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State Reimbursements for Genetic Tests Vary, OIG Report Finds

NEW YORK (GenomeWeb News) – As part of an effort to help the federal government set reimbursement rates for genetic tests, the Office of the Inspector General released a report this week that found wide variations in reimbursement levels from state Medicaid programs and other payors.

The study from OIG was done as the Centers for Medicare and Medicaid Services plans to assign new pricing codes — or Current Procedural Terminology (CPT) codes that are drafted by the American Medical Association — for genetic tests. The codes are used to determine reimbursement rates, and CMS wants to know the current pricing systems.

According to OIG, because both state Medicaid programs and private health insurance plans "closely monitor Medicare’s coverage and reimbursement decisions, CMS’ formulation of reimbursement rates for genetic tests may be useful to them."

Medicare is the largest healthcare payor in the country and its rates are often used by other payors to determine their own reimbursement rates.

One state Medicaid official told OIG "We have struggled with payment of such tests for the last couple of years. Additional guidance from CMS on genetic testing would be very helpful."

As an example of the range of reimbursement prices from state to state, OIG found that state Medicaid fee schedule rates for BRCA1 gene tests from Myriad Genetics ranged from $1,000 in Pennsylvania to nearly $4,500 in Iowa.

Leerink Swann analyst Dan Leonard said in an investor note on Wednesday, however, that the wild swing in prices is "deceptive, as [Myriad Genetics] is not a provider to Pennsylvania Medicaid, so its $1,000 reimbursement is merely theoretical, if its members were offered the test."

In another instance, the Federal Employee Health Benefits program also reported that reimbursement for the AlloMap test from XDx ranged from $2 to $3,658. One FEHB plan official told OIG that this wide variation in payment rates is probably due to low test volume and services provided by non-preferred provider organizations, and that the FEHB program is reviewing instances where its payments are higher than other insurers.

CMS is holding its 2012 annual laboratory meeting on payment rate recommendations on July 16.

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