-yr reduction of 7.4% (2.94B)• Estimated 10-yr cut of 6.4% ($5.14B decrease)• For tests on CLFS prior to implementation, six-
year phase-in of any reduction of payment
![Page 19: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/19.jpg)
Example of New CLFS Rates
• For a CLFS test whose rate is $20 in 2016, the maximum reduction would be $2 (10% of $20) in 2017, making the new rate $18
• For 2018, the maximum reduction would be $1.80 (10% of $18), for a test price of $16.20
• For 2019. the maximum reduction would be $1.62 (10% of $16.20) for a revised test price of $14.58
![Page 20: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/20.jpg)
Special Calculations for Certain Tests
• Cross-walking or gap-filling method will be used to set initial payment rates for new or existing tests when no payer data is available
• This method will also be used for tests where no payer data is reported because they are only reported by non-applicable labs
• Advanced Diagnostic Laboratory Tests paid using list price at launch for three calendar quarters (details below)
![Page 21: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/21.jpg)
What is a Advanced Diagnostic Laboratory Test (ADLT)?
• Test that provides new clinical diagnostic information that can’t be obtained from any other procedure or combination of tests
• May include other assays• Covered under Medicare Part B• Marketed and performed only by a single lab • Not sold for use by a lab other than the one
that designed the test or a successor lab
![Page 22: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/22.jpg)
Definition of ADLT
• Must meet one of the two following criteria: -- Cleared or approved by the FDA or -- The test must be a molecular pathology
analysis of DNA or RNA and -- When combined with an empirically
derived algorithm, yields a result that predicts the probability of a specific individual patient will develop a certain condition(s) or respond to a particular therapy (ies)
![Page 23: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/23.jpg)
Reporting Requirements for New ADLTs
• Labs performing new ADLTs must report by end of second calendar quarter of “initial period” all private payer rates for the first and second quarters
• “Initial period” begins on the first day of the first full calendar quarter on which the ADLT is performed
![Page 24: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/24.jpg)
Reporting Requirements for Existing ADLTs
• Data collection period is a full annual period• Reporting musr occur every year• Reporting period of Jan. 1 thru March 31 of
each year for the prior year’s collection period• For the data collection period of Jan. 1 thru
Dec. 31, 2016, the reporting period will run from Jan. 1 thru March 31, 2017
![Page 25: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/25.jpg)
Calculation of New ADLT Payment Rates
• Payment rate for a new ADLT during the initial three calendar quarters is equal to the actual list charge of the applicable laboratory
• List charge is defined as the publicly available rate on the first day on which the test is available for purchase by a private payer
• Payment rate is based upon first two quarters
![Page 26: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/26.jpg)
New ADLT Recoupment Process
• If Medicare payment during the initial period is more than 130% of the calculated weighted median, the government will recoup the difference between the paid amounts and calculated weighted median
• CMS says it will issue further guidance in the future on the recoupment process involving new ADLTs
![Page 27: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/27.jpg)
Calculating Existing ADLT Rates
• Based on the weighted median of all private payer rates for each test for the most recent data period
• Not subject to annual CPI update or any geographic, productivity or budget neutrality adjustments
• For ADLTs for which CMS has payment rates prior to Jan. 1, 2017, ADLT is subject to the same phase-in of payment reductions as existing CLDTs
![Page 28: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/28.jpg)
Lab Compliance
• Data provided are accurate, complete and truthful, and meet all the reporting parameters
• Must be certified by lab president, CEO or CFO, or designee who reports to one of these officials and who has appropriate delegated authority
![Page 29: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/29.jpg)
Lab Penalties
• CMS may impose penalties if it determines that an applicable lab has failed to report, or made a misrepresentation or omission in reporting requirement information
• A civil monetary penalty of up to $10,000 per day per violation may apply
![Page 30: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/30.jpg)
Confidentiality of Lab Data
• CMS may not disclose lab private payer and volume data in a manner that explicitly identifies a specific payer or laboratory or prices charged or payments made to a lab
• Exceptions include permission to disclose to GAO, CBO or MedPAC
• Data supporting application for ADLT status is not explicitly protected from disclosure
![Page 31: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/31.jpg)
Lab Coding Changes• CMS to assign HCPCS code for each new ADLT and
FDA approved oe cleared test• CMS must assign a unique code for each existing
FDA approved or cleared tests if one does not already exist
• CMS to assign temporary G codes using the existing HCPCS process
• Labs or manufacturers may request a unique identifier for ADLTs or FDA approved or cleared tests
![Page 32: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/32.jpg)
Local Coverage Requirements
• PAMA requires Medicare Administrative Contractors (MACs) to use established practice for issuing and reconsidering local coverage determinations toimplement local coverable policies for lab tests
• Process includes public comment period, public meetings in local area and 45-day period before final determination takes effect
![Page 33: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/33.jpg)
MAC Consolidation for Coverage & Claims Policies
• CMS authorized to designate one to four MACs to establish lab coverage policies and process claims
• CMS requests comments on pros and cons of proposed consolidation of MACs
![Page 34: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/34.jpg)
Top PAMA Problems
• CMS missed 2015 final rule deadline with reporting by labs due first quarter of 2016 even as final rule won’t be out until next year
• Details of process for reporting data not specified in proposal but will be in separate guidance yet to be issued
• Congressional intent not met by exempting hospital-based labs thereby endangering accurate market pricing though all labs will be equally affected by new rates
![Page 35: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/35.jpg)
More Issues & Questions• ADLT definition omits protein-based tests, contrary
to statutory language• Though many labs have multiple CLIA certificates,
CMS proposes single lab is one with only single CLIA number
• Are payment rates just for contracted amounts or also include non-contracted amounts for non-network labs
• Is rate after appeals or initial payment amounts• Are $0 payments/allowables to be factored in• What date does CMS want: DOS or date paid?
![Page 36: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/36.jpg)
PAMA Regulatory Timeline
• Sept, 25 2015 – CMS publishes proposed rule• July 1 – Dec. 31, 2015 – data collection period• Jan. 1 – Mar. 31, 2016 – data reporting period• Nov. 2016 – CMS publishes new rates• Jan. 1, 2017 – New CLFS rates take effect NOTE: Dates not known for either CMS
reporting guidance or publishing final PAMA Rule
![Page 37: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/37.jpg)
Comments to CMS on Proposed Rule • Comments due to CMS by Nov. 24, 2015• Refer to File Code CMS-1621-P when
commenting• Regular mail should be sent to: Centers for Medicare & Medicaid Services Department of Health & Human Services Attn: CMS-1621-P P.O. BOX 8016 Baltimore, MD 21244-8016
![Page 38: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/38.jpg)
Comment Options on Proposal
• Comments may also be submitted electronically by following the “submit a comment” instructions at http://www.regulations.gov
• Send comments by express or overnight mail to following address:
Centers for Medicare & Medicaid Services Department of Health & Human Services Attn: CMS-1621-P / Mail Stop C4-26-05 7500 Security Blvd. Baltimore, MD 21244-1850
![Page 39: Today’s Presentation](https://reader035.vdocument.in/reader035/viewer/2022062422/56812bdf550346895d904fc5/html5/thumbnails/39.jpg)
Questions & Answers