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Myriad Genetics Subpoenaed by OIG for Hereditary Cancer Billing Documents in Investigation

This article has been updated with additional information.

NEW YORK (GenomeWeb) – Myriad Genetics recently received a subpoena from the US Department of Health and Human Services, Office of Inspector General, related to "an investigation into possible false or otherwise improper claims submitted for payment under Medicare and Medicaid," the company said in a regulatory document.

According to a Form 8-K filed on Monday by the company with the US Securities and Exchange Commission, the OIG subpoenaed Myriad for documents related to its billing of government-funded healthcare programs for its hereditary cancer tests. The subpoena covers a period starting Jan. 1, 2014, through the date when the subpoena was issued. Myriad launched its 25-gene myRisk Hereditary Cancer test in September 2013.

Myriad said in the SEC document that it is cooperating with the government’s request and responding to the subpoena. At this time, no claims have been made against Myriad.

However, Medicare expert Bruce Quinn has been tracking CMS' edits specifically with regard to the CPT codes used to bill for BRCA1/2 testing. He wrote in his blog that he filed a Freedom of Information Act request with Myriad's Medicare contractor Noridian last year seeking information on its communication with the lab about specific CPT codes used to bill for hereditary cancer testing.

"I was puzzled how Noridian was handling the intersection of the [CPT code] 81211/81213 payments in light of [CMS'] Correct Coding Initiative edit," wrote Quinn, who consults diagnostic labs.

CPT Code 81211 describes full sequencing analysis of BRCA genes while CPT Code 81213 describes duplication and delection analysis of the genes.

However, as Quinn points out, CMS had issued coding edits to block labs from stacking these codes, which together amount to around $2,900 in payment. CMS it seems has guided industry to instead use CPT code 81162 (describing comprehensive analysis of BRCA1/2), and only bill CPT codes 81211 and 81213 with the use of a modifier to indicate that separate services have been performed on different days.

"This has important fiscal implications for CMS," Quinn explained last year. Under the Protecting Access to Medicare Act, the price for stacking CPT Codes 81211 and 81213 rises to around $2,900 but the price for CPT Code 81162 as a comprehensive code would fall, priced at $2,253 in 2018, to $2018 in 2019, and $1825 in 2020.

JP Morgan analyst Tycho Peterson wrote in a note to investors that the OIG investigation is "clearly an unwelcome development" for Myriad, though without additional details any potential impact is difficult to estimate. Approximately 8 percent of Myriad's hereditary cancer revenues come from CMS.

In a Form 10-K filed with the SEC, Myriad notes that the penalties for violating the federal False Claims Act could include payment of up to three times the damages sustained by the government, civil penalties ranging from $5,500 to $11,000 for each false claim, and exclusion from the federal health care programs.

In morning trading, Myriad's stock was down 12 percent and trading at $29.00.